European Company (Societas Europaes - abbreviation SE)

The European Company is actually a European public limited-liability company established pursuant to the EU law. The Societas Europeas can be established freely within the territory of the European Union. Albeit the efforts to have one common legislation within the entire EU, only the framework regulation (COUNCIL REGULATION (EC) No 2157/2001 on the Statute for European company (SE)) has been adopted and the detailed provisions are left in the competence of individual members states. I.e. in the Czech Republic, it is regulated by the provisions on the public limited-liability company under the Commercial Code and by the Act on the European Company.

Structure of SE– only one person in management board and one person in supervisory board

Contrary to the standard public limited-liability company, where 3 persons must be in the management board and 2 persons in the supervisory board, SE requires only 1 person in the management board and 1 person in the supervisory board.

Simultaneously, the founders may select between the single-board (tier) structure and the dual-board (tier) structure:

• As for the single-board structure, the company is formed by the administrative board with its chairman. The chairman can be also the managing director or the managing director may be a person totally outside of the administrative board. The administrative board must consist of minimum of 3 and of maximum of 18 members. Usually, the administrative board is not the statutory body of the company; it is responsible only for the business management; however the administrative board may act on behalf of the company. It is the chairman of the administrative board and the managing director in one person or the managing director himself, who is the statutory body.
• As for the dual-board structure, it is actually identical with the Czech joint-stock company (a.s.), only, as already mentioned above, it is possible to have only one person in the management board and one person in the supervisory board. This reduces the complexity of filling in positions within the statutory bodies as compared to standard Czech joint-stock company. As there are no provisions regulating the number of members in the SE management board in the Council Regulation (EC) No 2157/2001 on the Statute for European company, the decision about the number of the management board members remains in the competence of the founders or shareholders and it is laid down in the SE Statutes. Hence, the minimum is one person and the maximum is not defined.

Registered office – option to change the registered office within EU

The company must have its registered office within the territory of one of the EU member states and in the same state, where the statutory body is located.

The advantage of the SE is the option to re-allocate the registered office to a different EU member state without its liquidation. Therefore, it is possible to re-allocate the registered office to a member sate with better administrative or tax conditions at the present. The re-allocation has no impact on the legal continuity of the company; nevertheless, the domestic laws are abandoned as of the day of the change of the registered office. In spite of the registration in the state where the company management is located, the company shall pay taxes in each and every place, where it operates its business.

Subscribed capital

The minimum subscribed capital of the SE amounts to 120,000 EUR. As the Czech Republic has not adopted euro, the subscribed capital must be given in CZK. The subscribed capital is then slit up to the relevant share volume. Shareholders are liable for SE’s obligations with all their property up to their respective part of their subscribed capital.

Psychological effect – prestige

One of the advantages of the European Company is the fact that the SE abbreviation is easy to be understood for all business partners regardless their mother language; not all foreign partners understand the Czech abbreviation: a.s. Therefore, an amendment identifying the legal form is part of the company’s name; the abbreviation SE is put either in front of the name of the company or behind it.

The biggest European companies are e.g. Allianz, BASF, Strabag or Porsche Automobil Holding. In the Czech Republic, Finep is one the biggest European companies.

Formation – subsidiary company and other SE

There are several ways how to form a European company, however, we go via the option where an already existing European company forms a subsidiary company. Already existing European companies can – as the sole founder – form other European companies.

Differences to the Czech joint-stock company (a.s.) – employees’ involvement in the company management

In those without detailed knowledge of the European company law the need of employees’ involvement in the company management can raise fears and such difference can be viewed as a disadvantage. However, there is no ground for such fears. The scope of the involvement can be easily regulated in the SE’s Statues and the minimum scope comprises only the right to information published on the company’s web and the right of the selected representative to participate in the General Assembly but without any rights to active intervention.

Comparison of the European company and standard joint-stock company

Comparison of SE versus joint-stock company (a.s.)	European company	Czech joint stock company (a.s.)
Minimum number of persons in statutory bodies	2 (dual-board model) 3 (single-board m.)	2 (dual-board model) 1 (single-board m.)
Minimum subscribed capital	120.000 EUR	2,000,000 CZK
Option to re-allocate registered office and therefore also changing the legal and tax environment within the EU	yes	no
Employees’ involvement in company management	yes, but it can be limited significantly in the Statues	no

The most fast and effective solution with all the benefits is to purchase the so called ready-made company which has already paid up the subscribed capital and which is ready to start its operation immediately.