Centros Ltd. v. Erhvervs-og Selskabsstyrelsen

Mr. and Mrs. Bryde were Danish citizens living in Denmark. The Brydes wanted to establish a company in Denmark, but Danish law required a roughly $30,000 minimum capital investment to establish a new company. The Brydes established Centros Ltd. (plaintiff) in the United Kingdom, where there was no minimum-capital requirement. Centros did no business in the United Kingdom and had its United Kingdom registered office at the home of the Brydes’ friend. In 1992, Mrs. Bryde sought to register a Centros branch in Denmark. The Danish Trade and Companies Board (the board) (defendant) rejected the application on the grounds that Centros did not do business in the United Kingdom and was actually seeking to register a principal establishment in Denmark, in contravention of the minimum-capital requirement. The Brydes brought an action against the board in Danish court, arguing that the board’s refusal to register the branch violated the freedom of establishment guaranteed by Articles 52 and 58 of the Treaty Establishing the European Community (TEC). The Danish authorities argued that the Brydes were abusing freedom of establishment to avoid satisfying the Danish minimum-capital requirement. The Danish court referred the matter to the European Court of Justice for a preliminary ruling on whether a member state’s refusal to register a branch in these circumstances was compatible with Articles 52 and 58. The advocate general opined that the board’s refusal to register Centros’s Danish branch violated the freedom of establishment provided for by the TEC.