Can a company headquartered in a non-EU country participate in the formation of a European company?
It depends on each EU country, but the company in question needs to:
- be formed on the basis of the legislation of an EU country
- have its registered office in that country and
- to have a real and continuous connection with the economy of an EU country.
This provision applies in the following countries: Bulgaria, the Czech Republic, Denmark, Finland, Greece, Italy, Luxembourg, Norway, Poland, the United Kingdom, Spain, Slovenia, and Slovakia.
Can national authorities oppose the establishment of a European company?
YES, in the case of mergers. It depends on each member country, but this decision must be motivated only by the public interest.
This provision applies in the following countries: Belgium, Bulgaria, Cyprus, Denmark, France, Greece, Latvia, Poland, Portugal, the United Kingdom, Spain, Sweden, and the Netherlands.
Should the registered office and the registered office of the European company be located in the same country?
YES. When it no longer meets this requirement, the European company will be obliged to establish another head office or transfer its registered office to ensure that they are located in the same country. Failure to do so will result in the company being liquidated.
In addition, some countries may require that the head office and headquarters be located at the same address. These are Austria, Bulgaria, the Czech Republic, Denmark, France, Greece, and Latvia.
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Are there requirements related to organizational structures?
A European company can operate under one of the following structures:
- single level management system – the company is managed by a governing body
- system with two levels of management – the company is managed by a management body and a supervisory body
How does the one-tier system work?
The governing body must meet at least once every 3 months.
He shall appoint a chairman from among its members.
The members are appointed by the general assembly (the members of the first governing body may be appointed by the statute of the European company).
How does the two-tier system work?
- No one may be a member of the governing body or of the supervisory body at the same time.
- The supervisory body shall appoint a chairperson from among its members.
- The members are appointed by the general meeting (the members of the first supervisory body may be appointed by the statute of the European company).
- The members of the management body shall be appointed and removed by the supervisory body. EU countries may require or allow the European Company Statute to specify that this is to take place during the General Assembly.
- The management body must report to the supervisory body at least once every 3 months and provide it with any important information.
Who can be a member of the bodies of European society?
Members may be natural persons as long as they have not been deprived of the right to serve on the board of directors of a public limited company.
The statute for a European company may allow a company or other legal entity to become a member (unless the relevant national legislation on public limited companies provides otherwise). In such a case, a natural person must be appointed to perform that function.
How many members can be part of the bodies of European society?
- The European Company Statute does not provide for a specific number.
- The number of members – of the rules for determining this number – must be indicated in the European Company Statute.
- EU countries can set their own rules on the minimum / maximum number of members of European society bodies. In addition, for the two-tier system, they may indicate the number of members of the supervisory body.
- However, if employee participation is governed by Directive 2001/86 / EC, the administrative body must include at least 3 members.Pe ce perioadă pot fi desemnate organele societății europene?
- The maximum term of office is 6 years.
- The period chosen must be indicated in the European Company Statute.
- Members may be re-elected once or several times (subject to the restrictions laid down in the European Company Statute).
What are the rules regarding the European Company Statute?
The regulation does not provide for the format or the full content of the statute. Instead, it contains a set of rules, according to which:
- the articles of association may be amended only by a decision taken by a majority of 2/3 of the total shareholders, at a general meeting, unless:
- national rules on public limited companies in the EU country in which the European company is registered allow or impose a higher majority or
- national rules consider that a simple majority is sufficient, as long as the shareholders present hold at least half of the subscribed capital.
- the statute must not conflict with the agreed agreements on employee involvement. Otherwise, it needs to be modified. EU countries may decide that this change will be made without a decision of the general meeting of shareholders. The statute should also cover other issues:
- organizational structure (system with one or two levels of administration)
- the number of members for each body or the rules for its establishment
- term of office for members of management bodies (and any restrictions on their re-election)
- the list of categories of transactions that require an express decision by the management body (in the single-tier system) or the authorization by the supervisory body (in the two-tier system).
How are creditors, employees, and minority shareholders protected?
In the case of mergers and holding companies, the rules on employee involvement shall be established in accordance with Directive 2001/86 / EC. The general meetings of the companies involved also have the right to block the registration of a European company unless they are able to expressly ratify the agreed rules.
