## Facts

- Inspire Art Ltd. was incorporated in England and Wales and operated in the Netherlands solely through a branch in Amsterdam.
- Dutch law classified certain foreign-incorporated entities operating almost exclusively in the Netherlands as “formally foreign companies” and subjected them to the Wet op de formeel buitenlandse vennootschappen (WFBV).
- The WFBV imposed, among other measures, (i) minimum-capital requirements comparable to Dutch private limited companies, (ii) additional disclosure obligations (including identification as a “formally foreign company”), and (iii) special director-liability rules tied to noncompliance and undercapitalization.
- The Amsterdam Chamber of Commerce, responsible for the commercial register, required Inspire Art to register as a “formally foreign company” and comply with the WFBV.
- Inspire Art argued that, as an EU company validly incorporated in the United Kingdom, it could operate its Dutch branch under home-state company law and be subject in the Netherlands only to the branch disclosure regime set out in Directive 89/666/EEC.

## Issues

1. Whether Directive 89/666/EEC permits a host Member State to impose branch disclosure and labeling requirements beyond the information listed in Article 2.
2. Whether applying host-state minimum-capital rules and related director-liability/creditor-safeguard measures to a branch of a company validly incorporated in another Member State restricts freedom of establishment under Articles 43 and 48 EC (now Articles 49 and 54 TFEU).
3. If there is a restriction, whether it can be justified by creditor protection, preventing abuse, effective tax supervision, or fairness in commercial transactions.

## Decision

- The ECJ ruled that Article 2 of Directive 89/666 provides an exhaustive set of mandatory branch disclosure items; the Netherlands could not require additional disclosures such as classification and labeling as a “formally foreign company.”
- The ECJ held that the WFBV’s minimum-capital requirements and related director-liability/creditor-protection measures, as applied to a branch of a company formed in another Member State, restricted freedom of establishment by making establishment via a branch less attractive.
- The ECJ found the asserted justifications insufficient because the measures were not proportionate to the stated aims, particularly where they applied generally to the targeted category without individualized proof of fraud or necessity.
- The ECJ concluded that the contested Dutch measures were incompatible with Directive 89/666 and with Articles 43 and 48 EC as applied to companies in Inspire Art’s position.

## Legal Principles

- Directive 89/666 harmonizes branch disclosure for companies formed in other Member States; host states may not add disclosure obligations beyond those permitted by the directive.
- National measures that hinder or make less attractive the establishment of branches by companies validly formed in another Member State are restrictions on freedom of establishment.
- Creditor protection and fraud prevention can be legitimate public-interest aims, but host-state company-law reapplication (e.g., minimum capital and special director liability) must be narrowly targeted, suitable, and necessary; broad, category-based rules are disproportionate.
- Incorporating in a Member State with more permissive company law, even to operate mainly elsewhere, is not by itself abuse that justifies restrictive host-state measures.

## Conclusion

The ECJ invalidated a host-state “pseudo-foreign company” regime insofar as it imposed extra branch disclosures and effectively reimposed host-state minimum-capital and director-liability rules on a company validly incorporated in another Member State, holding that such measures conflicted with harmonized EU branch disclosure rules and the Treaty freedom of establishment.


Kamer van Koophandel en Fabrieken voor Amsterdam v. Inspire Art Ltd., Case C-167/01, 2003 E.C.R. I-10155 (ECJ 2003)