Societas Europaea

The number of registered societates Europaeae since 2004[1]
Clockwise from top left: Christian Dior SE (Chanel Iman modelling in 2009), LVMH Moët Hennessy Louis Vuitton SE (Moët & Chandon Champagne) and Airbus SE (A380 aircraft) are among the most well known societates registered.

A societas Europaea (Latin pronunciation: [/soˈki.e.taːs/ /ew.roːˈpae.a/] SE; Latin: European society or company; plural: societates Europaeae) is a public company registered in accordance with the corporate law of the European Union (EU), introduced in 2004 with the Council Regulation on the Statute for a European Company.[2] Such a company may more easily transfer to, or merge with companies in, other member states.

2,525 registrations have been reported as of March 2016, including the following nine components (18%) of the Euro Stoxx 50 stock market index of leading Euro Area companies (excluding the SE designation): Airbus, Allianz, BASF, E.ON, Fresenius, LVMH Moët Hennessy Louis Vuitton, SAP, Schneider Electric and Unibail-Rodamco.[3][4]

National law continues to supplement the basic rules in the Regulation on formation and mergers. The European Company Regulation is complemented by an Employee Involvement Directive that sets rules for participation by employees on the company's board of directors. There is also a statute allowing European Cooperative Societies.

Main provisions

Formation

The Statute provides four ways of forming a European limited company:[5]

  1. By merger of national companies from different member states
  2. By the creation of a joint venture between companies (or other entities) in different member states
  3. By the creation of an SE subsidiary of a national company
  4. By the conversion of a national company into an SE

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.[6]

Minimum capital

The SE must have a minimum subscribed capital of €120,000 as per article 4(2) of the directive, subject to the provision that where a member state requires a larger capital for companies exercising certain types of activities, the same requirement will also apply to an SE with its registered office in that member state (article 4(3)).

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 may transfer its registered office within the Community without dissolving the company in one member state in order to form a new one in another member state; however, such a transfer is subject to the provisions of 8 which require, inter alia, the drawing up of a transfer proposal, a report justifying the legal and economic aspects of the transfer and the issuing, by the competent authority in the member state in which the SE is registered, of a certificate attesting to the completion of the required acts and formalities.

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 authorization of the supervisory board or the deliberation of the administrative board:

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 harmonization at European level.

Winding-up

Winding-up, liquidation, insolvency, and suspension of payments are in large measure to be governed by national law. When an SE transfers its registered office outside the Community, or in any other manner no longer complies with requirements of article 7, the member state must take appropriate measures to ensure compliance or take necessary measures to ensure that the SE is liquidated.

Status of the legislation and implementation

Council Regulation (EC) No 2157/2001[7] of 8 October 2001 on the Statute for a European company (SE).

Council Directive 2001/86/EC[8] of 8 October 2001 supplementing the Statute for a European company with regard to the involvement of employees.

See also: Europa's collection of press releases, regulations, directives and FAQs on the European Company Statute.[9]

United Kingdom

UK Statutory Instrument 2004 No. 2326. The European Public Limited-Liability Company Regulations 2004[10] came into force on 8 October and gave effect to the European Company Statute Regulation (Council Regulation EC no.2157/2001), which gives the framework for a new form of company, the European Public Limited-Liability Company or Societas Europaea (SE). The regulations are available in full text on the HMSO website.

UK Statutory Instrument 2004 no. 2407. The European Public Limited-Liability Company (Fees) Regulations 2004[11] also came into force on 8 October 2004. An explanatory memorandum[12] on the Fees Regulations describe them as setting out "the fees payable in connection with the services and facilities provided by the DTI in respect of a new form of company, the European Public Limited-Liability Company or 'Societas Europaea' (SE)."

Employee participation

The regulation is complemented by the Council Directive supplementing the Statute for a European Company with regard to the involvement of employees (informally "Council Directive on Employee Participation"), adopted 8 October 2001.[8] The directive establishes rules on worker involvement in the management of the SE.

EU member states differ in the degree of worker involvement in corporate management. In Germany, most large corporations are required to allow employees to elect a certain percentage of seats on the supervisory board. Other member states, such as the UK, have no such requirement, and furthermore in these states such practices are largely unknown and considered a threat to the rights of management.

These differing traditions of worker involvement have held back the adoption of the Statute for over a decade. States without worker involvement provisions were afraid that the SE might lead to having such provisions being imposed on their companies; and states with those provisions were afraid they might lead to those provisions being circumvented.

