European Company Statute "Societas Europeae": definition and explanations

A European Company (SE) is a company authorized to operate in each country of the European Union under a legal form accepted by all states.

The European Company Statute came into being in 2004, after decades of negotiations within the European institutions.

It is based on European Union law, and provides facilities for companies to limit their administrative costs, while offering them a legal structure adapted to the markets of each European Union country.

However, creating this status was not easy: should national laws be harmonized? Should they compete with each other? Should the most liberal legislation be favored to suit companies?

A genuine economic player with the facilities to evolve within the European space, it also has its own legal framework.

A look back at this atypical status, used by a growing number of companies.

What is a European company?

A European company is often used to facilitate mergers and restructuring between one or more companies located in the European Union.

But above all, it makes it possible to bypass many of the legislative obstacles imposed by regulatory differences between European countries.

It can therefore operate easily throughout the country by creating a network of branches.

How do you create a European company?

There are a number of constitution methods.

First of all, this status is reserved for European companies, i.e. those subject to the laws of an EU member state.

This is a sine qua non for creating this type of company.

You can choose from 4 options:

• By merger. One or more public limited companies incorporated under European law and having their registered office within the European territory may merge. To do so, at least two of the companies concerned must not be governed by the law of the same Member State.
• By setting up a holding company between public limited companies and private limited companies (SARL). To set up a holding company, the same conditions apply as in the previous case. If all the companies are governed by the law of the same Member State, owning a subsidiary or branch for at least 2 years in another Member State enables the creation of a European Company.
• By setting up a subsidiary. It is possible to create a subsidiary between companies, with a public institution or an association. The same conditions apply as above. The European company may be considered as the parent company or as a subsidiary within a group.
• By means of transformation. This option is only available to public limited companies with their registered office and management in an EU member state, and if they have had a subsidiary governed by the law of a member state for at least two years.

How does a European company work?

The operation of a société européenne is similar to that of a société anonyme under French law.

This status requires a minimum contribution of €120,000 divided into shares when the company is set up.

Each Member State is free to set its own minimum capital requirement. SEs registered in France are subject to the provisions governing the management and administration of SAs. The only exception is the quorum for management and supervisory bodies.

Similarly, shareholder meetings are governed by the same rules as in a public limited company. Relations between shareholders are much freer and more flexible.

It may be managed by a Board of Directors, which is responsible for the management and control of the company.

Alternatively, a supervisory board can be set up to oversee the management of the general management.

However, there is no uniform tax regime for the SE.

The fiscal sovereignty of the Member States has been respected, which is why the SE is subject to the same tax regime as any other public limited company. It is therefore subject to the taxes and levies of the Member State in which its activities are located, with no special tax advantages.

This rule applies with the exception of SEs formed by merger, which may be taxed in the country where they have their registered office.

The European company remains a very specific status despite its relatively widespread use.

On a day-to-day basis, it is of considerable practical interest. However, the absence of a harmonized tax framework raises fears of social dumping between member countries.

The European Company is particularly advantageous for companies operating on a European scale.