Already early seventies of the 20th century the European Community had the following idea:
In order to do cross-border business in Europe, the legal situation of the representation of companies should be clarified.
A directive of the European Community imposed the member-countries of
the Community to pass legislation in which their company law should be
altered in the following way:
- there should be al least 2 kinds of company: one for small private closed partnership and one for larger companies.
- in both types of company the representation should be based on the
German prokura system. This means: limitation to the powers of attorney
in the company can only be effective towards third parties in case they
are created by the law, and not if only created by the company articles.
In this way if you do business with a foreign company you only need to
know if a representative of the company has been appointed. Once this
has been checked the representation of the company should always be
valid for you.