A compromise, contained in the Directive, was worked out as follows: worker involvement provisions in the SE will be decided upon by negotiations between employees and management before the creation of the SE. If agreement cannot be reached, provisions contained in the Directive will apply. The Directive provides for worker involvement in the SE if a minimum percentage of employees from the entities coming together to form the SE enjoyed worker involvement provisions. The Directive permits member states to not implement these default worker involvement provisions in their national law, but then an SE cannot be created in that member state if the provisions in the Directive would apply and negotiations between workers and management are unsuccessful.

Definition

Definition of employee participation: it does not mean participation in day-to-day decisions, which are a matter for the management, but participation in the supervision and strategic development of the company.

Participation

Employment contracts and pensions

Employment contracts and pensions are not covered by the Directive. With regard to occupational pension schemes, the SE is covered by the provisions laid down in the proposal for a directive on institutions for occupational schemes, presented by the Commission in October 2000, in particular in connection with the possibility of introducing a single pension scheme for all their employees in the European Union.

Development

Two approaches have been attempted to solve the problems cited above. One approach is to harmonize the company law of the member states. This approach has had some successes, but after thirty years only limited progress has been made. It is difficult to harmonize widely different regulatory systems, especially when they reflect different national attitudes to issues such as worker involvement in the management of the company.

The other approach is to construct a whole new system of EU company law, that co-exists with the individual company laws of the member states. Companies would have the choice of operating either under national regulations or under the EU-wide system. However, this approach has been only somewhat more effective than the harmonization approach: while states are not as concerned about having foreign traditions of corporate governance imposed on their companies, which the harmonization approach could well entail; they also wish to ensure that the EU-wide system would be palatable to the traditions of their national companies, so that they will not be put at a disadvantage compared to the other member states.

The European Company Statute represents a step in this direction, albeit a limited one. While it establishes some common EU rules on the SE, these rules are incomplete, and the holes in the rules are to be filled in using the law of the member state in which the SE is registered. This has been due to the difficulties of agreeing on common European rules on these issues.

Registrations

In terms of registrations, the Czech Republic is vastly overrepresented, accounting for 79% of all societates Europaeae as of December 2015. 9 of the 50 constituents of the Euro Stoxx 50 stock market index of leading Euro Area companies are as of December 2015 societates Europaeae.

Annual registrations by member state are presented in the following chart:[13]

100
200
300
400
500
600
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
  •   Germany
  •   Czech Republic
  •   Slovakia
  •   Other member states

Sectors in which societates with more than five employees have been registered (2014)[14]

  Financial services (21%)
  Services commerce (18%)
  Metal (15%)
  Chemical (11%)
  Other services (9%)
  Information technology (7%)
  Other (5%)
  Construction industry (5%)
  Food, hotel and catering (4%)
  Unknown (3%)
  Transport (2%)

Registrations of new societates are to be published in the Official Journal of the European Union. There is no official union-wide register of societates, as they are registered in the nation in which their corporate seats are located. worker-participation.eu does however maintain a database of current and planned registrations. Examples of companies include:

  Components of the Euro Stoxx 50 stock market index of leading Euro Area companies
Notable examples
Name State in which the
company is seated
Airbus  France
Atos SE  France
AmRest SE  Poland
Aixtron SE  Germany
Axel Springer SE  Germany
Autopistas de Puerto Rico  Spain[lower-alpha 1]
Allianz SE  Germany
BASF SE  Germany
Bilfinger SE  Germany
Christian Dior SE  France
Conrad Electronic  Germany
Dassault Systèmes  France
Deutsche Börse  Germany
E.ON SE  Germany
EPEX SPOT  France
Fresenius SE  Germany
Gfk SE  Germany
Graphisoft SE  Hungary
Groupe Eurotunnel SE  France
KWS Saat SE  Germany
OHB SE  Germany
Puma SE  Germany
LVMH Moët Hennessy Louis Vuitton SE  France
MAN SE  Germany
Nordex SE  Germany
Porsche Automobil Holding SE  Germany
Rocket Internet  Germany
Hannover Rück SE  Germany
Vapiano SE  Germany
Senvion SE  Germany
HAWE Hydraulik SE  Germany
ADVA Optical Networking SE  Germany
Equens SE  Netherlands
Dekra SE  Germany
SGL Carbon SE  Germany
Prosafe SE  Cyprus
ProSiebenSat.1 Media  Germany
Klöckner  Germany
Songa Offshore SE  Cyprus
SAP SE  Germany
Schneider Electric SE  France
Scor SE  France
Solon SE  Germany
Strabag SE  Austria
Unibail-Rodamco SE  France
Zalando SE  Germany
Ziehl-Abegg SE  Germany
  1. Headquartered in the U.S. insular area of Puerto Rico, but wholly owned by a Spanish company.

See also

Notes

References

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