Societas Europaea, the European company
Since 2004, it has been possible to set up a Societas Europaea (SE). An SE is a European company that aims to make cross-border operations within the EU easier. Such a company can be established in several ways: through the creation of an SE, the merger of several existing companies, or by converting an existing company into an SE. In this blog, we will discuss the various advantages and disadvantages of setting up an SE, as opposed to a Dutch BV or NV.
Advantages of a Societas Europaea:
One of the biggest advantages of an SE is that its functioning and creation are governed by centrally-regulated European law. Why is this beneficial? Well, because it involves fewer transaction costs. Please note that this Regulation also refers to national law in the country where the SE has its registered office. Some cases are, therefore, still covered by national law.
Another major advantage of an SE is that it can be relatively easy to conduct a cross-border seat transfer. There is clear legislation for an SE wishing to transfer its registered office; in many national legal systems, in contrast, this is either inefficiently, or not at all, regulated. For example, if you want to transfer a Dutch company to Germany, you will first have to liquidate the Dutch company and then move the liabilities and assets. This involves a lot of time and costs. With an SE, all of this is not necessary, therefore saving you a whole lot of time and money.
Finally, an SE has the advantage of a strong global image. Some well-known, large companies, such as Airbus, Porsche and Allianz, are, after all, SEs. Many people outside the Netherlands will not be overly familiar with a BV or an NV, but, in the case of an SE, however, there will be much greater public perception.
Drawbacks Societas Europaea:
Despite the fact that an SE is mainly governed by European law, it also has to satisfy the national law of the Member State where the registered office has been located. This can, therefore, cause confusion, because you are dealing with two legal systems at the same time.
In addition, the minimum starting capital required, at EUR 120,000, is relatively high. This can be disadvantageous for parties who do not have a large sum of money to start with.
Finally, another critical point can be where a company is required to set up an employee negotiating group; this can occur if a form of employee participation was in existence prior to the creation of the SE (in the case of a merger or conversion).
When you perform many cross-border activities and want to have a stronger image abroad, it may be wise to set up an SE. In addition, it can also be beneficial to have the possibility of transferring the registered office of the company, for tax purposes, for example. On the other hand, there are clear disadvantages in the fact that it is not always clear which law – national or European – is applicable, and the requirement to have substantial starting capital.
THIS ENTRY WAS POSTED IN GENERAL BY DESIREE.