Company registration, Other Legislation : The European Company Societas Europaea (SE)

The European Company Societas Europaea (SE)

The European Company Societas Europaea (SE) is actually the decree, which states the regulations for forming a European Company. The regulation has come into existence more than 30 years after the initial plan. The regulation is also known by the Latin term Societas Europaea.  The Council Regulation Act and the Council Directive supplementing the “ Statute for a European Company” were primarily aimed at creating a ‘European Company’ with its own law-making framework. 

How to form a “ European Company” ?

A European Company as per the council regulation can be formed in 4 ways. First of all there can be a merger, secondly a joint subsidiary can be formed, thirdly a holding company can be created and lastly, a public limited company formed under the national law can be converted. Only the public limited companies belonging to the Member states can form a merger. Creation of a SE holding firm is allowed to private and public limited companies, which have their registered offices situated in any of the member states and branches or subsidiaries in any of the member states. A joint subsidiary can be formed under similar circumstances to legal entities, which are governed, by private or public law.

 What is the minimum capital required by a SE?

An SE must have a capital of EUR 120,000.

Which should be the registered office of an SE?

As per the statutes, the registered office of an SE must be the centre of its operation. It is usually the address from where the central administration is handled. The location of the registered office can be easily transferred within the community. There is no need to dissolve the company if you intend to change the location of the registered office from one Member state to the other.

Where will you furnish information regarding registration and liquidation?

All information regarding liquidation and registration has to be disclosed to the Official Journal of the European Communities for information purpose. Each SE must be registered in the State, where the registered office is located.

What are the important Statutes related to SE?

The SE statutes clearly say that an SE must have a governing body and a supervisory and a management board or an administrative board.

If the SE is following a two-tier system, a management board administers it. The members of the management board have the right to represent the company in legal proceedings and third-party dealings. The members of the management board are appointed and terminated by the supervisory board. No individual can be a member of the supervisory and management board simultaneously.

However, the supervisory board can appoint a member belonging to the management board when there is a vacancy. During that time, the individual will be functioning only as the member of the management board and all his supervisory functions are suspended. This is the two tier system as the statutes.

In a single tier system, an administrative board supervises an SE. They have similar powers like that of the members of the management board. It has the power to delegate managerial activities only to its members.

The following activities need approval of the supervisory board or consideration of the administrative board:

• Investment project that needs an amount more than the proportion of subscribed capital.
• Acquisition, setting up or closing down of businesses or parts of the businesses where clearance or purchase price is more than the amount of subscribed capital.
• Raising or granting loans, matters related to debt securities, supposition of accountability of a 3rd party or suretyship of a 3rd party where the monetary value is more than the subscribed capital
• Termination of performance and supply contracts where the entire turnover is more than the turnover percentage of the previous fiscal year.

It is to be noted that the Statutes of the SE determine the percentage referred above. It might vary from 5% to 25%.