The SE in Europe

1
The SE in Europe

• Noëlle Lenoir
• Debevoise Plimpton LLP
• President of the HEC European Institute

2
Historical developments

• 1970 - Commissions proposal an autonomous
  European Statute, independent of the laws of the
  Member States
• 2000 - The Nice compromise a hybrid status
  with optional provisions

3
What is the SE?

• The union of
• EC texts (with options) Regulation 2157/2001/EC
  and Directive 2001/86/EC, dated both of 8 October
  2001
• National Law SE specific provisions and
  provisions applicable to public limited-liability
  companies
• By-laws (within the limits of what is permissible
  under national law)

4
What is the SE?

• A commercial company
• Listed or not
• Has a community legal personality
• Has intra-community mobility
• Cross-border transfer of seat
• Cross-border merger
• Whose structure can be either monist (Board of
  Directors) or dualist (Executive Board and
  Supervisory Board)
• Governed by partially harmonized rules
• Defined worker involvement since its
  establishment
• Has no specific tax regime

5
Who can create an SE ?

• Four legal entities
• Public limited-liability companies
• European Companies (SE)
• Private limited-liability companies that can
  promote the creation of an SE holding
• Other legal entities from public or private law
  (art. 48 CE companies governed either by public
  or private law, including co-operative
  companies, and other legal persons governed by
  public or private law) which can create a
  common SE subsidiary
• Companies of third States? Yes, if option is
  exercised by the Member State (i.e. Belgium,
  Luxemburg, Spain, United Kingdom)

6
How to create an SE?

• Four possible means of creating an SE
• Cross-border merger (e.g. Allianz SE, SCOR SE)
• Holding SE (e.g. Matmar SE)
• Subsidiary (e.g. Eurotunnel SE, Carthago Value
  Invest SE)
• Conversion of an existing public limited
  liability company (e.g. Fresenius SE, Elcoteq SE,
  Strabag Bauholding SE)
• Social share capital
• Minimum 120,000 euros
• Subject to a higher level required by national
  law (E.g. an SE registered in France making a
  public offering must have a share capital of
  225,000 euros, like French public limited
  liability company)

7
How to create an SE? The major steps in the
creation of Allianz SE
Sep. 11
Feb. 3
Dec. 15 Dec. 16
Feb. 8
13. Oct. 2006
Nov. 25
Mar. 28
Dec. 19
Jan. 06
Feb. 06
Mar. 06
Dec. 05
Sep. 05
(20/10 23/11) Offer to purchase
Corporate aspect
Registration of Allianz SE
Initial annoucement
Notarization of project to merge
Approval of merger project by Shareholders of
Allianz
Approval of merger project by the Supervisory
Board of Allianz
Approval of merger project by Shareholders of RAS
Approval of merger by RAS Board of Directors
Implementation of SNB and beginning of
negotiations
Start receiving information from employees and
their representatives
End of agreement
Source Allianz SE
8
How to create an SE? The major steps in the
transformation into an SE
Deposit of report of valuing auditor at
registered office
Corporate section
Registration of SE publicity
Nomination of a valuing auditor
Conversion project adopted by Board of Directors
General Assembly
Judicial review
Project presented to valuing auditor
Request for the nomination of a valuing auditor
Shareholders convened
Publicity of conversion project
Preliminary Phase
D-1 month
D-2 weeks
D1 month
D
D5 (6 months maximum if parties agree)
EWC convened
Preparation of project
Informal preparations for creation of SNB
Information consultation of EWC
Creation of SNB
Conclusion of an agreement with respect to
employee involvement or the application of
reference provisions
Social section
If needs be, decision of SNB to not continue or
to end negotiations
9
Social and tax aspects

• Social aspect
• Agreement with respect to worker involvment in
  the SE (Special Negotiating Body (SNB))
• Before/After principle in order to secure
  employees' acquired rights as regards involvement
  in company decisions, employees rights in force
  before the establishment of SEs should provide
  the basis for employees rights of involvement in
  the SE (e.g. Codetermination)
• Tax aspect
• No specific tax provisions in the SE Statute
• However, existence of a guarantee of fiscal
  neutrality, averaging the upkeep of securities of
  stable establishments

10
What are the advantages of the SE?

• General advantages
• European identity and marketing tool
• Cross-border mergers
• Intra-community mobility of registered office
• Harmonization at a European level of structures
  (network of SE subsidiaries with partially
  harmonized management)
• Simplification and rationalization of structures
  (reduction of number of legal entities,
  reorganization by line of products or types of
  service)
• Pan European model that transcends the
  nationalities
• Social cohesion
• Specific advantages (Banking and Insurance
  sector project finance)

11
What are the advantages of the SE? Simplification
rationalisation of structures (Allianz SE)
BEFORE
AFTER
Source Allianz SE
12
What are the advantages of the SE? Reorganisation
on a European level of the management of
activities (SCOR)

• Before the creation of SEs

• After the creation of SEs

SCOR SE
SCOR SA
SCOR Global Life SE
SCOR Global Life SA
SCOR Global PC SE
SCOR Global PC SA
Other holdings
Other holdings
SCOR SpA
SCOR AG
Revios AG
Other holdings
Other holdings
Other holdings
Other holdings
Other holdings
Source SCOR
13
What are the advantages of the SE? To create a
chain of impersonal SEs (fictional example)

• Before
• European or foreign group owning public
  limited-liability company subsidiaries governed
  by law from different Member States
• Legally and organizationally complex
• After
• Harmonized legal model to manage impersonal
  subsidiaries

14
What are the registered SEs?

• About 90 registered SEs
• By country more than 42 in Germany, 5 in the
  EEA zone
• By sector importance of financial services
• By way of constitution preference for
  constitution by merger and by transformation
• The case of shell SEs

15
How to improve the European Company statute?

• Proposals for a way forward in view of the 2009
  Commissions report
• Creation ex nihilo of an SE or increase in the
  means of constituting an SE
• A sole applicable legislation to the constitution
  of an SE by cross-border merger (provided that
  the law which protects to the greatest extent the
  minority shareholdersrights applies)
• Application of the registered seat theory
• Extension of the statutory autonomy
• Creation of an European companies register
• A Common consolidated corporate tax base

16
Conclusion the SE, an opportunity to be grabbed
by European companies

• Would Bill Gates have had the same success if he
  had to create a subsidiary of Microsoft in each
  State where he operated rather than operating in
  the United States as a whole?
• Mario Monti
• (Speech CCIP 1997)