The European Company Statute


Françoise Blanquet*


The proposal for a Regulation on the Statute for a European Company would provide for the setting-up of European public limited-liability companies. This would be a vital element in the realisation of the Single Market for companies.

The aim of the proposal for a European Company Statute (ECS) is to introduce a further option for enterprises in Europe. This new option would not only be of interest to multinational companies, but also to SMEs participating in intra-Community projects such as Trans-European Networks. Businesses with a European dimension would be able to register in any Member State as a European Company (SE).

Many companies have already benefited greatly from the development of the Single Market thus far. The rights already conferred on enterprises have transformed many elements of companies’ strategies and operations. However, companies operating at Community level are currently obliged to maintain unnecessary and costly partitions in their structures and organisations to meet the requirements of national company law. The ECS will facilitate the reorganisation of European businesses on a Community scale.

The option of creating an SE by merger of companies in different Member States would offer a simple solution to the problem that there is currently no law which permits any cross-border mergers. The creation of an SE could lead to economies of scale from more efficient management structures and use of resources. An SE would also be permitted to transfer its seat between Member States without the costs and difficulties encountered with the dissolution of a legal entity on transfer.

With the introduction of a single currency, there will be increased advantages attached to the unique legal structure of the SE. Companies reliant on the single European capital market might want to present themselves in a legal form which corresponds with their economic profile at the European level.

Business organisations have consistently over the years told the Commission that they want to see the ECS adopted and the Ciampi Group on competitiveness, which was rich with business experience, said in its first report that it placed the Statute at the very top of its list of priority actions for improving competitiveness. This is the reason why the ECS is among the priorities put forward by the Action Plan for Single Market, endorsed by the European Council in Amsterdam.



The need for an instrument like the European Company was acknowledged in 1970 when the Regulation was originally proposed. The development of the Single Market has only increased this need and brought the value of such an instrument into sharper focus. It is much easier to set our sights on the level of the Single Market now than it was perhaps 10 years ago, never mind 28 years ago when the European Company proposal was first made. Because of this evolving Community climate, there is a fresh opportunity to deliver the European Company Statute.

We are currently witnessing renewed interest and hope for the adoption of the proposal for the ECS. Discussions are proceeding in the Council on both the Regulation and the Directive relating to worker involvement.

Some problems have already been overcome. The initial proposal of 1970 was perhaps too ambitious in its aim to create an entirely new instrument which was to be governed wholly by European legislation. The current formulation of the Regulation, with several references back to the national laws of the place of registration, has generated much wider support. Member States have shown their intention to work constructively in order to agree a text of the Regulation.

Of course some problems endure. In particular, the issue of the participation of workers in an SE has presented several considerable problems in the past and a clear solution has not yet emerged.

However, there are many reasons for optimism. The report of the High Level Group on European Systems of Worker Involvement (The Davignon Group), consolidated by the sustained efforts of both the Luxembourg and UK Presidencies, has brought us within reach of a resolution of the issue of workers’ involvement in European Companies.



One of the key differences between the original proposal and the version now being considered is the current proposal’s references back to national rules in various cases.

The Regulation provides that an SE would be governed by the Regulations and the Statutes of the SE where authorised by the Regulation. In the case of matters not regulated by the Regulation, national provisions of the Member State in which the SE is registered would apply. These national rules might be in the form of measures relating specifically to SEs or to its own public limited liability companies registered in that Member State.

The fact that the functioning of an SE is not dependent on uniform Community rules in all areas has simplified the proposal considerably. In addition, it should be noted that the Regulation explicitly does not cover areas of law outside company law. That is, there are no provisions dealing with taxation, competition, intellectual property or insolvency.



The current proposal sets out requirements for the formation, share capital, registration, management structure and general meetings of a European Company.

The sole accounting provision in the Regulation would permit the SE to prepare and publish its accounts in ecus. All other provisions on the preparation and auditing of accounts and the accompanying annual report would be subject to the rules applicable to public limited-liability companies under the law of the State in which the SE had its registered office.

As regards winding up, liquidation, insolvency and suspension of payments, an SE would be governed by the legal provisions which would apply to a public limited-liability company.



