The European Company Statute came into force on 8 October 2004, but national delays stop companies from using it

The European Company Statute (in theory) came into force on 8 October 2004, over thirty years after it was first proposed by the Commission. The European Company Statute is a legal instrument based on European Community law that gives companies the option of forming a European Company - formally known by its Latin name of "Societas Europeae" (SE). A European Company can operate on a European-wide basis and be governed by Community law directly applicable in all Member States. As a European Company a business can restructure fast and easily to take advantage of the trading opportunities offered by the Internal Market.

A related Directive concerning worker involvement in European Companies entered into force at the same time. However, only six of the 28 EU and EEA Member States have implemented the regulations at national level necessary to allow European Companies to be set up on their territory. Until the rest do so, many companies operating in more than one Member State will be denied the option of being established as a single company under Community law and thus of being able to operate throughout the EU with one set of rules and a unified management and reporting system.

Only Belgium, Austria, Denmark, Sweden, Finland and Iceland have so far taken the necessary measures to allow European Companies to be founded on their territory, despite the fact that the European Company Statute was adopted at EU level in 2001.

Under the European Company Statute, a European Company can be set up by the creation of a holding company or a joint subsidiary or by the merger of companies located in at least two Member States or by the conversion of an existing company set up under national law. The minimum capital requirement has been set at €120,000 so as to enable medium sized companies from different Member States to create an SE.

Under the accompanying Directive on employee involvement, the creation of a European Company requires negotiations on the involvement of employees with a body representing all employees of the companies concerned. If it proves impossible to negotiate a mutually-satisfactory arrangement then a set of standard principles applies, the exact nature of which depends on the format for worker participation in the companies concerned before the European Company was set up.

For the full texts of the Regulation on the European Company Statute and of the accompanying Directive on employee involvement, see:

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.