European company refers to a legal form for firms in the European Union, it allows for the formation of companies on the basis of largely uniform legal principles.
The Council Regulation on the Statute for a European Company of the European Union, comprises rules of European Public Companies referred to as Societas Europaea (SE). The registration of an SE can be instituted in any member state of the European Union, and the registration is transferable to a different member state.
The European company has distinct characteristics and these include having its own legal personality. It is a capital company with a minimum capital of 120,000 euros, the capital is divided into shares, and each shareholder is liable only to the amount of capital subscribed. It must have its seat in a state of the EU, but it can always move to another member state. Shareholders can exercise fundamental rights at an annual general meeting.
The SE offers European companies the opportunity to operate across the EU as a legal entity. However, some national differences remain high, as the directive on the SE provides only a framework that can be specified by national legislation for public companies.
The Statute renders four ways of initiating a European limited company. And this can be done either through a merger, formation of a holding company, formation of a joint subsidiary, or conversion of a public limited company. The option of forming a company by merger is available only to public limited companies, while formation of an SE holding company is available to public and private limited companies.
Stipulated conditions must be met for the successful establishment of a European company. And they include the fact that only companies from EU and EEA Member States participate in the foundation. For mergers the participating companies must come from at least two member states.
In the case of a holding SE, implementation is only possible either as the fusion of at least two of the participating companies, and limited liability established in different member states. But there is also the possibility of a merger between companies from the same member state, provided at least two of these companies has a link through a subsidiary or a branch in another member state
A converted SE stock company must have at least two years, and have a subsidiary in another member state; a branch is not sufficient and the capital must be at least 120,000 euros. Only public companies are entitled to a holding SE, and may be formed by limited liability corporations and companies, a joint subsidiary SE may be established by all companies under Article 48 paragraph 2 of the Treaty.
No individual can be a member of both the management board and the supervisory board of one company concurrently. The supervisory board is permitted to nominate one of its members to carry out management duties in the event of absence.