With the EU Council's formal adoption on 8th October 2001 of the
Regulation on the Statute for a European Company, together with a
related Directive on worker-participation, the introduction of
pan-European companies is now on course after more than 30 years.
The Regulation is due to come into force on 8th October 2004, when
it will become directly applicable in all member states.
The Regulation is intended to remove the legal
obstacles to the development of European-wide companies, to be
known as "SEs" (from the Latin "Societas Europaea"). By using an
SE, businesses established in more than one member state will be
able to operate throughout the EU on the basis of a single set of
rules and a unified management system. A single operating structure
might avoid the need for a complex network of subsidiaries governed
by different national laws, and could mean significant reductions
in administrative and legal costs. The Regulation does not,
however, overcome all the difficulties inherent in cross-border
operations - for example, there is no single EU-wide convention for
The Regulation sets out the formation, dissolution,
reporting, and management rules of the SE. It provides, for
example, a uniform structure for general meetings, management
structure, confidentiality, and for approving transactions with a
significant impact on the community. In each case the SE must
impact on at least two member states and must be formed from
pre-existing companies with a two-year operating history. It will
be possible to form an SE by one of four ways:
- the merger of two or more existing public limited companies
from at least two different member states;
- the transformation of a public limited company that has had a
subsidiary in another member state for at least two years;
- the formation of a holding company promoted by public or
private limited companies from at least two different member
- the formation of a subsidiary of companies from at least two
different member states.
While all four ways will be available to public
companies, private companies may only use the last two. The SE will
be treated as a public company under the law of the relevant member
state; it will, for example, be able to issue shares to the public.
Its capital will be denominated in euros and its issued capital
must be at least EUR120,000.
The SE must be registered in the member state where
it has its administrative head office, and the law of that state
will apply to the SE's financial and tax matters, and will
determine its treatment on insolvency. It will be able to choose
between a single board structure (like British companies) or the
Continental two-tiered system of supervisory and management boards.
If it wanted (for example, for strategic business reasons) to move
its operation and head office into another member state, it would
be able to move its registered office there without going through
the process of winding up and re-registration.
Rather than having direct effect like the
Regulation, the related Directive will have to be implemented
individually by each member state by 8th October 2004 (and in
practice it will not be possible to establish an SE in a member
state which has not implemented the Directive). The Directive aims
to ensure that worker-participation in SEs is available in each
member state. Depending on the law of the relevant member state,
worker-participation will not necessarily involve representation on
the board. It will be at the level of supervision and strategic
development as opposed to the day-to-day running of the SE, and
will not confer any right of veto.
The process of forming the SE will entail
negotiations on the involvement of employees with a body
representing all employees of the companies concerned, and the
Directive provides for a standard set of principles to apply if no
agreement is reached. Essentially, these would oblige SE managers
to consult regularly with a body representing the employees, and to
provide it with regular reports covering current and future
business plans, production and sales levels, the implications for
the workforce, management changes, mergers, divestments, and
potential closures and lay-offs.
For further information, please contact Marianne
Walsh by telephone on +44(0)20 7367 2654 or by e-mail at [email protected]
or contact Simon Howley by telephone on +44(0)20 7367 3566 or by
e-mail at [email protected]