The Societas Europaea in Germany in particular in the context of the theory controversy in the international corporate law

- II -

Table of contents

  Abbreviations  IV

  A. Introduction  1

  B. Characteristic of the Societas Europaea  3

I.  Objective of the Legislation  3

II.  Historical background  3

III.  Nature of the Societas Europaea  5

IV.  Relevant right  6

V.  Establishment forms  6

1.  Establishment by merger of corporations  7

2.  Establishment of a holding-SE  7

3.  Establishment of a daughter-SE  8

4.  Conversion of an existing corporation into a SE  8

5.  Secondary establishment by an existing SE  8

VI.  Corporate Governance of the SE  9

1.  General meeting  9

2.  Binaryistic system  9

  a) Supervisory board  9

  b) Executive committee  9

  c) Criticism at the binaryistic system  9

3.  One-board system  10

  a) Board of directors  10

  b) Executive directors  11

  c) Criticism at the one-board system  11

VII.  Co-determination  11

1.  Objective of the Council Directive regarding the co-determination  12

2.  Forms of the participation of the employees  12

  a) Special negotiating body  12

  b) Information and consultation by the SE representative body  13

  c) Participation of the employees in the organs of the SE  14

  d) Unresolved problems of German co-determination  16

- III -

  C. The theory controversy in the international corporate law  

  seat theory vs. formation theory  17

I.  Seat theory  17

1.  Transfer of the statute seat abroad  17

2.  Shifting of the administrative seat abroad  18

  a) Influx state follows the seat theory  18

  b) Influx state follows the formation theory  18

3.  Shifting of the statute or administrative seat into Germany  19

  a) Transfer of the statute seat into Germany  19

  b) Transfer of the administrative seat into Germany  19

4.  Criticism at the seat theory  19

II.  Formation theory  20

III.  Influence of the ECJ iurisdiction on the theory controversy  21

1.  The freedom of establishment with the way course  21

2.  The freedom of establishment with the influx  22

3.  Résumé of the freedom of establishment  23

IV.  „Mobile seat theory“ with the Societas Europaea  23

1.  Indication of the SE-VO for the validity of the formation theory  23

  a) Council Recital 23  23

  b) Art. 2 SE-VO  24

  c) Other indications  24

2.  Indication of the SE-VO for the validity of the seat theory  24

  a) Art. 7 SE-VO  24

  b) Art. 64 SE-VO  24

3.  Combination of the seat theory and the formation theory  25

4.  Seat of a Societas Europaea  25

  a) Present legal situation  25

  b) Legal situation after the entry into force of the MoMiG  26

5.  Transfer of seat of a Societas Europaea  26

  D. Summary  27

  Bibliography  30

  Other Sources  34

- IV - Abbreviations

AG (Die) Aktiengesellschaft [Corporation; review] AktG Aktiengesetz [Stock Corporation Act] AO Abgabenordnung [General Fiscal Law] a.o. among others Art. Article Artt. Articles AuR Arbeit und Recht (review) AWD Außenwirtschaftsdienst des Betriebs-Beraters (review) BayObLG Bayerisches Oberlandesgericht [Bavarian Higher Regional Court] BB Betriebs-Berater (review) BGBl. Bundesgesetzblatt [Federal Law Gazette] BGHZ Sammlung der Entscheidungen des BGH in Zivilsachen [Report of the Federal Court of Justice in civil cases] BStBl. Bundessteuerblatt [Federal Tax Sheet] BT-Drucks. Bundestags-Drucksache

[printed matter of the Lower House of German Parliament] BuW Betrieb und Wirtschaft (review) BVerfGE Sammlung der Entscheidungen des BVerfG [Report of the Federal Constitutional Court] c. case COM Document of the European Commission DB Der Betrieb (review) DStR Deutsches Steuerrecht (review) DStRE Deutsches Steuerrecht - Entscheidungsdienst (review) EC European Community ECJ European Court of Justice ECR European Court Reports ECU European Currency Unit Ed. Editor EEA European Economic Area EEC European Economic Community

