Societas Europaea

General Information

In this respect, the Act states as follows:

"The Minister may by regulations provide for the formation, constitution and regulation of European Companies (SE). In this subarticle, a European Company (Societas Europaea or SE) refers to a company set up within the territory of the European Union on the conditions and in the manner laid down in Council Regulation 2157/2001 of 8 October 2001 on the Statute for a European Company (SE)."

While no subsidiary legislation (regulations) has been passed in Malta for the above purpose, the EU Council Regulation 2157/2001 of 8 October 2001 on the Statute for a European company (Official Journal of the European Communities, L294, 10/11/2001, pp. 0001-0021) applies as part of domestic law automatically and directly. While no subsidiary legislation has been promulgated so far in Malta, it is understood that the competent authorities in Malta intend to promulgate secondary legislation relating to SEs but it is not yet clear when the relevant secondary legislation will be promulgated.

Incorporation

The SE is a public limited liability company which has a distinct and separate legal personality from that of its members. In such a case, the shareholders are not liable beyond the amount subscribed, which is the normal rule for limited liability companies. The SE may be established in one of four ways:

* by way of merger; or

* through the creation of a holding company; or

* through the creation of a subsidiary company; or

* by conversion of a public limited liability company previously formed under national law.

The European Company Statute lays down a number of provisions to regulate these four methods of formation of a SE.

In order for a SE to be formed, certain requisites must be satisfied. For instance, the SE must be a public company and, therefore, able to list its shares; accordingly, it requires more stringent rules for the protection of its shareholders.

A SE acquires legal personality on the date of its registration. It is registered in the Member State in which it has its registered office in a register designated by the laws of that Member State. It should be treated in every Member State as if it were a public limited company formed in accordance with the law of the Member State in which it has its registered office. Upon registration, the name of a SE shall be preceded or followed by the abbreviation "SE". 

The SE may, subject to a prescribed procedure, and with the approval of its shareholders, transfer its registered office to another Member State without being wound up and without losing its legal personality. However, in such a case, the SE would have to change its statute to adapt to the national laws of the receiving Member State. This transfer may be blocked if any of the Member States' competent authorities oppose such transfer for reasons of public interest within two (2) months following the publication of the transfer proposal.

A Member State has the option of requiring a SE registered in its territory to locate its head office and registered office in the same place. The Member State in which the SE's registered office is situated must employ the requisite measures to ensure that the transgressing SE which fails to regularise its position is liquidated.

A company the head office of which is not in the Community should be allowed to participate in the formation of a SE provided that company is formed under the law of a Member State, has its registered office in that Member State and has a real and continuous link with a Member State's economy according to the principles established in the 1962 General Programme for the abolition of restrictions on freedom of establishment. Such a link exists in particular if a company has an establishment in that Member State and conducts operations therefrom.

A SE is also able to convert to a public limited liability company governed by the law of the Member State in which its registered office is situated. No decision on conversion may be taken before two (2) years have elapsed since its registration or before the first two sets of annual accounts have been approved.

The winding up, liquidation, insolvency, cessation of payments and similar procedures, a SE is regulated by national rules which would apply to a public limited company formed according to the laws of the Member States where the SE's registered office is situated, including the provisions related to decision-making by the General Meeting.

A SE may itself set up one or more subsidiaries in the form of SEs. The provisions of the law of the Member State in which a subsidiary SE has its registered office that require a public limited liability company to have more than one (1) shareholder shall not apply in the case of the subsidiary SE. The provisions of national law implementing the twelfth Council Company Law Directive (89/667/EEC) of 21 December 1989 on single-member private limited liability companies (Official Journal of the European Communities, L 395, 30/12/1989, p. 40) shall apply to SEs mutatis mutandis.

The registration and completion of the liquidation of a SE must be disclosed for information purposes in the Official Journal of the European Communities.

A SE shall also comprise of a General Meeting of the shareholders. A SE shall hold a General Meeting at least once each calendar year, within six (6) months of the end of its financial year unless the law of the Member State in which the SE's registered office is situated applicable to public limited liability companies carrying on the same type of activity as the SE, provides for more frequent meetings. A Member State may, however, provide that the first General Meeting may be held at any time in the eighteen (18) months following a SE's incorporation.

