THE EUROPEAN COMPANY

 

The legal basis can be found in the Act of 25 August 2006, which came into force on 3 September 2006.

The objective is to create a single company type which is governed entirely by a single set of rules across the whole of Europe, and not subject to national rules.

The European Company ("S.E.") which has its registered office in Luxembourg is not a new form of commercial company but a variant of the société anonyme with some specific differences to the société anonyme, as regards the circumstances in which a European Company can be created and the rules which govern it, such rules being justified by the essentially international purpose of the European Company.

 

The creation of a European Company under Luxembourg law

 

A European Company may only be formed in one of four sets of circumstances, clearly defined by the act, presupposing a transnational community element:

- by the formation of a European Holding Company, whereby sociétés anonymes (public limited companies) or Sàrls (private limited companies) incorporated under the law of a Member State are brought together, if:
- at least two or more of them pertain to different Member States or
- have had a subsidiary or branch office located in another Member State for at least two years
- by the formation of a subsidiary in the form of a European Company by commercial companies, non-commercial partnerships or legal persons governed by public or private law according to the law of a Member State, if:
- two or more of them pertain to different Member States or
- have had a subsidiary or branch office located in another Member State for two years
- by a merger of already existing sociétés anonymes, where two or more of them pertain to different Member States
- by a change in company form of a société anonyme into a European Company, if it has for at least two years had a subsidiary incorporated under the law of a Member State of the European Economic Area.

It should be noted that a European Company does not acquire legal personality until the date of its registration with the Trade and Company Register (and not on the date of execution of the notarised deed (the articles of association) as in the case of other commercial companies).

In the case where the companies involved in the creation of a European Company employ staff, the Act of 25 August 2006 stipulates a long consultation process with the representatives of the workers prior to their employment with the European Company. A detailed study of such formalities would reach far beyond the scope of this report.

The European Company is a company with share capital in which each shareholder is committed to the level of capital that he subscribes. The share capital, which must be subscribed in Euros, must be a minimum amount of 120,000 Euros.

The operating rules of the European Company (powers of the organs of the company, rules relating to issuing securities, nullity, dissolution, liquidation, bankruptcy, etc.) are in principle the same as for an ordinary société anonyme.

One of the great advantages of the European Company is its intra-community mobility: it is actually permitted to transfer its registered office from one Member State to another Member State, without exception, respecting certain formalities with a view to protecting the shareholders, holders of securities and creditors of the European Company. Such a transfer does not give rise to dissolution or to the creation of a new legal entity.

The change in nationality of a Luxembourg European Company only requires a majority of two thirds of the share capital.

 

Tax aspects

 

A company with share capital by nature, the European Company benefits from Directive 90/435/EEC of 23 July 1990 on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States, such as the "Merger Directive", the scope of application for which has been extended to cover transfers of registered offices of European Companies.

 

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