The Eleventh Directive

Abstract

Abstract The Eleventh Directive on disclosure by branches seeks to stop a lacuna in the system of protection of third parties by the mandatory disclosure of certain information relating to companies. As has been seen, the First, Fourth, Seventh and Eighth Directives impose a series of disclosure requirements on companies. Where a company incorporated in one Member State seeks to exercise its right of establishment by setting up a subsidiary in another Member State, that subsidiary, being a company, will be subject to those requirements in the Member State where it is incorporated. Where however a company establishes a branch rather than a subsidiary in another Member State, that branch, not being a corporate entity, will not be so subject. Although information about the company will be available in its State of incorporation, it may not be readily accessible to third parties dealing with it through the medium of the branch. That difference in treatment may be seen as both affecting the exercise of companies’ rights of establishment and prejudicing the protection of third parties in certain circumstances. Moverover, certain Member States had imposed their own disclosure requirements on branches, which differed between Member States, leading to further discrepancies within the Community. The Eleventh Directive aims to redress the balance by subjecting branches to certain of the disclosure requirements.