In the case of transformations, EU countries may request that they be approved by qualified majority voting or by unanimous vote in the governing body of the company to be transformed if there are already rules in place for employee participation. No EU country has chosen this option yet.
In the case of mergers, creditors and holders of bonds or securities other than shares will be protected in accordance with the relevant national law (taking into account the cross-border nature of the merger).
In the case of mergers and holding companies, EU countries may take measures to protect minority shareholders who have opposed the merger or creation of a holding company.
The countries that have chosen this option for mergers are Austria, Bulgaria, Czech Republic, Denmark, Estonia, Finland, Germany, Greece, Latvia, Poland, Portugal, Romania, Slovenia, Slovakia, Spain, the Netherlands, and Hungary.
The countries that have chosen this option for holding companies are Austria, Bulgaria, the Czech Republic, Estonia, Germany, Greece, Latvia, Portugal, Slovakia, Spain, and Hungary.
In the case of holding companies, EU countries can take measures to protect creditors and employees. The following countries have already done this:
- creditors: Cyprus, Czech Republic, France, Portugal, Spain, and Hungary.
- employees: Bulgaria, Cyprus, Czech Republic, Slovenia, Slovakia.
In the case of holding companies and transformations, the proposed incorporation must include a report setting out the implications for shareholders and employees.
Can the capital of a European company be changed?
It depends on the rules for public limited companies in the country where the European company is registered.
How are shareholders involved in the decision-making process in European society?
Shareholders participate in decision-making at general meetings.
How often?
General meetings may be convened at any time, but at least once a calendar year, within 6 months of the end of the financial year of the company (unless national law provides for more frequent general meetings).
EU countries may also request that the first general meeting be held within 18 months of the incorporation of the company.
Who can convene a meeting?
- one of the governing bodies of European society
- a competent authority
Shareholders holding at least 10% of the company’s subscribed capital (or less, if required by national law or the company’s articles of association) may also request that a meeting be convened. If the company does not meet, it may be required to do so by the competent authority of the EU country in which it is registered.
Voting in general meetings:
- Decisions are taken by simple majority.
Exceptions:
- if national law provides for a larger majority
- if the statute of the European company provides for a larger majority (eg to change the statute of the company)
Can European society be transformed into a joint-stock company?
YES. This can be done in the EU country where the company is registered, as long as:
- the company has been registered for at least 2 years or
- the first 2 sets of annual accounts of the company were approved.
The transformation into a joint-stock company leads neither to the dissolution of the European company nor to the creation of a new legal entity.
What is the involvement of employees in a European company?
Employee involvement means any mechanism by which employees can influence the decisions to be made in a company. Such mechanisms give employees’ representatives the right to:
- to be informed and consulted
- to participate in the administration of the company through
- exercising the right to elect or appoint certain members of the management or supervisory body of the company, or
- exercising the right to recommend or challenge the appointment of a party or all members of the company’s management or supervisory body.
What about the rights of employees in companies involved in setting up a European company?
Existing practices in these companies regarding employee involvement should not be reduced as a result of the formation of a European company unless management and employee representatives decide otherwise. Instead, the rights in force before the formation of a European company should provide the basis for the rules on employee involvement at the level of the new European company.
How is it decided in practice to involve employees in a European company?
Management and employee representatives must make a decision in this regard before registering the European company.
The rules on employee involvement are set out in a negotiated agreement between the management of the companies forming the European company and their employees’ representatives.
In order for these negotiations to take place, a special negotiating body must be set up to represent the employees of the companies concerned. Its members shall be elected or appointed in proportion to the number of employees of those companies in each Member State.
If no agreement is reached within 6 months (which can be extended up to 12 months), a set of standard rules on employee involvement will apply. The standard rules do not apply if the employees’ representatives decide:
- not to initiate negotiations or to terminate ongoing negotiations; and
- simply be based on the rules on informing and consulting employees applicable in the country where the European company has employees.
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Romania Company has worked in the consulting business for over 18 years. Contact us today to find out how we can assist you with the incorporation of your Romanian company, right through the business, fiscal, and licensing matters.