An SE could be formed by any of the following methods:

  1. Merger of public limited-liability companies formed under the law of a Member State provided that at least two of them are governed by the law of different Member States;

  3. Creation of a holding SE promoted by public / private limited liability companies formed under the law of a Member State provided that at least two of them are governed by the law of different Member States or have had a subsidiary or a branch in another Member State for at least two years. After the creation of the holding SE, the companies which promoted the SE remain subject to their own national legislation;

  5. Creation of a subsidiary SE by any legal bodies formed under the law of a Member State provided that at least two of them are governed by the law of different Member States or have had a subsidiary or a branch in another Member State for at least two years. After the creation of the subsidiary SE, the original legal bodies continue to be governed by national legislation;
A further option -- conversion of a public limited-liability company formed under the law of a Member State provided that it has had a subsidiary or branch in another Member State for at least two years – would be available under the last draft of the proposal for a European Company Statute. However, the Davignon Group’s conclusions did not refer to the formation by conversion in order to avoid the risk of companies converting in order to avoid national rules.

An SE would be able to participate in the formation of another SE in the same way as a public limited-liability company governed by the law of the Member State in which it has its registered office.


Share Capital

The minimum subscribed capital would be ECU 120,000. National law would apply in relation maintenance and changes of share capital.



The registered office and head office of the SE would be required to be located in the same Member State. The SE would be registered in the company register of that Member State, and its details would be published in the manner laid down by the Member State in accordance with the First Directive. Registration would also be published in the Official Journal.

An SE would also be permitted to transfer its registered and head office to another Member State while maintaining its legal personality.

The authorities of the Member State in which the SE had its registered office could order the SE to be wound up or liquidated where its registered office and head office were located in different Member States.


Management Structure

The European Company Statute would provide a choice between a one or a two-tier board structure.

In the two-tier system, no person could be a member of both the supervisory and management boards. The supervisory board would be appointed by the general meeting and would itself appoint members of the management organ. The supervisory board would be required to receive a report from the management organ at least once every three months and more often if necessary.

In the one-tier system, the members of the administrative organ would be appointed by the general meeting. The board would be required to meet at least once every three months.

Further rules on the membership of boards would apply under both systems. Members would be appointed for a period of up to six years and, subject to restrictions in the SE’s statutes, members could be re-appointed. The statutes of the SE could allow a legal entity to be a member provided that this was permitted by the Member State’s law applicable to public limited-liability companies. Anyone disqualified in any Member State would be prohibited from becoming a member. Finally, members would be liable for loss or damage sustained by the SE following any breach of their duties.


General Meeting

The general meeting would decide on matters for which it is given responsibility by the Regulation and the corresponding Directive with regard to the involvement of workers, and for which responsibility is given to the general meeting of a public limited-liability company of the relevant Member State. The organisation, conduct and voting procedures of the general meeting would be governed by the law applicable to a public limited-liability company in that State.

General meetings would have to be held at least once a year. They could be convened by the board or any competent authority in accordance with national law applicable to a public limited-liability company. Shareholders holding 10% or more (or less under the same conditions as those applicable to public limited-liability companies) of an SE’s subscribed capital would also be able to request the SE to convene a general meeting and would be permitted to request that additional items be put on the agenda.



The Davignon Group’s report very successfully re-launched the debate on the European Company Statute. It is hoped that the Group’s report may have provided the seed from which a solution will grow.

The conclusions of the Davignon Group have established the principle of free negotiation between the Social Partners as the foundation of a solution to the problem of worker participation in the SE. It is hoped that European Companies will be created from all kinds of different backgrounds. All interested groups have been strongly attracted to the principle of negotiation within the European Company to resolve the issue of worker participation in each and every unique situation that will lead companies to form a European Company.

The continuing discussions are concerned with the rules which should apply if an agreement cannot be agreed between the management and the workers’ representatives. The issue will only be satisfactorily concluded with compromise on all sides. A solution is certainly within reach if the political will can be found to grasp it.



There is now an opportunity to create a completely new vehicle for business. The European Company Statute would provide for a new instrument unlike anything currently available.

In seeking a system for a European Company which will operate effectively in the Single Market, Member States have already let go of some of the principles which permeate their national systems. It is hoped that a little further evolution will bring them to agreement in the Council.

The adoption of the Statute would be a very strong symbol of the Single Market of the future – a Single Market ready and equipped to move into its next phase of integration.


* franç European Commission. Usual disclaimer applies.