Setting up of a Societas Europaea (SE) - The European Company
On 8 October 2004, Council Regulation No 2157/2001 on the Statute for a European Company or Societas Europea (SE) (the “Regulation”) entered into force in the EU. The Regulation was also integrated into the EEA (European Economic Area) Agreement in 2002 meaning that in addition to the EU Member States, an SE can also operate in the EFTA (European Free Trade Area) states, i.e. Switzerland, Iceland, Norway and Liechtenstein.
No subsidiary legislation (regulations) has been passed in Malta in this regard, and therefore the MFSA are directly looking at the EU Council Regulation 2157/2001 of 8 October 2001 on the Statute for a European Company as directly applicable as part of domestic law automatically. So far in Malta, we’ve only had a couple of SE companies, registered under the same register as the normal companies however instead of a ‘C’ number, they are given an ‘SE’ number.
Formation and structure
An SE acquires legal personality on the date of its registration. If its registered office is in Malta, then its home state would be deemed to be Malta and therefore regulated by the laws of Malta. It is important to note that it should be treated as if it were a public limited company formed in accordance with the laws of Malta. Upon registration the company adds “SE” at the end of its chosen name. An SE can be registered in any member state of the European Union, and the registration can be easily transferred to another member state. There is no EU-wide register of SEs (an SE is registered on the national register of the member state in which it has its head office), but each registration is to be published in the Official Journal of the European Union. Through the setting up of an SE, companies established in more than one Member State (or EFTA state), can merge and operate throughout the EU on the basis of a single set of rules and a unified management and reporting system.
Moreover, a company can restructure efficiently with minimum cost and can move across borders as circumstances may warrant. The transfer of a registered office of an SE will not result in the creation of a new legal entity. The registered office of an SE must be located within an EU or EEA state and may be relocated to another EU or EEA state. An SE must have share capital and shareholders whose liability is limited in similar manner to that of a public limited company. Regardless of the currency in which it is expressed, an SE is required to have a minimum amount of subscribed share capital of the equivalent of at least EUR 120,000. An SE may only allot shares which are paid up to at least a quarter of their nominal value and the whole of any premium (except as part of an employees' share scheme).
An SE may be formed in one of the following ways:
1. Merger or Consolidation
Public limited companies with a registered office within the EU may form an SE if at least two of the merged companies are governed by the law of different states. Draft terms of merger must be drawn up and should include the following particulars:
- the name and registered office of each of the merging companies together with those proposed for the SE;
- the share-exchange ratio and the amount of any compensation;
- the terms for the allotment of shares in the SE;
- the date from which the holding of shares in the SE will entitle the holders to share in profits and any special conditions affecting that entitlement;
- the date from which the transactions of the merging companies will be treated for accounting purposes as being those of the SE;
- the rights conferred by the SE on the holders of shares to which special rights are attached and on the holders of securities other than shares, or the measures proposed concerning them;
- any special advantage granted to the experts who examine the draft terms of merger or to members of the administrative, management, supervisory or controlling organs of the merging companies;
- the statutes of the SE;
- information on the procedures by which arrangements for employee involvement are determined (pursuant to Council Directive 2001/86/EC of 8 October 2001 supplementing the Statute for a European company with regard to the involvement of employees).
- A merger carried out as by acquisition shall have the following consequences ipso jure and simultaneously:
- all the assets and liabilities of each company being acquired are transferred to the acquiring company;
- the shareholders of the company being acquired become shareholders of the acquiring company;
- the company being acquired ceases to exist;
- the acquiring company adopts the form of an SE.
2. Formation of a Holding Company
Public and private limited companies with a registered office in the EU may form a holding SE if at least two of the companies are governed by the law of different states, OR if one of the companies has had a subsidiary governed by the law of another state for at least two years.
Before forming a holding SE, draft terms for the formation and an explanatory report must be drawn up by the companies promoting the formation, and presented to general meetings of their shareholders. The explanatory report must explain and justify the legal and economic aspects of the formation and indicate the implications for the shareholders and for the employees of the adoption of the form of a holding SE.
A merger carried out by a new formation will have the following consequences ipso jure and simultaneously:
- all the assets and liabilities of the merging companies are transferred to the SE;
- the shareholders of the merging companies become shareholders of the SE;
- the merging companies cease to exist.
3. Formation of a Subsidiary
Two or more companies, firms or other legal bodies formed under the law of a Member State with registered offices and head offices within the Community may form an SE by subscribing for its shares. At least 2 of the companies or firms must be governed by the laws of a different Member State or for 2 years have had a subsidiary company governed by the laws of another Member State or had a branch in another Member State.
A public limited company registered in Malta may transform into an SE registered in Malta provided the public limited company has for 2 years had a subsidiary governed by the laws of another Member State. Before the transformation can take effect, the public limited company must prepare draft terms of conversion and an explanatory report and present them for approval to a general meeting of shareholders. The explanatory report must explain and justify the legal and economic aspects of the conversion and indicate the implications for the shareholders and for the employees of the adoption of the form of an SE. In order to be approved, 75% of the votes cast at the general meeting must be in favour of the conversion.
Transferring registration from one Member State to another
One of the aims of the Regulation is that an SE should be able to transfer its registered office to another Member State without being wound up. An SE registered in Malta may transfer its registered office to another Member State and, conversely, an SE registered in another Member State may transfer its registered office to Malta. The principal requirement is the need to obtain shareholder approval.
No decision to transfer can be taken for 2 months after a proposal for the transfer has been published. During this time, the relevant authorities in the Member State where the SE is registered can oppose the transfer. The transfer can only take place once the authorities in both Member States are satisfied that all the acts and formalities have been completed. The registry to which the SE is transferring relies on a certificate issued by the "old registry" confirming they are complete. The effective date of the transfer is the date on which the SE is registered in the Member State to which it is transferring.
The first general meeting of an SE's shareholders must be held within 18 months of the company's incorporation. Thereafter, a general meeting must be held at least once in each calendar year within 6 months of the end of the company's financial year. General meetings may be convened at any time by the administrative organ, management organ or supervisory organ. Shareholders holding at least 10% of the SE's subscribed capital (or some lesser percentage, if this is set down in the statutes) may request the SE convene a general meeting, stating in the request the items to be put on the agenda. Shareholders holding at least 5% of the SE's subscribed share capital may request that additional items be placed on the agenda of a general meeting.
Council Directive 2001/86/EC of 8 October 2001 supplementing the Statute for a European company with regard to the involvement of employees entered into force simultaneously with the Regulation, and its aim is to ensure that employees have a right of involvement in decisions affecting the SE such that it provides a “mechanism including information, consultation and participation, through which employees' representatives may exercise an influence on decisions to be taken within the company”.
Annual Accounts and Taxation and Liquidation
Save in circumstances where the SE is providing specialized services such as financial or insurance services, an SE is governed by the rules pertaining to the preparation and submission of accounts, winding up and to tax treatment as are applicable to a public limited liability in the Member State in which the registered office of the SE is located.