Get Set for Euro Companies…

In October 2004, legislation will come into force creating a new European company. It will be the first to be based on EU law and will be called by its Latin name “Societas Europaea” or “SE” for short. The SE is intended to benefit those businesses with cross-border operations across the EU and will take the form of a limited liability company, with a minimum issued share capital share of euros 120,000. Companies operating in at least two different EU member states will be able to form an SE.

What are the likely advantages

• Reduced administration and legal costs
  
• Ability to respond quickly to business opportunities
  
• Operating throughout the EU with one set of rules and a unified management and reporting system

Ways to form an SE

• Merger of at least two PLCs from at least two EU member state
  
  
• Formation of a holding company by Ltds or PLCs from at least two EU member states
  
  
• Formation of a subsidiary by companies from at least two EU member states
  
  
• Conversion of an existing PLC, which for at least two years, had a subsidiary in another member state.

The SE and SMEs

Small and medium-sized enterprises (SMEs) are likely to encounter SEs as creditors, suppliers, customers and competitors and therefore an understanding of SEs will be vital. All SEs will have to provide for employee involvement in its management structures. But the EU laws on SEs will not cover issues such as taxation, employment or director liability and, on such matters, the SE will still be subject to the domestic laws in each jurisdiction in which it is operating.

Jordans has been involved in the DTI consultation process for the new legislation, has an in-depth understanding of the new European company structure and will be ready to provide incorporation services in relation to it, when the SE comes into effect.