European law

European companies: formationThe EU Council has adopted Regulation (EC) 2157/2001 on the statute for a European company (OJ L 294, 10 November 2001, pp1 to 21).

Publication of the regulation is accompanied by publication of Directive 2001/86/EC (see following) laying down the rules on the involvement of employees in European companies; and the provisions of the directive are stated to form 'an indissociable complement to [the] regulation [which] must be applied concomitantly'.

The regulation does not expressly lay down a comprehensive regulatory code for European companies; it incorporates many facets of the national law of the individual member state in which the European company is registered so far as that law regulates public companies with limited liability in that state (referred to below simply as 'national law').

A European company is known as a Societas Europea, abbreviated to 'SE'; the abbreviation must precede or follow the name of the company and, other than in respect of legal entities already using the abbreviation, its use will be restricted to European companies.

Such a company will be able to be set up within the Community in the form of a European public limited liability company in accordance with the regulation and, from its registration, will have legal personality.

Such a company will have to have a share capital expressed in euros (at least 120,000, which is approximately 74,000; larger subscribed capital may be required by national law for certain categories of business).

The company may be formed by merger of existing companies, or by the formation of a holding company or of a subsidiary, or by the conversion of an existing public limited liability company, provided that the existing company has had (for at least two years) a subsidiary governed by the law of another member state; whatever the manner of its formation, the European company must include companies from more than one member state.

A European company will be able to set up one or more subsidiaries which may also be European companies.

The capital structure of a European company will be governed by national law; member states outside the Eurozone may require European companies registered with them to express their capital in the same currency as their public limited liability companies (although the European companies would have the option of expressing their capital in euros as well).

The registered office of a European company will be in the same member state as its head office, but may be transferred to another member state in accordance with the regulation without winding up the company or creating a new legal entity.

A European company will be governed by the regulation, by its own statutes (so far as expressly authorised by the regulation), and (in respect of matters not so covered) by national laws implementing EC measures relating specifically to European companies, by national law of the appropriate member state, and by the company's own statutes in the same way as a public limited liability company in the place where it has its registered office.

The formation of a European company will be governed by national law.

A European company will be registered in the appropriate register in the member state in which it has its registered office; its documents and particulars will be published in accordance with national law.

Notice of registration will be published in the Official Journal of the European Communities.

Subject to the provisions of the regulation, a European company will be treated in the member state where it has its registered office as if it were a public limited liability company formed in that state.

The structure of a European company will be either two-tiered (that is, a general meeting of shareholders, plus a supervisory board and a management board) or one-tiered (a general meeting of shareholders plus an administrative board).

Members of the boards will be appointed for a period laid down in the company's statutes, not exceeding six years; but they may be re-appointed for further such periods.

The powers of the general meeting of shareholders, so far as not laid down in the regulation, will be such as are conferred on general meetings by the national law implementing Directive 2001/86/EC, and such powers as are conferred by national law on general meetings of public limited liability companies.

With the exception of credit or financial institutions and insurance undertakings (in respect of which specific provision is made), the preparation of annual and consolidated accounts for European companies will be governed by the provisions of national law; similarly, national law will apply to their winding-up, etcetera.

The regulation will enter into force on 8 October 2004 (three years after it was adopted).

European companies: employee involvementThe EU Council has adopted Directive 2001/86/EC (OJ L 294, 10 November 2001, pp22 to 32) supplementing the statute for a European company with regard to the involvement of employees.

National implementing measures must be in place by 8 October 2004, although these may take the form of agreements between employers and employees.

Arrangements for the involvement of employees will be established in all European companies either in accordance with the negotiations envisaged by the directive or by default provisions.

As soon as possible after plans are published for the formation of a European company, steps will have to be taken to start negotiations with representatives of employees of all the companies concerned on arrangements for the involvement of employees in the proposed European company; these negotiations will be conducted through a special negotiating body representing the employees of the participating companies (membership of that body will be by election or appointment in accordance with the respective national laws of the member states).

The special negotiating body and the appropriate bodies of the participating companies will seek to reach a written agreement on arrangements for employee involvement in the European company (incorporating specified matters); but the special negotiating body may (by a two-thirds majority) decide not to open negotiations but to rely instead on existing national rules for informing and consulting employees of the member states where the European company will have employees; similarly, the special negotiating body may terminate the negotiations with the same consequence.

Member states will have to adopt 'standard rules' on employee involvement (modelled on rules annexed to the directive).

Such standard rules will apply from the date of the registration of a European company if the parties to negotiations fail to reach agreement within six months (subject to a possible extension to one year), or the parties agree to the adoption of such rules.

The standard rules relate to the composition of the body representing employees, the rules on information and consultation, and the rules on employee participation; but (in general terms) the rules on employee participation will only be applicable where there previously existed an element of such participation in the one of the companies which form the European company.

The directive makes express provision as to issues of confidentiality and for the 'protection' of employees involved in the various procedures envisaged.