European company (in a translation from Latin «Societas Europaea» – European societies) is a new legal form of business, which is designed to be a tool for deepening the integration processes of the European Community. The company formed (or transformed) in a form that can act throughout the European Union without a separate pass procedures of national treatment in each of them.
The first draft of a European company (hereinafter – SE) was proposed in 1970. The idea was to create a concept of European company law, which was to unify all aspects of the SE, so that it can operate at a supranational level, the European Community, and not in accordance with the national law of the Member States.
However, due to the need to harmonize a large number of issues, in particular the structure of organs, tax, employee participation in company management, etc., the work lasted for a long time and is difficult.
The final version of the project, the replacement of the complete unified regulation, proposed a model of co-SE as a pan-European business regulation, and national regulations law. In 2001, it was decided the two main pieces of legislation the EU: Regulation on the Statute of SE (hereinafter – the Regulation) and the Directive on the participation of employees in a SE (hereinafter – the Directive), but due to the Regulation entered only in 3 years that Member State could during this time to adapt their national legislation
Consider what a European company, and what are its features. At its core, SE is a public joint stock company with limited liability, where each party bears the risk of loss of property belonging to him within share. But the size of the authorized capital of such companies is quite significant: it is the minimum of 120,000 euros, and in some countries for certain activities may be even greater.
Registered SE must be in the country where it is actually located the controls (main office). At the same time, some countries (eg, France, Czech Republic, Latvia) require that the legal and actual address is the same. In case of questions the SE activities, not regulated by the Regulation, the SE is considered as a joint stock company with limited liability of the country in which it is registered and regulated by the relevant national legislation. As this legislation will be implemented as taxation of financial statements, bankruptcy, winding-up or liquidation of the SE and the like. The source of the SE regulation activities are also its own founding documents and laws of the Member States adopted for the implementation of the EU actions on the European companies.
As its title (at the beginning or end) SE should have the abbreviation «SE» regardless of language writing. Established it can only be legal entities that are registered and placed their governments in EU member states, one of the following methods:
- Merger of joint stock companies (including SE), if at least two of them are governed by the right of different EU Member States;
- The base of the Company’s shareholders or limited liability companies (including SE) of the holding, if at least two of them are governed by the right of different EU member states;
- The base of legal entities (including SE) common subsidiary (branch), if at least two of them are governed by the right of different EU member states;
- The conversion of the European Group of joint-stock company, at least two years has a branch (subsidiary) in another EU Member State;
- Create the other subsidiary SE.
Ability to create a SE company registered outside the EU is available only in some countries (eg England), provided that such company has its registered office in the territory of a Member State and its activities are closely and for a long time linked to the economy of this country.
Join SE carried out by the registration authority in accordance with national legislation of EU member states, where the main office is located. The status of a legal entity will be obtained after completion of the registration procedure, but it is important to know that SE does not register until they are negotiated with the employees of the company and pending a decision on their representative bodies, and their participation in decision-making of the company. After registration there is a public announcement of the registration SE, respectively, with the national regulations of the country, as well as the publication of announcements in the Official Journal of the EC (Official Journal of the European Communities).
From the point of view of management, may be single-level SE – Shareholders’ Meeting plus administrative organ combining management and supervisory functions, or the two-level – a meeting of shareholders, the supervisory body and the executive body. Experience shows that most companies choose one-tier system.
Consequently, the following can be distinguished among the main advantages of SE:
- The ability to improve the operating efficiency of management:
- Simplification of the administrative structure and the reduction of administrative costs (the disappearance of the need for time consuming and costly procedures to create, and then the content of the network of representative offices in different EU countries);
- Overcoming obstacles related collisions between the various rules of law of the EU member-states.
- Flexibility in the location within the EU:
- The company may have its registered office in one of the participating countries, while its actual location may be in any other Member State;
- Mutual recognition of the competent authorities of the host country recognize the requirements established by the legislation of the country of registration, and refrain from imposing additional requirements or standards that exist in the host country;
- Control of the State of registration: the company’s activity is controlled by the competent authorities of the State of registration, regardless of their place of residence and place of manufacture of the goods / services;
- Single authorization / license to engage in economic activities within the EU.
- The free movement of capital within the EU.
- Ability to transfer the location of the administrative center to another EU Member State, without application of the procedure of liquidation and registration of a new legal entity:
- Saving succession;
- The disappearance of the need to pay tax on the liquidation and sale of shares by shareholders;
- Choice of the legal system, the most favorable for the conduct of a particular type of economic activity, since a change in the place of registration involves also a change of jurisdiction.
- The ability to intra-EU cross-border merger.
- Increased credibility in the dialogue with government and trade union bodies:
- Ability to apply together with the national and also European legislation (such as agreements between the EU and Member States)
- The weakening of the influence of trade unions by fixing in the constituent documents (after relevant negotiations) types and forms of participation of workers in decision-making, or the use of a standard set of principles given in the Directive.
- Improve the reputation and corporate image with the acquisition of a pan-European company status.
In conclusion, it should be noted that in matters of regulation of activity of SE today remains much fuzzier or controversial issues, in connection with which there is an active work to improve European legislation in this area, including the establishment of a unified approach to taxation. In addition, this form of doing business is more suitable for large enterprises due to the form of the company and a sufficiently large amount of the authorized capital. However, at this point in the European Commission there is discussion of a new form of doing business for small and medium-sized enterprises – the European Private Company (Societas Privata Europaea – SPE), but that’s a topic for another article.