EUROPEAN (EU) COMPANY LAW Prof. M.E. de Leeuw Università di Ferrara Spring semester 2018

EU corporate law Lecture 16-17: The European Company and other supranational companies M.E. de Leeuw

The Objectives of SE “remove obstacles to the creation of groups of companies from different MS (…); allow European companies with a European dimension to combine and plan and carry out the reorganization of their business on a Community scale and to transfer their registered office to another MS while ensuring adequate protection of the interests of minority shareholders and parties (…); permit the creation and management of companies with a European dimension, free from the obstacles arising from the disparity and the limited territorial application of national company law, and to allow companies with a European dimension to adapt their organisational structure, and to choose a suitable system of corporate governance ensuring efficient management, proper supervision and the maintaining of the rights of employees to involvement” (paragraphs of preamble)

Content Regulation 2157/2001 on the Statute for a European Company Regulates uniformly for all MS, the formation of an SE providing for rules for registration (art. 11-14) and provisions on means of formation (art. 15-37); A number of core elements of structure (art. 38-51); Structural change of the SE formed by transferring of seat (art. 7) or cross-border merger (art. 3(1) SE involved in cross-border merger).

Applicable law Ranking: Regulation applies with supremacy; Provisions of the companies statutes (where Regulation expressly authorises it); National law (gap-filling role- by provisions of the law of the country where it has its registered office)

Formation SE Different methods, e.g.; formation by merger between public limited companies; to secure a cross-border element at least two of them must be governed by the law of different MS; formation of a holding SE by public and/or private limited companies; formation of a subsidiary SE by companies and firms; conversion into an to an SE by a public limited company, if that company has a subsidiary company governed by the law of another MS for at least two years. Required “cross-border element”. SE upon registration, “SE” mentioned in name.

SE Real seat and head office Registered office laid down in SE Statute; located within Union and in the same MS as head office (real seat theory). Art. 7. Discrepancy seat/head office: Move head office to MS of registration; Move registered office to the MS where head office is. Art. 8: transfer registered office: no winding up and no creation of new entity, but applicable law changes because of references in Regulation to national law of registered office.

SE capital, board structure, annual accounts and winding up Min. subscribed share capital is 120.000 Euro. Structure choice: Unitary board or two-tier- system (art. 38). General meeting (shareholders) decides on numerous issues like : appointment of members of SE management/supervisory organs, transfer of registered office, amendments of its statutes... Annual accounts: governed by national but harmonized law; Winding up/liquidation/insolvency; governed by national law Involvement of employee: Directive on the involvement of employees (2001/86)

SE Positive drivers for creation: Commission Report on application SE Reg. after 5 years (COM(2010)676 final Transfer of registered office without winding up and reincorporation; Its supra-national character; Its statute takes precedence over national law; The European image.

SE Negative drivers for creation Establishing: The set-up costs (784.000 Euro average); time-consuming and complex procedures; Inexperience of public authorities with this form; In running: Insufficient awareness of the business community (customers, suppliers, banks) and employees of this form; Rules on employees participation are complex and time-consuming; Many references to national law; Problem of coupled seat and registered office.

The Societas Europaea (SE) Regulation 2157/2001 on the Statute for a European Company (adopted 2001, in force since Oct. 2004) Characteristics: Public limited liability company (share capital); Formation through merger, holding…; Min. share capital; Becomes SE after registration; One or two-tier board structure; Employee involvement (Directive 2001/86) Applicable law: Regulation, statute, national company law of the MS where is the registered office.

Show data on SE’s formation in EEA. http://www.worker-participation.eu/European-Company-SE/Facts-Figures

EEIG characteristics Regulation 2137/85 (’89 measures in place) The EEIG is a (modest legal) form of association between companies or other legal bodies, firms or individuals from different EU countries who need to operate together across frontiers (at least two members from different MS); An EEIG’s activities must relate to the economic activity of its members, but must be ancillary to them; Cannot be created to make profit; No capital requirements; Unlimited and severe liability.

New EU company forms in EU “Societas Unius Personae” (still on agenda- not EU company but harmonisation) European Private company (withdrawn 2013) European Foundation (withdrawn 2014) European Mutual society (withdrawn in 2006) European Association (withdrawn in 2006)