by Vlad Cuc
A European Company is a company set up on EU territory (Romania in this case) under the form of a European Anonymous Company. The main conditions to function are given by the following: its social shares have to be in Euro and cannot be less than EUR 120,000 and the registered headquarters of the company have to be located in the EU in the same state where the company’s main administration is located.
For example, if the company’s main office is in Romania, its registered office must also be in Romania. The company name must be preceded by the abbreviation SE, which designates the official name of the company (Societas Europaea/European Company). Our team of Romanian lawyers can assist with more information on other characteristics on this company type.
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What are the options to create a European Company in Romania?
In order to open a European Company in Romania or in any other country of the European Union (EU), the investors have several options – more exactly, four different manners through which this company type can be created; below, we present the main possibilities for setting up a European Company and in-depth information concerning each options can be presented by our team of Romanian lawyers:
- the European Company can be set up through a merger which operates as a joint stock company;
- the Societas Europaea can also be formed through a holding company (registered as a joint stock company or as a limited liability company);
- this company type can also be set up as a branch, as long as the entities forming the Societas Europaea have had another branch office or a subsidiary in other European countries for at least two years;
- transforming a company into a joint stock company in Romania;
- based on the option selected to register the Societas Europaea, the legislation can require at least two companies from different EU states to form this legal entity.
How to form an European Company in Romania through a merger
The registration through a merger: the management of the companies which are merging must draft a so-called “merger project”. This project includes the following elements: the name and headquarters of each merging companies, the exchange report of shares, the delivery methods of the European Company’s shares and the date on which these actions give out the right to participate to benefits and any special methods related to this right etc.
NOTE: In the official journal of the European Company’s member state will also be published information pertaining to the type and name of the merging companies as well as the name and headquarters of the European Company which will be created after the merger’s completion.
Transforming an anonymous company into a European Company
Transforming an anonymous company into a European Company does not result in dissolving of a company or the creation of another company. The headquarters cannot be transferred from one member state to another in the moment of transformation.
NOTE: The rights and obligations of the company which will be transformed regarding the employment conditions per the internal law, current practice and individual labor contracts on the date of registration are to be transferred to the new European Company on the basis of this registration.
What are the corporate governance requirements for a SE in Romania?
With regards to the company’s corporate governance, the legislation stipulates that that the company can opt for a one-tier system or for a two-tier system. This means that the governance of the SE in Romania can be represented by its shareholders and by an administrative board (in the case in which the one-tier system is selected) or by a supervisory board, if the two-tier system is selected).
In the first case, the management of the SE will be assured by the administrative board, which is required to establish quarterly meetings. In the second option, the management of the company will fall under the supervision of the management board and the members forming the management board will be named or removed by the powers of the supervisory board.
Please note that the applicable legislation does not allow a person to be a member of the supervisory board and of the management board at the same time; our team of Romanian lawyers can provide further information regarding other legal requirements related to the management of a SE in Romania.
The management board is also required to meet on a quarterly basis and to discuss various matters related to the company and, once the meetings are completed, it is legally required to report to the supervisory board. The supervisory board has the right to supervise the work carried out by the management board.
How many SE are registered in Europe?
Since the European institutions have created the legal environment for the registration of a European Company (in 2004), the number of SE has gradually increased across Europe. Currently, the SE operates in economic sectors such as financial services, commercial services, textile industry, metal industry or the accommodation sector. With regards to their number, the following apply:
- in 2004, when the SE was introduced in Europe, there were only 6 SE;
- by 2008, the number of SE increased rapidly, reaching a total number of 278 companies;
- in 2010, at a European level, there were a total of 633 SE;
- by 2012, the number grew at more than 1,000 businesses, accounting for 1,512 companies;
- the threshold of 2,000 businesses was achieved in 2014, when there were 2,239 SE;
- by the end of 2017, there were 2,943 SE in Europe, while a new threshold, of 3,000 businesses, was achieved by March 2018.
Earlier in this article, we have mentioned that the management structure of the European Company can be based on a one-tier system or a two-tier system. With regards to the statistics on this matter, it is important to know that only 16% of the SE have chosen the one-tier system, while the large proportion of these companies have selected the two-tier system (83%).
Businessmen must also observe the tax requirements and the accounting procedures that have to be applied to this structure; the main regulations available in this sense are set out by the directives of the European Commission (EC), which can be detailed at length by our Romanian law firm.
Liquidation, insolvability and cease of payments of a European Company in Romania
In regards to these situations, a European Company is regulated by the legal dispositions applicable to the anonymous companies constituted by respecting the internal regulations of the member state (in this case, Romania) where the central office is located, including those rules in reference to the decision procedure in the General Assembly.
Please address to our law firm in Romania for more information on the registration of a European Company in this country; our team of Romanian lawyers can also assist investors with the tax regulations applicable to this structure upon its registration in this country.