European Company Formation Specialists - Fletcher Kennedy Limited

Societas Europaea (SE)

Societas Europaea (SE) European Company

Introduction

The European Company (known by the Latin term "Societas Europaea" or SE) is now a reality some 30 years after the initial proposal. We can now incorporate a European company with its own legislative framework. This will allow companies incorporated in different Member States to merge or form a holding company or joint subsidiary, while avoiding the legal and practical constraints arising from the existence of different legal systems. To arrange for the involvement of employees in the European company and recognise their place and role in the company.

Incorporation
There are four ways of forming a European limited company:

merger, formation of a holding company, formation of a joint subsidiary, or conversion of a public limited company previously formed under national law. Formation by merger is available only to public limited companies from different Member States. Formation of an SE holding company is available to public and private limited companies with their registered offices in different Member States or having subsidiaries or branches in Member States other than that of their registered office. Formation of a joint subsidiary is available under the same circumstances to any legal entities governed by public or private law.

Minimum capital
The SE must have a minimum capital of 120 000 euros. Where a Member State requires a larger capital for companies exercising certain types of activity, the same requirement will also apply to an SE with its registered office in that Member State.

Registered office
The registered office of the SE designated in the statutes must be the place where it has its central administration, that is to say its true centre of operations. The SE can easily transfer its registered office within the Community - as is the case at present - without dissolving the company in one Member State in order to form a new one in another Member State.

Laws applicable
The order of precedence of the laws applicable to the SE is clarified.

Registration and liquidation
The registration and completion of the liquidation of an SE must be disclosed for information purposes in the Official Journal of the European Communities. Every SE must be registered in the State where it has its registered office, in a register designated by the law of that State.

Statutes
The Statutes of the SE must provide as governing bodies the general meeting of shareholders and either a management board and a supervisory board (two-tier system) or an administrative board (single-tier system).
Under the two-tier system the SE is managed by a management board. The member or members of the management board have the power to represent the company in dealings with third parties and in legal proceedings. They are appointed and removed by the supervisory board. No person may be a member of both the management board and the supervisory board of the same company at the same time. But the supervisory board may appoint one of its members to exercise the functions of a member of the management board in the event of absence through holidays. During such a period the function of the person concerned as a member of the supervisory board shall be suspended.
Under the single-tier system, the SE is managed by an administrative board. The member or members of the administrative board have the power to represent the company in dealings with third parties and in legal proceedings. Under the single-tier system the administrative board may delegate the power of management to one or more of its members.

The following operations require the authorisation of the supervisory board or the deliberation of the administrative board:

• any investment project requiring an amount more than the percentage of subscribed capital;
• the setting-up, acquisition, disposal or closing down of undertakings, businesses or parts of businesses where the purchase price or disposal proceeds account for more than the percentage of subscribed capital;
• the raising or granting of loans, the issue of debt securities and the assumption of liabilities of a third party or suretyship for a third party where the total money value in each case is more than the percentage of subscribed capital;
• the conclusion of supply and performance contracts where the total turnover provided for therein is more than the percentage of turnover for the previous financial year;
• the percentage referred to above is to be determined by the Statutes of the SE. It may not be less than 5 % nor more than 25 %.

Annual accounts
The SE must draw up annual accounts comprising the balance sheet, the profit and loss account and the notes to the accounts, and an annual report giving a fair view of the company's business and of its position; consolidated accounts may also be required.

Taxation
In tax matters, the SE is treated the same as any other multinational, i.e. it is subject to the tax regime of the national legislation applicable to the company and its subsidiaries. SEs are subject to taxes and charges in all Member States where their administrative centres are situated. Thus their tax status is not perfect as there is still no adequate harmonisation at European level.

Winding-up
Winding-up, liquidation, insolvency and suspension of payments are in large measure to be governed by national law. An SE which transfers its registered office outside the Community must be wound up on application by any person concerned or any competent authority.

Our fee to incorporate an Societas Europaea (SE) is £495

For more information please contact us