European Company Statute

European Company Statute

The European Company Statute (SE) gives companies operating in more than one Member State the option of being established as a single company under Community law and so able to operate throughout the European Union with one set of rules and a unified management and reporting system rather than all the different national laws of each Member State where they have subsidiaries. For companies active across the Internal Market, the European Company therefore offers the prospect of reduced administrative costs and a legal structure adapted to the Internal 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 will have to be implemented in national law in all Member States) on worker involvement.

The European Company Statute Directive is a separate legal instrument which accompanies the SE Regulation as regards rules on employee involvement. Under this Directive, the creation of a European Company requires negotiations on the involvement of employees with a body representing all employees of the companies concerned.

The findings of the external study on the operation and impacts of the European Company Statute, conducted by Ernst & Young and finalised in December 2009, were as follows:

  • Inventory of European Companies: 431 SEs were registered as at 10 September 2009. The number increased exponentially from 2004 to 2008, but fewer European Companies were created in 2009 (as at 10 September 2009) compared to 2008. Currently SEs are present in 20 out of 30 EU/EEA Member States, with the vast majority (around 65%) being registered in the Czech Republic (170 SEs) and Germany (109 SEs). A dominant field of activities for SEs is services (financial and insurance activities – 31%; other services activities – 27%). Around 10% of the SEs have transferred their registered office to another Member State, the most popular destinations being UK (7) and Cyprus (6).
  • Drivers, trends and practical problems in the setting-up of European Companies: the two most important reasons cited by companies for setting up an SE are the possibility of transferring the registered office and the European image associated with an European Company. The possibility of conducting a cross-border merger, simplification of the management structure and regulatory reasons seem to be less important. The most important negative drivers are the set-up costs, complexity and uncertainty of the SE and the employee involvement (in Member States with no employee participation system).

Proposals made by consultant for possible amendments:

  • align the rules of the European Company Statute Regulation with the cross-border mergers directive and
  • make the conditions and procedures for the formation of the European Company Statute more accessible to businesses (e.g. by simplifying the cross-border requirement, by allowing also private limited liability companies to transform into an SE; by reducing the minimum capital requirement).

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