Since 8 October 2004, according to Council Regulation (EC) No. 2157/2001, the European Union has legalised a new legal and organisational form of a legal entity – a European company (Societas Europaea - SE) which is not subject to national regulation in individual EU countries but is regulated at the Europe-wide level.
Societas Europaea may be established as a private or public limited liability company. Physical persons may not be its founders but may be its shareholders.
A company with the registered address outside the European Union may be involved in SE incorporation provided that it has a duly registered office in the territory of one of the EU countries and a valid and long-lasting relations with the country’s economy.
SE charter capital must be denominated in Euros and may not be less than €120’000. And, a SE registration country’s law which requires that companies engaged in certain activities had a certain amount of charter capital, is applicable to European companies.
European companies are required to include the abbreviation “SE” in their names.
A public SE registration country’s law is applicable to SE capital and its change, SE shares, bonds and other securities.
SE registered office must be located in the territory of the European Union, in the same country where its head office is located. The country of registration may request that European companies locate their head and registered offices at the same address.
SE may relocate its registered address within the EU without liquidating the company at the former place of registration. In contrast, any other form of a European company may not relocate its registered address to another EU state without having liquidated its business in the country of previous incorporation. Such relocation will not result in SE liquidation or a new legal entity incorporation. And directors, managers or other administrative bodies have to draw up a document referring to the office relocation and publish it in public media.
The document must include the following information:
- SE name;
- SE current registered address and proposed registered address;
- any consequences for SE staff caused by such SE relocation;
- rights provided for shareholders and/or creditors protection given that the law of the State of SE relocation may provide for adequate protection for the minority shareholders who oppose such relocation.
Upon completion of all necessary formalities, a judicial body, a notary public or another competent authority of the new SE registered office location country issues a certificate confirming the completion of all actions and formalities required for SE relocation.
SE may not relocate its registered office if it is in the process of dissolution or liquidation, having insolvency proceedings or any similar legal proceedings are pending. SE having relocated its registered office to another country is treated, for the purposes of any action brought prior to the relocation, as having its registered office in the country where the SE had been registered prior to the relocation, even if the action against the SE is brought after the relocation.
Where the SE business is regulated by special provisions of the national law, the law is applicable to it in its entirety irrespective of the location of its offices within the European Union.
SE charter provisions may not conflict with the labour law and staff employment provisions adopted in the EU.
A European company may be organized as a result of a merger (acquisition or consolidation) of existing companies, as holding SE or as SE subsidiary.
Any limited liability companies operating in the EU may establish SE by way of merger pursuant to the following conditions:
• at least two of such companies should operate in line with various EU countries’ law;
• at least two of such companies should have, for at least two years, a subsidiary regulated by a third country’s laws or a branch located in a third country.
For a holding SE to be incorporated, directors of the founder companies have three months to have the founder companies’ shareholders declare whether they are going to transfer their shares for incorporation of the holding SE. Holding SE may be incorporated only provided that during the above period, the founder companies’ shareholders transferred the minimum necessary part of their shares into the new SE.
The establishing of SE subsidiary must comply with the provisions of the national law of the State where the subsidiary is established.
SE management has either a two-tier structure - general shareholders’ meeting and a managing body, or a one-tier structure – a managing body alone, depending on the form adopted in SE constituent documents. The managing body is responsible for SE management, and the managing director (or the board of directors) is responsible on the same terms provided for other public companies with a registered office in that EU country. No one may be a member of SE managing and controlling body at the same time.
In a one-tier structure, SE activities are managed by the administrative body including at least three members. One or several members of the administrative body are appointed by resolution of SE general shareholders meeting. Members of the first administrative body may be appointed upon signing the statutory documents.
Rules applicable to one-tier and two-tier SE managing structures provide that managing bodies’ members are appointed for a period specified in the charter but for no more than six months. In accordance with SE charter, SE managing body members may be appointed for a new term more than once. A legal entity may be a member of its managing body unless the law of SE country of registration provides otherwise in respect of its public limited liability companies. However, such legal entity has to appoint a physical person to perform its functions in SE managing body.
SE charter must have a list of managing body’s transactions to be approved by the supervisory body in case of a two-tier structure or the administrative body’s decision-making procedure in case of a one-tier structure.
SE managing body members may not disclose (even after they resign from the office) any information pertaining to SE if such disclosure may harm SE interests unless the disclosure is required or permitted by the national law or meets the public interests.
With regard to annual and consolidated financial statements, if any, including annual statements, audit reports and publication of statements, SE is regulated by the rules applicable to public limited liability companies operating under the laws of EU countries where SE has its registered office.
From the practical perspective, a new SE may be of interest to those operating offshore companies which, for political or economic reasons, have to change their registered address without being liquidation and while retaining legal succession.
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