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European Company Statute - Frequently Asked Questions

European Company Statute - Frequently Asked Questions

1. What is the European Company Statute (SE Statute)?

The European Company Statute gives companies operating in more than one Member State the option of establishing themselves as a single company under EU law. Rather than having to comply with all the different national laws of each Member State where their subsidiaries are based, the Statute would make companies able to operate throughout the EU with one set of rules, including a unified management and reporting system. Furthermore, the European Company offers them the prospect of reduced administrative costs and provides a legal structure more conducive to carrying out activities within the Single Market as a whole.

The European Company Statute was established by two pieces of legislation. Namely, a Regulation (directly applicable in Member States) establishing the company law rules and a Directive (which has been implemented in national law in all Member States) on worker involvement. These rules are supplemented by cross-references to national legislation applicable to public limited-liability companies.

2. Why is the Commission reporting on the European Company Statute now?

The European Company Statute (Regulation 2157/2001) requires the Commission to report on its practical application five years after its entry into force and to put forward amendments where appropriate.

The reason the Report was delayed beyond this five year window was to allow more time for the SE Regulation to be actively in force in all Member States and to allow for a more meaningful report on its application. Since the European Company Statute came into effect, the number of established SEs has increased considerably: there were 9 SEs created in 2004, 16 in 2005, 35 in 2006, 88 in 2007, 179 in 2008, and 156 in 2009.

3. How has the Commission consulted stakeholders?

In 2008 the Commission had an external study carried out on the operation and impact of the SE Statute. The study, which was published in March 2010, was based on questionnaires and interviews with stakeholders concerned.

In May 2010, the Commission launched a consultation on the results of the external study in order to test the study's results with a wider audience and provide the Commission with stakeholders' views on issues relevant in assessing the SE Statute. In total 69 stakeholders took part in the consultation. The responses as well as a synthesis of the comments were published on the DG Internal Market and Services' European Company website.

To complement the consultation process, a high-level conference on the SE Statute was held on 26 May 2010. At this event, various stakeholders had the opportunity to discuss their experiences with the application of the Statute, including the problems they had encountered with it and made suggestions for the way forward. The video recording of the conference is available on the European Company website.

4. What is the content of the Commission Report and the accompanying Commission Staff Working Paper?

The Commission Report includes a description of the main positive and negative factors, which influence setting up an SE, as well as of trends on the distribution of SEs throughout the EU. It also outlines the main problems companies can encounter when setting up and running an SE.

The accompanying Commission Staff Working Document supplements the assessment with an extensive inventory of SEs and an analysis of the flexibility of relevant national legislation in the different Member States. It also further elaborates on the main problems encountered when setting up and running an SE.

5. How many SEs are there and how are they distributed throughout the EU/EEA?

As of 25 June 2010 (reference date of the Report), 595 SEs were registered in 21 out of the 30 EU/EEA Member States. The vast majority of SEs, around 70%, was registered in the Czech Republic (281) and Germany (134). Very few SEs were registered in Southern European Member States, with the exception of Cyprus (12).

The Netherlands (24), the United Kingdom (23), Slovakia (22) and France (19) have a relatively high number of SEs on their territory. The group of countries with the lowest use of the SE Statute includes Portugal and Spain – with only 1 SE each - and Bulgaria, Finland, Greece, Iceland, Italy, Lithuania, Malta, Romania, and Slovenia where no SEs have been set up.

6. What are the conclusions of the Study on the application of the SE Statute?

The Report concludes that the European Company has made it possible for companies with a European dimension to transfer the registered seat cross-border, to better reorganise and restructure, and to choose between different board structures. At the same time, it has upheld the rights of employees to be involved in decision-making within companies and has protected the interests of minority shareholders and third parties. The European image and supra-national character are additional advantages that the Statute offers to companies.

The Report acknowledges that the application of the Statute also poses a number of practical problems. First, the SE Statute does not result in a uniform SE legal form across the European Union, but in 27 different types of SEs. Second, the Statute contains multiple references to national law and uncertainty remains as to the legal implications of the Statute's directly applicable rules and their interface with national law. Third, the uneven distribution of SEs across the European Union suggests that the Statute does not respond sufficiently well to the needs of companies in all 27 Member States.

7. Does the Commission Report on the SE Statute also touch on the SE Directive on employee involvement?

The Commission Report focuses on the SE Regulation and makes reference to employee involvement issues only where they are relevant to assessing the application of the Regulation.

A 2008 review on the application of the SE Directive is available at:

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:52008DC0591:EN:NOT

8. What are the next steps after the Report?

The SE Regulation requires that Commission considers whether any modifications are necessary based on the assessment of the application of the SE Regulation.

The Commission is currently reflecting on potential amendments to the SE Statute, with a view to making proposals in 2012, if appropriate. Any such amendments, if put forward, would be carried out in parallel with any possible revision of the SE Directive, which would be subject to the consultation of social partners in accordance with Article 154 of the Treaty. More generally, any measures which the Commission would propose as a follow-up to the Report would be subject to better regulation principles, including an impact assessment.

