The Societas Europaea, in other words: the European company (hereinafter: ‘SE’) may be less known than its famous sisters, the NV and the BV (public limited company and private limited company, respectively), but that doesn’t mean that it is less interesting. The SE is based on the public limited company as it is known in the Member States and very similar to it. That is why it is sometimes called the European public company.
As a company form the SE originates from Council Regulation (EC) No 2157/2001 of 8 October 2001 on the statute for a European company (SE). The purpose of the regulation was to create a legal person that corresponds with the economic reality under which many companies operate their businesses on a cross-border basis and perform their activities in several Member States. Within this scope, the rules aim at simplifying mergers and the formation of holding companies or joint subsidiaries for companies established in several Member States.
In the former Belgian Companies Code, the rules on the SE could be found in Book XV. In the new Belgian Companies and Associations Code (CAC) they are also in Book XV, however in a simplified form. The new Book XV is more compact and refers specifically to the rules of Book VII on the NV (public limited company) that, save from explicit derogation from those provisions, also apply to the SE.
For instance, in an SE with a two-tier board structure, based on section 15:19 of the CAC the management board is authorised for general company policy and strategy and has all the powers reserved to the board of directors, whereas in an NV such authority is vested in the supervisory board.
Although the Belgian legislator is entitled to supplement the provisions of the Regulation, the new CAC does not contain any fundamental changes to the SE. As this company form is seemingly somewhat of a fish out of water, we will briefly explain the principles it entails below.
SEs are companies whose capital is divided in shares, just like in an NV (public limited company). The required minimum capital is EUR 120,000, of which at least EUR 61,500 must be paid-up.
There are different ways of forming an SE:
- through merger, if at least two of the public limited companies involved are established in different Member States;
- through formation of a holding SE, if at least two of the forming public limited companies and companies with limited liability are located in different Member States, or if each of them has been the owner of a subsidiary or branch office located in another Member State for at least two years;
- through formation of a joint subsidiary, if at least two of the companies involved are governed by the laws of different Member States, or if each company has been the owner of a subsidiary or branch office located in another Member State for at least two years;
- public limited companies may be converted to an SE if they have been the owner of a subsidiary located in another Member State for at least two years. Likewise, an SE may be converted back into an NV;
- through formation of one or more subsidiaries in the form of an SE by an existing SE. Such subsidiary may have one single manager, even if the laws of the Member State where the subsidiary has its registered office dictate that the mother company should consist of more than one single shareholder.
In our first Newsletter we already mentioned that one of the purposes of the CAC is to align Belgian company law to European developments. The introduction into Belgian company law of the single-director public company is a clear example of the influence of European company law, where the one-director company principle has been common for quite some time.
Even for companies whose main administration is not in the European Union, Member States may decide that they may take part in the formation of an SE. However, in that case the company involved must have been incorporated in accordance with the laws of the Member State; it must have its registered office in that Member State; and it must have a real and long-term connection with the economy of a Member State.
An SE’s registered office must be located in the same Member State as the central administration. Again we see the influence of European law on the CAC: the latter has incorporated the ‘registered office doctrine’ into Belgian law, whereas previously our laws applied the ‘real seat doctrine’.
In addition to Regulation 2157/2001, the law of the Member State where the SE has its registered office applies to the SE.
If a company is established through merger of at least two companies located in different Member States, for both companies the incorporation and publication requirements of the merger proposition will be subject to the law of the Member State where the individual companies are located and that applies to mergers of public limited companies in that Member State.
Even if another company controls the SE, is its sole shareholder and is not located in the Member State where the SE has its registered office, the law of the Member State where the SE has its registered office will apply, not the law of the Member State where the controlling company is located.
The Regulation does not address insolvency law. Consequently, in the event that an SE is declared liquidated, dissolved or bankrupt only the laws of the Member State where it has its registered office will apply.
According to Regulation 2157/2001, SEs may be structured to have either a one-tier or a two-tier management body. (For more information on the one-tier and two-tier management systems, please consult our newsletter dedicated to Book VII. You can find it on our website.)
Earlier on in this article we explained that NVs and SEs differ with respect to the distribution of power between the management board and the supervisory board.
In the Member State where the SE has its registered office the directors of the SE are subject to the same liability regime as directors of NVs in that Member State.
In the next edition we will discuss Book 16: the European Cooperative Society (SCE).