The Societas Europaea (SE) is a new legal entity that can be set up and registered in Great Britain from the 8th October 2004. It is a complex new legal structure that governs a new legal entity to cover the increase in Pan-European operations i.e. at least 2 of the companies involved must be Trading in different member states. This article only gives a brief outline and anyone wishing to form an SE should seek specialist legal advice or refer directly to the UK and European Statutes and regulations.
It is a requirement of SE's that their registered office and head office must be in the same member state and in some member states at the same address. An SE must have share capital and shareholders (as a PLC does). It may denominate it's share capital in any currency provided, if registered in the UK, at least £50,000 is denominated in sterling. An SE is required to have a minimum share capital of at least 120.000 Euros (conversion rate in the last day of the month preceding formation). However there are no regulations as to whether the share capital needs to be paid up or not.
The management of the company may either be 1 tier an "administrative organ" or 2 tier with a "management organ" and a separate "supervisory organ".
There are five principle ways of forming an SE: -
1. Merger of 2 or more public limited companies.
2. A holding SE governing 2 or more private public limited companies including SE's.
3. A subsidiary SE including 2 or more companies, firms or other legal bodies.
4. A subsidiary SE under article 3(2)
5 Transformation of an existing PLC.
Across the European Union public limited companies go under different
names in particular " La Societe Anonyme, Die Aktiengessellschaft or a PLC" in the UK and Ireland. Any commercial bodies forming an SE must have their registered offices in the EU although their head offices need not be in the EU provided there is a real and continuous link with the economy of a member state.
However an SE is created, it cannot be registered and bought into existence until: -
A. An agreement has been reached for employee involvement in company decisions; or
B. The special negotiating body has decided to rely on the rules for employee involvement and consultation in force in the member states where the SE has employees; or
C. No agreement has been reached within the relevant period of time such that the standard rules apply.
The key points in looking at whether an SE structure may be suitable can be looked at when thinking of a formation by merger or the formation of a holding SE. Where 2 or more PLCs or existing SE's wish to merge to form an SE it is necessary that at least 2 of them are governed by the laws of different member states. It may be conducted by acquisition with the acquiring company becoming an SE or by the formation of a new company with the merging company ceasing to exist. Before the mergers can take effect, draft terms for the merger must be drawn up by the merging companies and presented to general meetings of their shareholders for approval. In Great Britain the Secretary of State for Trade and Industry and the High Court may appose the merger in the public interest. Once all pre-merger acts and formalities have been completed the High Court must issue a certificate confirming that fact.
If a holding SE is being formed, 2 or more private or public limited companies (including existing SE's) formed under the law of a member state and with a registered office in a member state may form an SE by promoting a formation of a holding SE. The companies promoting the formation must become majority owned by the SE. At least 2 of the companies must be governed by the laws of a different members state or have had a subsidiary so governed. Again, it is necessary for draft terms for the formation and an explanatory report to be drawn up by the companies and presented to general meetings of their shareholders. The report must explain and justify the legal and economic aspects of the formation and indicate the implications for shareholders and for employees of the adoption of the form of a holding SE. If any registered company in Great Britain is involved, wherever the holding SE will be registered, the draft terms for the formation must be filed at Companies House at least 1 month before the companies general meeting. Once the draft terms have been approved the shareholders have 3 months to notify the company whether they intend to contribute their shares to the formation of the holding SE. If the minimum proportions of shares are not assigned within that time the SE cannot be formed.
One of the aims is allowing SE's to establish is that they should be able to transfer their registered office from 1 member state to another without being wound-up. Clearly, the relevant authorities in any member state where an SE is registered can appose such transfer. However, an SE registered in England and Wales cannot transfer its registered office to Scotland or Northern Island or visa versa.
If the company is formed as an SE it must not use any other designation for example "se" or "S.E". An SE cannot include in its title any other company type designation such as limited, unlimited or public limited company.
The administration and management of an SE depends on whether it operates a 1 or 2 tier system. In a 1 tier system the administrative organ manages the SE. It must meet at least once every 3 months and a chairman must be appointed from its members. The number of members of the administrative organ may be laid down in the statutory documentation regulating the SE but by law it must have at least 2 members. If employee participation is regulated in accordance with the existing directive, with no other agreement reached with employees the minimum number is 3.
There is no upper limit.
In the 2 tier system the management organ manages the SE and a distinct "supervisory organ" supervises the work of the management organ. Generally, a person may not be a member of both. The supervisory organ cannot be involved in management although a member of the management organ maybe appointed to the supervisory organ if allowed by the company statutes. Again, there is no upper limit on the number of members of each organ but they both must have at least 2 members.
These limits may however vary from member state to member state. A company may be a member of one of the SE's organs but a human being must be designated to exercise the functions of the organ.
In many other respects the rules governing an SE once it is established in the UK are similar to the rules governing PLC's. Clearly, this article does not attempt to give full details of the law but only a brief outline of this new
Pan–National European structure.
Simon S. Aronsohn
Law Firm Ltd
3rd Floor,
Queens House
180 Tottenham Court Road
London W1T 7PD
Tel: +44(0)20-7907-1460
Fax: +44(0)20 7907 1463
www.Lawfirmuk.net
inforu@Lawfirmuk.net
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