FID Trust International

It is a company that can operate on a European-wide basis and may be created on registration in any one of the Member States of the European Economic Area.

The main advantage of forming this type of company is that the company can operate throughout the EU on a single set of rules and a standard management and reporting system. This will then allow the company to avoid the expensive and time consuming set up of additional companies/subsidiaries governed by different national laws. In particular, there will be advantages in terms of significant reductions in administrative and legal costs, a single legal structure and standard management and reporting systems.

By setting up as a European Company a business can restructure fast and easily to take the best possible advantage of the trading opportunities offered by the Internal Market. European Companies with commercial interests in more than one Member State will be able to move across borders easily as the need arises in response to the changing needs of their business.

There are a number of different ways to form an SE Company:

  1. Holding SE - Two or more private or public limited companies (including SEs).
  2. Merger - Two or more public limited companies (including SEs).
  3. Subsidiary SE - Article 2 (3) - Two or more companies (including SEs), firms or other legal bodies.
  4. Subsidiary SE - Article 3 (2) - An existing SE.
  5. Transformation - An existing public limited company.

The SE is a European public limited company. An SE may be created on registration in any one of the Member States of the European Economic Area (EEA). Article 10 of the Regulation requires Member States to treat an SE as if it is a public limited company formed in accordance with the law of the Member State in which it has its registered office. GB national laws that apply to public limited companies also apply, in many respects, to SEs registered in GB (Article 9(1)(c)(ii) of the Regulation).

An SE must have share capital and shareholders whose liability is limited in a similar manner to that of a PLC. As with a PLC, an SE may denominate its share capital in any currency it chooses provided that at least £50,000 is denominated in Sterling or EUR € 65,600 is denominated in Euros. Regardless of the currency in which it is expressed, an SE is required to have a minimum amount of subscribed share capital equivalent to at least EUR €120,000. The relevant conversion rate is that for the last day of the month preceding the formation of the SE. As with a PLC, an SE may only allot shares which are paid up to at least ¼ of their nominal value and the whole of any premium (except as part of an employees’ share scheme).

It does not need to file a Form 117 or obtain a certificate to commence business and borrow. There are two different systems for the structure of managing and controlling SEs. The SE’s statutes may, therefore, require either a one-tier or two-tier system of administration:

  1. In a one-tier system, management is undertaken by an ‘administrative organ’; and
  2. In a two-tier system, management is undertaken by a ‘management organ’ and a separate ‘supervisory organ’ supervises the work of the management organ. The Directive also makes provisions for employees to be involved in the management of an SE.

FORMATION

GB has taken advantage of a Member State option in the Regulation under which their head offices need not be in the EU, provided there is a real and continuous link with a Member State’s economy. Other Member States may require that both the registered office and head office of any commercial bodies involved in the formation of an SE are in the EU. However once an SE is created, it cannot be registered and brought into existence until:

  1. agreement has been reached for employee involvement in company decisions;
  2. the special negotiating body has decided to rely on the rules for employee involvement and consultation is in force in the Member States where the SE has employees; or
  3. no agreement has been reached within the relevant period of time, so the standard rules apply.

Formation by Merger

Two or more public limited companies or existing SEs may merge to form an SE provided at least two of them are governed by the laws of different Member States. The merger may be conducted by acquisition (with the acquiring company becoming an SE) or by the formation of a new company (with the merging companies ceasing to exist).

Before the merger can take effect, draft terms for the merger must be drawn up by the merging companies and presented to general meetings of their shareholders for approval. In GB, the Secretary of State for Business, Enterprise and Regulatory Reform and the High Court (or the Court of Session in Scotland) may oppose the merger if it is in the public interest to do so.

Once all the pre-merger acts and formalities have been completed, the High Court (if the registered office of the merging company is in England or Wales) or the Court of Session (if the registered office of the merging company is in Scotland) must issue a certificate confirming that fact.

The High Court (if the SE is to be registered in England or Wales) and the Court of Session (if the SE is to be registered in Scotland) are responsible for scrutinising the legality of the merger and, if satisfied, approving the merger. It is possible for two or more PLCs registered outside the UK to merge to form an SE registered in England, Wales or Scotland.

If the merger involves the creation of a new SE to be registered in GB, the registration must be affected in the part of GB in which the SE will have its registered office address.

Formation of a Holding SE

Two or more private or public limited companies (including existing SEs) formed under the law of a Member State and with a registered office in a Member State may form an SE by promoting the formation of a holding SE. The companies promoting the formation must become majority-owned by the SE. At least 2 of the companies must be:

  1. governed by the laws of a different Member State, or
  2. have had a subsidiary company governed by the laws of another Member State for 2 years, or
  3. had a branch in another Member State.

Before forming a holding SE, draft terms for the formation and an explanatory report must be drawn up by the companies promoting the formation and presented to general meetings of their shareholders. The explanatory report must explain and justify the legal and economic aspects of the formation and indicate the implications for the shareholders and for the employees of adopting the form of a holding SE. Regardless of where the holding SE will be registered, any GB registered company involved in its formation must file the draft terms for its formation at Companies House at least one month before the company’s general meeting.

Once the draft terms have been approved, shareholders have 3 months to notify the company whether they intend to contribute their shares to the formation of the Holding SE. If the minimum proportions of shares are not assigned within that time, the SE cannot be formed.

Where the conditions are fulfilled, a notice to that effect must be delivered to Companies House within 14 days on Form SE70(1) . Shareholders who have not previously indicated they intend to make their shares available have a further month in which to indicate whether they intend to make their shares available for the purposes of forming the holding SE.

If the Holding SE is to be registered in GB, the registration must be affected in the part of GB in which the SE will have its registered office address.

Formation of a Subsidiary SE

Two or more companies, firms or other legal bodies formed under the law of a Member State with registered offices and head offices within the Community may form an SE by subscribing for its shares. At least 2 of the companies or firms must be governed by the laws of a different Member State or for 2 years have had a subsidiary company governed by the laws of another Member State or had a branch in another Member State.

Formation by transformation of a PLC

A PLC registered in GB may transform into an SE registered in GB provided the PLC has for 2 years had a subsidiary governed by the laws of another Member State. The PLC cannot simultaneously transform to an SE and move its registered office to another Member State.

This process does not involve the winding up of the PLC or the creation of a new legal person in the form of an SE.

Before the transformation can take effect, the PLC must prepare draft terms of conversion along with an explanatory report and present them for approval to a general meeting of shareholders. The explanatory report must explain and justify the legal and economic aspects of the conversion and indicate the implications for the shareholders and employees of adopting the form of an SE. In order to be approved, ¾ of the votes cast must be in favour.

Please contact us by telephone 0207 439 3400 (0044 207 439 3400 – International) or E-mail if you wish to incorporate European Company Or “Societas Europaea” (SE).