Dr. Albert Schröder

Ten Year Anniversary of the European Company

The EU legislative procedure leading up to the establishment of a (public) European company form, the Societas Europea (SE), lasted 31 years, and when this company form was finally adopted on 18 October 2004, there was no saying whether the business world would accept it. After a cautious start, the SE has now become an integral part of the business world. Presently, more than 2,000 SEs exist throughout Europe - many of these in Germany. Of the 30 DAX companies, five are organised in the legal form of an SE or an SE & Co. KGaA (Allianz, BASF, E.ON, Fresenius and SAP), and so are 12 of the 60 MDAX and SDAX companies (Axel Springer, Bilfinger, Deutsche Annington, GfK, Klöckner, MAN, Puma, Norma Group, SGL Carbon, Surteco, Tipp24, Wacker Neuson). In addition, hundreds of medium-sized, non-listed companies in Germany have opted for the legal form of the SE.

There are many reasons for doing so: In comparison with national company forms, the SE has the advantage of being known throughout Europe as the legal form of a large international company, which can make it easier for companies to conduct international business. Compared to the German stock corporation (Aktiengesellschaft; AG), for example, the SE offers greater flexibility in several significant respects: In larger companies (which are generally required by German law to have employee representatives on their supervisory board from a certain size upwards) the size of the supervisory board can be reduced. Small and medium-sized companies (at least those not subject to the requirement of employee representation on the supervisory board) may opt for a one tier board, which is frequently desired by business owners but not feasible for the AG: Instead of having a management board and a supervisory board, these companies can make do with a single board, consisting of both supervisory and management board members. This so-called "monistic" variant of the SE is utilised by approximately half of all German SEs. The form of the SE can also be used to avoid the employee codetermination requirement from applying in the event of staff increases: Unlike a German private limited company (Gesellschaft mit beschränkter Haftung; GmbH) or an AG, an SE does not automatically become subject to the codetermination requirement when the number of its employees exceeds 500 (in which case one third of the board must be constituted of employee representatives) or 2000 (parity co-determination).

The SE will be 10 years old on 18 October 2014. Currently, there is no end in sight to its success. The knowledge about the advantages of this legal company form is spreading slowly but surely. Europe continues to grow together more and more closely, particularly in response to political and economic threats from abroad, and there is no alternative to the internationalisation of business. In Latin then: Societas Europaea - ad multos annos (many happy returns!).

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