EUROPEAN STOCK COMPANY (SOCIETAS EUROPAEA) - the most reputable legal form entity

Due to the fact that the legal form of SE (Societas Europaea) is uniform throughout the EU, it enjoys a higher reputation and credibility at the other party, whether it is, for example, a German consumer, or a Swiss investor or a French supplier. Multinational corporations also often cooperate only with companies that are governed by the same or known legal order as themselves, and some large foreign corporations even regulate their cooperation with companies such as de facto unknown Czech “s.r.o.” by their risk management departments very strictly, which often makes it very difficult or even impossible doing the business itself. Not only prestige and reputation, but also the negotiating position of SE (Societas Europaea) is significantly stronger, especially in international trade.

The SE has the advantage of doing business easier in several EU countries and enjoying mobility within the single market, as only this type of company makes it easier to relocate its registered office to another Member State without costly dissolution and liquidation of the original entity or without changing its legal form. The SE (Societas Europaea) can also organize its activities under one European brand and do business even without setting up a network of subsidiaries.

In Europe, almost 20% of the companies in the Euro Stoxx 50 stock index have the form of a European company. The largest SEs (Societas Europaea) are, for example, Airbus, Allianz, BASF, E.ON, Louis Vuitton, SAP, Schneider Electric or Unibail-Rodamco.

The European company must have its registered office in the territory of the EU and must comply with the rules of European law. In general, the same regulations apply to European companies in all EU countries. The key regulation is Council Regulation (EC) No. 2157/2001 on the Statute for a European company (SE). In matters not governed by European law, the law of a Member State shall apply. In the law of the Czech Republic, conditions of a European company are regulated by Act No. 627/2004 Coll., on European Company and Act No. 90/2012 Coll., on Business Corporations. Depending on the EU country in which the European company (SE) is established, some issues may be governed by specific national rules (such as employee participation, etc.).

The registered capital of the SE (Societas Europaea) is divided into shares and must amount to at least EUR 120,000. As with ordinary - national joint stock companies (“a.s.”), the structure of the SE is formed by the general meeting, which is the highest body of the company. In the statutes of the SE (Societas Europaea) it is possible to choose a two-tier or one-tier internal structure. In the two-tier system, the company is managed by the board of directors - as a statutory body (which can have only one member!) and the control over the company is ensured by the supervisory board (which can also have only one-member!). The general legal regulations entrust the power to appoint and remove members of the supervisory board to the general meeting. However, the statutory body (board of directors) shall be appointed by the supervisory board, unless this competence has been transferred by articles of association to the general meeting. In the one-tier system, however, there is only one controlling and managing body, namely the board of directors (as an administrative body). It must have at least three members (max. up to 18 members). The board of directors elects a chairman from among its members, who is the statutory body of the company. One natural person may not be a member of more than five boards of directors of SEs or joint stock companies at the same time. In the one-tier system, therefore, the participation of at least 3 persons in the bodies is required, while in the two-tier system, the participation of 2 persons is sufficient.

Another advantage may also be the fact, for example, that the Companies Register provides little or no information on the owners of SEs (Societas Europaea) as compared to limited liability companies (“s.r.o.”).

On the other hand, a disadvantage is that SE (Societas Europaea) cannot be established like other types of companies. It must be established by a minimum of 2 legal entities which, however, are governed by the laws of at least 2 different Member States, or alternatively by corporations established in one Member State but having a branch or subsidiary in another Member State. It is also possible to establish an SE by changing the legal form or by transformation. However, the easiest and cheapest solution is to purchase a ready-made Societas Europaea, as the SE (Societas Europaea) can also be established by an existing SE. We founded the very first SE (Societas Europaea) in the Czech Republic - you can take advantage of our offer here.