Capitalisation and Financing

The capital of a SE shall be divided into shares. The capital of a SE shall be expressed in Euro. A SE must have a subscribed capital of at least €120,000. The laws of a Member State requiring a greater capital for companies carrying on certain types of activity shall apply to SEs with registered offices in that Member State.

Board Structure

A SE must be efficiently managed and properly supervised.

A SE has a choice with regards to the type of board structure:

* a two-tier structure, consisting of the Management Organ and the Supervisory Organ; or

* a one-tier system, consisting of a single organ that is entrusted with the management and administration of the affairs of the SE.

Although a SE should be allowed to choose between the two systems, the respective responsibilities of those responsible for management and those responsible for supervision should be clearly defined.

Annual Costs

Annual costs will arise in the form of legal, information and control costs, especially as regards accountancy, auditing and publicity. Other possible costs are legal and tax consultancy and costs for various supervisory and managing individuals. The amount of these costs varies and depends on size, structure and equity requirements of the company. Costs tend to be lower for partnership structures than for corporations. 

Corporation Taxation and Financial Reporting

The SE Regulation does not cover other areas of law such as taxation, competition, intellectual property or insolvency. The provisions of the Member States' law and of Community law are therefore applicable in these areas and in other areas not covered by the SE Regulation.

A SE shall be governed by the rules applicable to public limited liability companies under the law of the Member State in which its registered office is situated as regards the preparation of its annual and, where appropriate, consolidated accounts including the accompanying annual report and the auditing and publication of those accounts.

A SE which is a credit or financial institution shall be governed by the rules laid down in the national law of the Member State in which its registered office is situated in implementation of Directive 2000/12/EC of the European Parliament and of the Council of 20 March 2000 relating to the taking up and pursuit of the business of credit institutions (Official Journal of the European Communities, L 126, 26/05/2000, p. 1) as regards the preparation of its annual and, where appropriate, consolidated accounts, including the accompanying annual report and the auditing and publication of those accounts.

A SE which is an insurance undertaking shall be governed by the rules laid down in the national law of the Member State in which its registered office is situated in implementation of Council Directive 91/674/EEC of 19 December 1991 on the annual accounts and consolidated accounts of insurance undertakings (Official Journal of the European Communities, L 374, 31/12/1991, p. 7) as regards the preparation of its annual and, where appropriate, consolidated accounts including the accompanying annual report and the auditing and publication of those accounts.

In tax matters, a SE is treated the same as any other multinational, i.e. it is subject to the tax regime of the national legislation applicable to the company and its subsidiaries. A SE is subject to taxes and charges in all Member States where its administrative centre is situated. Winding-up, liquidation, insolvency and suspension of payments are in large measure to be governed by national law. A SE which transfers its registered office outside the Community must be wound up on application by any person concerned or any competent authority.

Employee Participation in Corporate Bodies

Council Directive 2001/86/EC of 8 October 2001 supplementing the Statute for a European company with regard to the involvement of employees (Official Journal of the European Communities, L294, 10/11/2001, p. 22) has already been implemented in Malta by the Employee Involvement (European Company) Regulations, 2004 (Legal Notice 452 of 2004, as amended by Legal Notice 427 of 2007). This introduces into Maltese law the provisions of Council Directive 2001/86/EC on employee-related issues. The SE Regulation provides that the provisions of Council Directive 2001/86/EC form an indissociable complement to it and must be applied concomitantly.

Directive 2001/86/EC is designed to ensure that employees have a right of involvement in issues and decisions affecting the life of their SE. Other social and labour legislation questions, in particular the right of employees to information and consultation as regulated in the Member States, are governed by the national provisions applicable, under the same conditions, to public limited liability companies.

Sources:

Europa http://europa.eu/

Malta Ministry for Justice and Home Affairs http://www2.justice.gov.mt/lom/home.asp