The recognition of foreign commercial companies

A commercial company is a creation of the law of a certain state. Therefore, in order to be able to perform commercial activities in a foreign country it must be recognised as a subject of law by the system of law of that country because this recognition is very important for the international activities of commercial companies the states have adopted several international conventions regulating the matter as follows:

1) The 1956 Hague Convention which has not entered into force, but some states have included it into their legislation, such as Romania

2) The 1964 Strasbourg Convention adopted within the council of Europe

3) The 1968 Brussels Convention on the recognition of European Commercial Companies. Generally a foreign commercial company is automatically recognised by each state under the condition of reciprocity if that company fulfils the validity conditions provided by its national law.

However, there are two limits when recognising a foreign commercial company as follows:

a) The commercial company cannot have in the foreign country more rights than it has in its national state according to its national law.

b) The commercial company cannot have in the foreign country more rights than the national commercial companies of that country.

The groups of commercial companies

The groups of commercial companies are meant to allow the concentration of capitals because most national legislations have provisions that forbid the association of commercial companies that may distort the competition. There are 3 forms of groups of companies as follows:

1) The concern in the German system of law. It may be set up in two ways:

a) By a determination contract when the dominant company buys on the market shares of another company in order to gain the control over its capital and ask to control the economic decisions. The dominant company exercises an influence over the management system and economic and commercial policy of the dominating company.

b) By an incorporation contract when the dominant company becomes the soul associate (shareholder) of the incorporated company. Thus, the management system of the incorporated company is carried on by the dominant company.