The European Company (SE) as a Vehicle for Corporate Mobility within the EU: A Breakthrough in European Corporate Law?

Abstract

The adoption of the Regulation establishing the European Company (Societas Europaea–SE) has been warmly welcomed, since the new pan-european company form is the only veritable vehicle of corporate mobility and community wide restructuring. The present contribution focuses on this ability of complete mobility within the European Union, which consists the most special and fascinating legal feature of the European company, an advantage that for a long time has been denied to national companies. However, this unique feature of the SE is already, two years after the Regulation having become operational, questionable. It has been argued that these advantages are only relative, since cross border mergers are already possible among domestic entities while the reincorporation mechanism, even though it is still a SE’s competitive advantage, suffers from complexity and the strict requirement of territorial correspondence between SE’s registered office and head office. After outlining the most important mechanisms of corporate mobility that the SE offers, the possibility for companies to merge across borders within the Union by forming an SE and the SE’s ability to transfer its seat to another Member State, we will discuss the recent developments that have occurred in European company law scene since the adoption of the SE Regulation and the consequences they will have on the potential mobility and attractiveness of the SE as a company form. “No subject in company law has required more efforts, involved more man-hours and received more attention than the statute for a European Company.” After almost forty long, negotiation-filled years the new European Company, the Societas Europaea (SE), is finally a reality. From October 2004, existing European companies have the possibility to use the Societas Europaea as a new corporate form and to enjoy the benefits it professes to provide. The adoption of the European Company (SE) Regulation has raised much criticism in the doctrinal debate. The Regulation is undeniably no longer the supranational European company of the past drafts but rather, as the final result of a series of compromises, a “hybrid company” combining harmonized substantial rules with references to national company laws. The multiple layers of regulation, ie, the statute itself, the laws implementing the European Company at a national level, national laws of the member states, and the European Company’s constituent documents, which govern the European Company are likely to lead to uncertainty, thereby decreasing rather than increasing the European Company’s attractiveness. Hence many commentators have regarded the new corporate form as a national company “of European type” rather than a stricto sensu European Company. Besides, the failure of the European Statute to address the problem of taxation will clearly undermine the number of firms incorporating as European companies. From a legal point of view though, the SE statute makes a number of significant innovations to traditional legal concepts. The most important is that for the first time under European company law, the European Company Regulation laid down a legal framework for corporate restructuring in two key areas: by facilitating crossborder mergers between companies to form a European Company and in enabling a European Company, once formed, to transfer its place of registration between Member States without winding up.