9. Where can I find more information about the SE Statute?

For more information about the SE Statute you can consult:

http://ec.europa.eu/internal_market/company/se/index_en.htm

See also MEMO/04/235 and IP/10/1531


START-UP DOCS
© Barcelona Activa SAU SPM, 1998-2009
The European
Company
01 Objectives of the European Company (S.E).
02 Establishment methods
03 Share capital and administrative bodies
04 Other aspects
05 Employee participation
06 More information

Law 19/2005, November 14th, on European Companies located in Spain defines the regulatory
bases of the adjustment and implementation process of Regulation 2157/2001, of October 8th,
by which the European company statute is approved.
The European Society (SE), called European Public Company in Spain, establishes a new type
of company regulated by a mixed normative regime (communitarian and state). At Community
level, the S.E. is regulated by the Regulation 2157/2001 which is applicable from 8th October
2001 and by Directive 2001/86, also applicable from October 8th 2001 which completes the
Statute of S.E. as far as the implication and participation of the employees are concerned.
The objectives of the S.E. are basically:
- To enable companies from different states of the Union to merge, form a holding or joint
subsidiary, promoting mutual collaboration, while avoiding the problems arising from
working with the different legal systems of member states.
- Promote the participation of the employees in the decision making process affecting
companies ruled by the legal regulations of the SE.
01. Objectives of the European Society (SE)

The Regulation provides for four different establishment methods:
- Merger: This method can only be applied by public companies registered in different
countries of the European Union, and can be practised by absorption between
companies or establishment of a new company.
- Establishment of a holding: This method can be applied by civil societies and limited
companies whose registered office is located in different countries of the European
Union or which have branches registered in countries that are different from the one of
the registered office of the parent company.
- Establishment of an SE subsidiary: This method can be applied by any type of
company with registered office in the European Union. It is used when creating a
subsidiary, between companies from different countries, which will be registered in
another country of the Union.
- Transformation into SE: The transformation of a civil society registered in a Member
State of an SE will be permitted if the former has had a subsidiary registered in another
country of the EU for at least two years.
02. Establishment methods

Share capital
The minimum capital required to set up an SE is 120,000 Euro.
If, in a member State, the minimum capital required of companies of a particular sector is
higher, this minimum capital will also be applied to the SE registered in the member state.
However, this is not the case in Spain, where the highest minimum capital is half the minimum
required by the European Regulation.
Administrative bodies
The Regulation provides for two different systems of management of the company. In both
cases, one of the bodies will be the General Meeting of Shareholders and the other one will
depend on the system established in the statutes of the company:
Single-tier system, with a single administrative board which will be responsible for the
management of the company
Two-tier system with a management and a supervisory board which will decide the members of
the management body, approve the activities that have been decided and supervise their
functions.
03. Share capital and administrative bodies

At the beginning or at the end of the company name of the new company, the abbreviation S.E.
will have to be added.
The registered office of the SE will have to be registered in the state of the European Union in
which the central administration of the company is located. Being mandatory, in the case of
Spain, the deposit of the establishment project of the company registered in Spain in the
Mercantile Registry.
Establishment and other registration acts of a European Company registered in the Spanish
state will be registered in the Mercantile Registry in accordance with the provisions affecting civil
societies of the state.
The acts that must become public in the application of the Regulation will be published as stated
in the general provisions applicable to civil societies, not being able to register an SE in the
Mercantile Registry with the same name as another existing Spanish company.
The registration, liquidation and transfer of a registered office to another Member State will have
to be published in the Official Journal of the European Community. In case of change of
address, the act can be cancelled by request of the public supervisory board due to reasons of
public interest.
The obligatory annual accounts will be the same as those of other types of civil society. That is,
a balance, a profit and loss account, an annexe and a management report.
04. Other aspects
The aspect that was most debated when deciding the Regulation was the involvement of
employees in management of the company.
The Regulation, in the end, defined this involvement in the following terms:
“Employee participation” will not be applied to daily management of the company, which must
be controlled by the managers, but to the tasks of supervision and development of strategies for
the company.
There are various methods of participation:
- The method according to which the employees are part of the supervisory or
administrative body.
- The method that establishes a different body which acts for the legal defence of the
employees of the European Company.
- Those methods are chosen by agreement between the administrations or supervisory
bodies of the companies and their employees, respecting the level of information and
consultation anticipated by the method that a different body establishes.
The European Company will not be able to be established by means of a general meeting,
before it has chosen one of these methods of participation.
Material and financial resources must be given to the employee’s representatives to ensure the
proper use of their functions.
Employment and retirement contracts are not covered by the directive. However, when it comes
to the regimes of professional anticipations, they benefit from the provisions of the directive
proposal regarding professional retirement institutions, proposed by the Commission in October
2000, mainly regarding the possibility of introducing a single retirement scheme for all
employees of the European Union.
05. Employee participation
The European Company
- Wikipedia: "European Company".
Available online: http://en.wikipedia.org/wiki/European_Company
Consulting date: 11/01/2008.
- Website of the European Union: "European Anonymous Company Statute"
Available online:: http://europa.eu/scadplus/leg/es/lvb/l26016.htm
Consultation date: 11/01/08
- Law 19/2005, November 14th, on European Companies located in Spain.
Available in .pdf: http://www.boe.es/boe/dias/2005/11/15/pdfs/A37303-37308.pdf
Consultation date: 11/01/08
Written by the Barcelonanetactiva team from the following sources of information:
- Website of the European Union: “European company statute (S.E.)”.
Available online: http://europa.eu/scadplus/leg/es/lvb/l26016.htm
Consultation date 11/01/08
- Law 19/2005, November the 14th, on European Companies located in Spain.
Available in pdf: http://www.boe.es/boe/dias/2005/11/15/pdfs/A37303-37308.pdf
Consultation date: 11/01/08
06. More information