European Company SE (Societas Europaea)

[2fire]

Dear OCT members,

Has anyone had experience with a European Company (SE)?

How does it work?

For example, if I have a factory in EU Country A, sales offices in EU Countries B and C, and I decide to merge them into a European Company (SE) based in Country D, what will happen to the merged companies in A, B, and C? Will they become branches of the SE, or will they remain as SE entities with local offices and functions?

This process is somewhat confusing and not well described in publicly available resources. I would be glad if someone can explain it.

 

[JohnLocke]

It isn't different in Sweden like in any other European country, where you have substance you get taxed. For a setup like the one you describe you need professional assistance in corporate tax planning if you don't want to risk to pay tax in country A,B,C !

 

[2fire]

It isn't different in Sweden like in any other European country, where you have substance you get taxed. For a setup like the one you describe you need professional assistance in corporate tax planning if you don't want to risk to pay tax in country A,B,C !

Dear JohnLocke,

By SE I didn’t mean Sweden, I mean novel legal form in Europe:

https://europa.eu/youreurope/busine...s/setting-up-european-company/indexamp_en.htm

 

[JohnLocke]

True, read your post wrong sorry.

 

[Forester]

Dear OCT members,

Has anyone had experience with a European Company (SE)?

How does it work?

For example, if I have a factory in EU Country A, sales offices in EU Countries B and C, and I decide to merge them into a European Company (SE) based in Country D, what will happen to the merged companies in A, B, and C? Will they become branches of the SE, or will they remain as SE entities with local offices and functions?

From what I have understood, the former is true – only one subject will arise from merging.
But I have not faced this in practice. As with any EU regulation issue, consulting a specialised lawyer is IMO higly recommended (as the many of EU regulations are pure legal mess, taking into account their local modifications).

 

[mraleph]

Dear OCT members,

Has anyone had experience with a European Company (SE)?

How does it work?

For example, if I have a factory in EU Country A, sales offices in EU Countries B and C, and I decide to merge them into a European Company (SE) based in Country D, what will happen to the merged companies in A, B, and C? Will they become branches of the SE, or will they remain as SE entities with local offices and functions?

This process is somewhat confusing and not well described in publicly available resources. I would be glad if someone can explain it.

Wau, truly a regulated stakeholder capitalism.

SE needs to have an employee participation in the company bodies, apart from other mandatory requirements

Relevant national authorities from some EU countries - Belgium, Bulgaria, Cyprus, Denmark, France, Greece, Latvia, the Netherlands, Poland, Portugal, Spain and Sweden - might oppose the transfer of registered office during the 2 months' notice period on the grounds of public interest.

What is the actual benefit from such structure?

 

[2fire]

What is the actual benefit from such structure?

If I am correctly understanding the actual benefit that you don’t need to setup subsidiaries or branches and you can operate locally in each EEA member. Another benefit which seems to me interesting is that you will have nice solid financial statements and you can benefit with easier financing for your needs.

There is must be a some reasons why those big names have SE: Allianz SE, E.ON SE, SAP SE, BASF SE, Fresenius SE & Co. KGaA, Airbus SE, Schneider Electric SE

As it is mentioned these companies have chosen the SE form to facilitate their operations across multiple EU countries, benefiting from streamlined regulations and increased mobility within the EU single market.

 

[daniels27]

I personally would expect the legal fees to be substantially higher than using local companies as there are very few SE companies.

While for big names there will be benefits, I expect those benefits to be outweighed by the high base costs for pretty much anything without assets and turnover in the higher millions.

I would recommend the German Wikipedia article, it gives a good explanation of the advantage of having a SE holding, with subsidiaries all over Europe. You can then easier move the SE holding between member stays. Banks and insurances can form subsidiaries and are then only regulated in the country if the seat is management.

If you are about to proceed, I would check with a Czech lawyer at 80% are incorporated in Czechia.

 

[mraleph]

If I am correctly understanding the actual benefit that you don’t need to setup subsidiaries or branches and you can operate locally in each EEA member. Another benefit which seems to me interesting is that you will have nice solid financial statements and you can benefit with easier financing for your needs.

There is must be a some reasons why those big names have SE: Allianz SE, E.ON SE, SAP SE, BASF SE, Fresenius SE & Co. KGaA, Airbus SE, Schneider Electric SE

As it is mentioned these companies have chosen the SE form to facilitate their operations across multiple EU countries, benefiting from streamlined regulations and increased mobility within the EU single market.

I've introduced myself to EU regulation establishing Societas Europeae. That structure looks like an EU integrative mechanism with several precluding requirements - one a mandatory employees' representation in management board. It's expensive for compliance and maintenance. You may have your reasons why an EU holding or operational company with subsidiaries and branches isn't a solution to your case, but I can't figure what's the benefit from SE.

Thank you for bringing this topic to attention.

 

[Forester]

If I am correctly understanding the actual benefit that you don’t need to setup subsidiaries or branches and you can operate locally in each EEA member.

In my deep opinion, if we talk about EU (not EEA), you can operate freely across all member countries being registered in one country without any additional measures (exceptions for some industries/professions exist), it's the fundament of Schengen (free movement of people, goods and services).

Another benefit which seems to me interesting is that you will have nice solid financial statements and you can benefit with easier financing for your needs.

Sure.

