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Legal Entities

European company (Societas Europaea - SE)

European company (Societas Europaea - SE)

Redactor: Duma Cristian-Gabriel

Introduction

  • Definition: the Societas Euripae (SE) was defined as an associative form, similar to a joint-stock company, having as its object the carrying out of commercial activities, in which commercial companies governed by different national laws participate.
  • Relevant legislation: Council Regulation (EC) No. 2157/2001 on the Statute for a European company, Law 31/1990, as well as those concerning joint-stock companies, to the extent of their compatibility with the provisions of the european regulation.
  • Structure: basically, as stated above, it is a form of an joint-stock company, therefore has the exact same structure. For more information about an JSC, you can take a look here.

Chapter 1: Formation and Capital Structure

  • Formation: Creating an SE can be done through these metods:
    • by merging: there need to be at least 2 companies (joint-stock companies) from different EU countries.
    • By establishing a European holding company (JSC or LLC): This involves at least two companies from different EU countries or companies that have had a subsidiary or branch in another EU country for a minimum of two years.
    • Establishing an European subsidiary (Companies, firms, or other legal entities): at least two entities from different EU countries are involved, or the participating entities have had a subsidiary or a branch in another EU country for at least two years.
    • By converting a joint-stock company into a European company: a company that has had a subsidiary in another EU country for at least 2 years.
  • Capital Requirements: the minimum capital requirement for creating an SE is at least *No changes necessary* 120.000 euros.

Chapter 2: Condititions to form an SE

  • According to the law, in order to craft an SE, you must meet the following requirements: criteria:
    • To have your registered office and central headquarters in the same EU country.
    • To be present in other EU countries (through subsidiaries or branches); if you do not meet this requirement, your company and the other enterprises involved must be governed by the legislations of at least 2 EU countries.
    • To have a minimum subscribed capital of 120,000 EUR.
    • To have concluded an agreement with employee representatives regarding their participation in the company and the manner in which they will be consulted and informed.

Chapter 3: Advantages of an SE

  • Benefits:
    • The European company is advantageous for its mobilityas its registered office can be transferred to another member state without causing dissolution or the creation of a new legal entity.
    • The European company offers the benefit of facilitating cross-border mergers within the community, enabling company restructuring. This is especially advantageous for banking and insurance entities, as it facilitates the rationalization of internal structures and streamlines legal organization, resulting in reduced administrative expenses. The SE, therefore, enables the uniform establishment of management and control entities.
    • The possibility of establishing one or more subsidiaries, which will also be European companies themselves.
    • Simplifying the methods of transferring the SE’s registered office enables advantageous tax domicile selection. However, for better oversight in tax fraud, the SE must be registered in the member state of its actual administration (i.e., where it is managed).
    • The security of law materialized through this new uniform legal form offers increased security for investors, especially in the new states of the European Union.
    • Cost savings in operating such an entity are also important, as a uniform legal form allows for reduced administrative costs.
    • The label's description “European company” serves as a symbol and plays a significant role in marketing and strengthening relationships between commercial companies formed under the diverse laws of the member states of the community.
    • Worker involvement in the SE will be an opportunity for them to have their role in the company recognized and, additionally, their status as European citizens.

Chapter 4: Dissolution & Rules for European companies in each country

  • In regards to liquidation, dissolution, insolvency, and cessation of payments, your European company must comply with the rules applicable in the European country where the company is registered.
  • Rules for European companies in each country: in all EU countries, European companies are generally subject to the same European rules. However, depending on the country where your European company is established, there may be different rules regarding certain aspects – for example, which authorities you need to contact and what employee participation methods you need to apply.
  • Accounting rules: You will need to comply with the accounting rules applicable to joint-stock companies in the EU country where your company is registered.

Conclusion: The Societas Europaea – A Modern Vehicle for European Business Integration

  • The Societas Europaea (SE) represents a significant advancement in European corporate integration, combining mobility, legal harmony, and operational efficiency. It offers a flexible framework for cross-border expansion, simplifying mergers and administrative processes, and reducing costs. Emphasizing worker involvement, the SE aligns with European values of inclusivity and unity. Its adaptability to various national legal requirements makes it an ideal choice for businesses aiming to capitalize on the diverse European market, enhancing growth and stability in the EU's dynamic economic landscape.