The European Commission has recently published a proposal that would create a new type of European private company to be known as an SPE (Societas Privata Europaea). The proposal takes the form of a directly-applicable Regulation that could come into effect by 1 July 2010. Although it will require local law in each member state to supplement the final version of the Regulation, the features of the SPE are generally more attractive than those of its older brother, the Societas Europaea (SE), which has been in force since 2004 but which has had very little take-up in the UK. As an SPE will have a legal form that is recognised throughout the EU, it has obvious attractions for multinational groups and could in time become the blueprint for European companies.

Unlike the SE, the SPE would not require any cross border element. According to the proposal, its main features would be:

  • Ease of formation

  • A minimum share capital of €1

  • Requirement to cover at least forty specific areas in the articles of association

  • Requirement to have its registered office and principal place of business in a member state (but not necessarily the same one)

  • Uniform rules on distributions (and the option of a solvency certificate to be issued before a distribution)

  • A registered share system for shareholders

  • Certain prescribed matters requiring decisions of shareholders, some requiring a minimum two thirds qualified majority

  • Minority rights allowing the right to request a shareholders meeting or a competent court or authority to appoint an independent expert to investigate a breach

  • Corporate governance using a one tier or two-tier system of management

  • Specific duties of directors

  • Procedure for registered office to be transferred to another member state

  • Information rights for shareholders

  • Employee participation on the same basis as already applies in the jurisdiction of registration.

This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq

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The original publication date for this article was 05/08/2008.