The European Company can be the apt legal vehicle to solve complex issues encountered by businesses established in Europe. The rationale of Regulation 2157/2001 allows for a legal framework for companies incorporated in different Member States to merge or form a holding company or joint subsidiary, while avoiding the legal and practical limitations that stem from the existence of different legal systems. A second arm of the legislation targets the involvement of employees in the European company, recognising their role within the company.

Companies that are operating in various Member States, mainly through branches or subsidiaries, can avail themselves of the European Company so as to operate throughout Europe under a common regulatory framework. This translates in great savings on regulatory and other compliance in various countries. Moreover, the registered office of a European Company can be moved from one Member State to another with no restrictions, and without having to undergo liquidation proceedings in the state of registration. The status of a European Company can also be valuable in terms of reputational value, showing a stronger company status which will assist in establishing a sound brand name. A European company is also afforded the possibility to move its seat according to its operations, without the need to simultaneously move the registered office. Consequently, a European Company may have its registered office in Malta, while operating throughout the EU freely.

The easy movement of the registered office may be a fact of significant importance for some businesses as they can move their registered office to any Member State. Having the registered office and the administrative office in Malta though, can satisfy the requirement of being a tax resident in Malta with all the associated benefits as explained in the tax section.

Fact Box
FormationA European Company (SE) may be formed in the following four ways: merger, formation of a holding company, formation of a joint subsidiary, or conversion of a public limited company previously formed under national law. Formation by merger is available only to public limited companies from different Member States. Formation of an SE holding company is available to public and private limited companies with their registered offices in different Member States or having subsidiaries or branches in Member States other than that of their registered office. Formation of a joint subsidiary is available under the same circumstances to any legal entities governed by public or private law.
Minimum capitalThe SE ought to have a minimum capital of €120 000. Where a Member State requires a larger capital for companies exercising certain types of activity, the same requirement will also apply to an SE with its registered office in that Member State.
Registered officeThe registered office of the SE designated in the statutes must be the place where it has its central administration that is where the true centre of operations lies. The SE can easily transfer its registered office within the EU dissolving the company in one Member State in order to form a new one in another Member State.
StatutesThe Statutes of the SE must provide as governing bodies, the general meeting of shareholders and either a management board and a supervisory board (two-tier system) or an administrative board (single-tier system).
Annual accountsThe SE must draw up annual accounts comprising the balance sheet, the profit and loss account and the notes to the accounts, and an annual report giving a fair view of the company's business and of its financial position; consolidated accounts may also be required.
TaxationIn tax matters, the SE is treated the same as any other multinational, i.e. it is subject to the tax regime of the national legislation applicable to the company and its subsidiaries. SEs are subject to taxes and charges in all Member States where their administrative centres are situated. Thus their tax status is not totally satisfactory as there is still no adequate harmonisation at European level.
Winding-upWinding-up, liquidation, insolvency and suspension of payments are in large measure to be governed by national law. An SE which transfers its registered office outside the EU must be wound up on application by any person concerned or any competent authority.

At WDM International we can assist you with advice in relation to the setting up of a European company, as well as with any legal and tax implications attributable to such a set up. WDM International can also provide the necessary annual services to maintain an SE.