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The European Company (also known by its Latin name of ‘Societas Europaea’ or SE) is a public limited company that is set up within the territory of the European Community. The legal form of the European Company was created by the European Council Regulation 2157/2001 on the 8th October 2001. The main purpose of its formation was to enable cross-border mergers and transfers and to create a legal entity “free from the obstacles arising from the disparity and the limited territorial application of a national law”.

 

According to art. 10 of the Regulation each Member State should treat the European Company as if it were a Public Limited Company formed in accordance with the law of the Member State in which it has its registered office. There are four ways of setting up a European Company: merger, formation of a holding company, formation of a joint subsidiary or conversion of a PLC previously formed under the national law of a Member State.

 

The registered office of the European Company must be the place where it has its central administration, that is to say its real centre of operations. It can be transferred within the EU without dissolving the Company in one country and forming a new company in another country.

 

Regardless of the currency in which it is expressed, the European Company must have a minimum subscribed capital of €120,000.

 

There are two different systems regarding the management and control of European Companies. Depending on the form adopted in the statutes, the European Company can have either an administrative body (one-tier system) or a supervisory body and a management body (two-tier system).

 

The Regulation is complemented by the European Council Directive of 8 October 2001 supplementing the Statute for a European Company with regard to the involvement of employees. As per article 2 of the Directive the employee participation is “any mechanism, including information, consultation and participation, through which employees’ representatives may exercise an influence on decisions to be taken within the company”.

 

The European Company is subject to the tax regime of the national legislation applicable to the company and its subsidiaries.

 

Luxembourg adopted the Law on European Companies and employee involvement in them on 25 August 2006. The Law also modernised the Act of 10 August 1915 governing Luxembourg commercial companies. The most significant innovations regarding the Luxembourg PLC include the introduction of a two-tier system and the sole shareholder. In practice, most Luxembourg PLCs have a one-tier system and are governed by a board of directors. The new dualist structure gives the investors an interesting alternative. Company founders and promoters have a possibility to appoint Luxembourg residents as the directors of the European Company, but are able at the same time to keep a certain degree of control through a supervisory body.

 

 

 

 

 

 

EUROPEAN COMPANY