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DATE | The SE as a legal form easily explained (this contribution)

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The legal form of the SE is still considered a relatively new legal form under company law. This will further pursue and advance the European Union's objective of harmonising European company law.

To begin with, one can ask why a European legal form was developed. In principle, as an example, any German legal form can also operate in other European countries as well as in any other countries outside the EU. However, the introduction of this form of society changes something for societies. Behind this lies the idea of harmonisation in the European Union, which aims to bring company law into line throughout the EU. In 2001, the so-called SE Regulation initiated the new legal form.

The legal form of the SE is a legal entity defined as a corporation. The name or the short form SE comes from the Latin according to the term “Societas Europaea”.

The requirements for establishing a company in the legal form of the SE include four aspects. First of all, it is relevant in which country the European company has its headquarters and headquarters. For the establishment, the headquarters and headquarters must be located in the same EU country, otherwise the establishment of the SE is not possible.

It must also be noted that in other countries of the European Union either subsidiaries or branches must be present or the relevant companies must be subject to the law of two or more EU countries in order for an SE to be established. Furthermore, as with domestic companies, a share capital is necessary. Here, the necessary minimum capital amounts to 120,000 euros.

Finally, it is important to keep in mind that workers’ rights are sufficiently protected. Important rules apply here. This includes, inter alia, that the management and employee representatives make a decision on employee participation in the company bodies and for consultation and information of employees.

In the course of a merger, a European company SE can be founded. This requires joint stock companies from several European countries.

In order to obtain a European holding company, two companies from different EU countries are also required at least once. Otherwise, the creation of a European holding company is also possible, provided that the companies have had either a branch in the EU or a subsidiary for more than two years. It should be noted that a public limited company or a limited liability company can be used for this purpose.

In order for a European subsidiary to be formed, it is necessary that two legal entities exist, these do not necessarily have to be companies.

In order to be able to carry out a conversion, a joint stock company is again required. Another prerequisite for the conversion into an SE is a subsidiary or branch established for two years in a European country.

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establishing a SE?

Interestingly, the European Union has adopted regulations on this, which in principle do not cover all relevant topics. Because the idea behind it envisages the national legal standards as a supplementary reading or as necessary legal regulations for this. Important is the stock company law in Germany as well as specially designed regulations for the legal form of the SE.

In principle, the commercial and tax accounting regulations of the country in which the company was founded apply.

Since the legal form of the SE is basically similar to the AG, taxation also corresponds to this. Thus, an SE established in Germany is subject to trade tax and corporate tax.

In comparison between an SE and an AG, there is already a large discrepancy in the choice of corporate bodies. Whereas the AG requires a general meeting, the Supervisory Board and the Executive Board in accordance with the dualistic system, an SE can choose between the dualistic and the monistic system. The monistic system requires exclusively a general meeting and a board of directors. In addition, this legal form is often also used because of the international image to signal a European or international orientation of society.

Finally, the SE can be seen as an attractive option for companies operating throughout Europe. The differences mentioned offer various advantages, sometimes more flexibility than is possible with the legal form of the AG and has the aforementioned signal effect on investors or business partners.