There is must be a some reasons why those big names have SE: Allianz SE, E.ON SE, SAP SE, BASF SE, Fresenius SE & Co. KGaA, Airbus SE, Schneider Electric SE

As it is mentioned these companies have chosen the SE form to facilitate their operations across multiple EU countries, benefiting from streamlined regulations and increased mobility within the EU single market.

Well, I am guessing that the benefits can be related more likely to strenghtening their political weight and establishing stronger political connections... The big business is strongly tied to politics, the EU is not an exception, on the contrary.
But it's just my guess.

I personally would expect the legal fees to be substantially higher than using local companies as there are very few SE companies.

Sure.

While for big names there will be benefits, I expect those benefits to be outweighed by the high base costs for pretty much anything without assets and turnover in the higher millions.

I agree; and see above.

I would recommend the German Wikipedia article, it gives a good explanation of the advantage of having a SE holding, with subsidiaries all over Europe.

I have read it but haven't found there much information re: this; could you eventually elaborate more?

You can then easier move the SE holding between member stays. Banks and insurances can form subsidiaries and are then only regulated in the country if the seat is management.

Yes.

I would check with a Czech lawyer at 80% are incorporated in Czechia.

Really? Quite interesting. Could you point at some source?
(BTW, the bindings between business and politics in Czechia are extremely strong, TBMK.)

 

[daniels27]

https://en.wikipedia.org/wiki/Societas_Europaea

As of 11 April 2018, 3,015 registrations have been made. In terms of registrations, the Czech Republic is vastly overrepresented, accounting for 79% of all Societates Europaeae as of December 2015.

https://de.wikipedia.org/wiki/Europäische_Gesellschaft

Advantages of a European Company

The SE offers European companies the opportunity to operate as a legal entity with national branches/permanent establishments throughout the EU. The SE enables companies operating across Europe to combine their business in a holding company and to establish subsidiaries with Europe-wide standards. However, certain national differences still remain, as the SE Directive only creates a framework that is specified by national legislation for public limited companies. In this way, there is more standardization, but not complete congruence.

The SE structure simplifies cross-border M&A transactions. This enables companies to expand and reorganize across national borders - without the expensive and time-consuming formalities for multiple subsidiaries in individual states.

As the SE can move its registered office to another member state while maintaining its identity, without the need for dissolution in the country of departure or new establishment in the country of arrival, companies can choose their registered office for purely economic reasons.

Another advantage is seen in the psychological perception, since the establishment at least suggests the merger of equal partners, but in the external presentation one national company is not taken over by another national company (so-called mergers of equals).

For banks and insurance companies, the aspect that they only have to deal with one supervisory authority, namely that of the country of domicile, in the case of a permanent establishment group, for which the SE is particularly suitable (unlike a group with subsidiaries), plays a role.[9]

The SE is also increasingly being used as a legal form by medium-sized companies in order to take account of their international market presence or to make company succession more seamless with the help of the monistic system.[10]

Finally, according to the Commission report, the trade unions have discovered the SE - which they are skeptical about because of the negotiable co-determination - as a means of creating a pan-European employee awareness.[11]

 

[Forester]

https://en.wikipedia.org/wiki/Societas_Europaea

Wow.
Thanks.

https://de.wikipedia.org/wiki/Europäische_Gesellschaft

Oh well. Now I see, it's at the very beginning, before the thorough description what it is about. “Vorteile einer Europäischen Gesellschaft”
Hence,
1) I must admit that I have lied when I have claimed that I read it; I just went through it quite quickly and I overlooked this part – as I had not expected this before description, I looked for it at the end, at Practical Significance (Praktische Bedeutung) and Weblinks...
2) It means that I am not well suitable for today's world – I dislike this stupid “managerial style” where you get in the paper (not separately e.g. in the abstract) some conclusions presented before you get some data to make your own conclusions...

Regardless, this
--------------
The SE structure simplifies cross-border M&A transactions. This enables companies to expand and reorganize across national borders - without the expensive and time-consuming formalities for multiple subsidiaries in individual states.

As the SE can move its registered office to another member state while maintaining its identity, without the need for dissolution in the country of departure or new establishment in the country of arrival, companies can choose their registered office for purely economic reasons.

Another advantage is seen in the psychological perception, since the establishment at least suggests the merger of equal partners, but in the external presentation one national company is not taken over by another national company (so-called mergers of equals).
-----------
is well understandable, as well as the point about banks dealing with only one supervisory authority (although, in fact, it is not so simple as it seems; e.g they have to deal with financial arbiter /or comparable institution/ in every country, IMO.)

 

[CyprusLawyer101]

I ve set up one SE for a client 7-8 yrs ago. Still providing corporate services to them. Nothing much going on in terms of increase compliance other than usually going through different routes to satisfy registrar compliance than normal companies. This one is acting as a holding company. I don't not really recall what was the reason behind opting for an SE rather than a normal ltd.

 

[2fire]

This one is acting as a holding company.

Does it hold other EU companies or works internationally?

I am trying to understand how does SE establish works in other member states.

 

[CyprusLawyer101]

Does it hold other EU companies or works internationally?

I am trying to understand how does SE establish works in other member states.

I believe is just one EU subsidiary. Out if my limited experience, I would say that this vehicle adds nothing to the tax planner and not much to corporate governance / operation. Still authorities in the EU need to be notified / approve in case of mergers, redomiciliations etc. Maybe such processes become easier.