- V -EGBGB Einführungsgesetz zum Bürgerlichen Gesetzbuch [Introductory Act to the German Civil Code] e. g. exempli gratia FB Finanz-Betrieb (review) FCC German Federal Constitutional Court (Bundesverfassungsgericht) FCJ German Federal Court of Justice (Bundesgerichtshof) FFC German Federal Finance Court (Bundesfinanzhof) fn. footnote Finanzrundschau (review) FR GmbH Gesellschaft mit beschränkter Haftung [private limited company] GmbHG GmbH-Gesetz [Companies Act] GmbH-Rundschau (review) GmbHR i. e. id est, that means IntGesR International Corporate Law KG Kammergericht [superior Court of Justice] KStG Körperschaftsteuergesetz [Corporation Tax Law] lit. littera, letter

Gesetz zur Modernisierung des GmbH-Rechts und zur MoMiG

mn margin number Neue Juristische Woche (review) NJW No. number

Zeitschrift für die notarielle Beratungs- und Beurkundungspraxis NotBZ (review) OJ Official Journal of the European Union OLG Oberlandesgericht [Higher Regional Court] p. page(s) para. paragraph RdW Recht der Wirtschaft (review) RG Reichsgericht [supreme court of the German Reich] RGZ Sammlung der Entscheidungen des Reichsgerichts in

- VI -RIW Recht der internationalen Wirtschaft (review) SE Societas Europaea SEAG Gesetz zur Ausführung der Verordnung (EG) Nr. 2157/2001 des

SEBG Gesetz über die Beteiligung der Arbeitnehmer in einer Europäischen Gesellschaft [SE participation law] SEEG Gesetz zur Einführung der Europäischen Gesellschaft [introductory law of the European company] SE-RL Council Directive 2001/86/EC of 8 October 2001 supplementing

SE-VO Council Regulation (EC) No 2157/2001 of 8 October 2001 on the Statute for a European company (SE) subpara. subparagraph TEC Treaty establishing the European Community UmwG Umwandlungsgesetz [Reorganization Act] vs. versus WISU Wirtschaftswissenschaftliches Studium (review) WM Wertpapier-Mitteilungen (review) ZGR Zeitschrift für Unternehmens- und Gesellschaftsrecht (review) ZIP Zeitschrift für Wirtschaftsrecht (review)

- 1 - A. Introduction

End of the 50's of the past century some scientists have already supported supranational limited companies in Europe. ¹ Finally, the European Commission submitted its first suggestion over the statute for European companies in 1970. ² After more than three decades of continuing, intensive negotiations, in particular over the arrangement of workers´ participation, ³ the European Heads of State and Government agreed on the introduction of a European company at the end of 2000. The European Council of Ministers adopted the “Council Regulation (EC) No 2157/2001 of 8 October 2001 on the Statute for a European company (SE)” ⁴ [shortened by SE-VO] and the “Council Directive 2001/86/EC of 8 October 2001 supplementing the Statute for a European company with regard to the involvement of employees” ⁵ [shortened by SE-RL]. Although the regulation could have been entered into force directly in all member states (Art. 249 para. 2 TEC), Art. 70 SE-VO allowed a generous period by 8 October 2004, within the national legislators had to transform the directive into national law. In opinion of the commission only both complementary legal instruments together could regulate the common legal form of the European company sufficiently. Therefore the regulation entered into force explicitly, as soon as the directive was converted into the respective right of the member states, ⁶ which should happened in accordance with Art. 14 SE-RL at latest by 8 October 2004. Since this date, transnational active capital companies are available in the entire area of the European Union and in the member states of the European Economic Area (EEA) ⁷ in the legal form of the European company, usually shortened with SE for “Societas Europaea”.

In the Federal Republic of Germany, the legislation decided the “Gesetz zur Einführung der Europäischen Gesellschaft (SEEG)” ⁸ [introductory law of the European company], which converted with Art. 2, the SE-Beteiligungsgesetz (SEBG) (SE participation law), the directive

¹ See Sanders, AWD (RIW) 1960, p. 1-5.

² Proposal for a Council regulation on the statute for a European company of 30.6.1970, OJ C 124/1, 10.10.1970.

³ See Jahn/Herfs-Röttgen, DB 2001, p. 634.

⁴ Council Regulation (EC) No 2157/2001 of 8 October 2001 on the Statute for a European company (SE), OJ L 294/1, 10.11.2001; shortened by SE-VO.

⁵ Council Directive 2001/86/EC of 8 October 2001 supplementing the Statute for a European company with regard to the involvement of employees, OJ L 294/22, 10.11.2001; shortened by SE-RL.

⁶ See the Regulation Recital 22 of the SE-VO.

company), BGBl. I 2004 p. 3675.

- 2 -for the co-determination into national law. It was entered into force by 29 December 2004, too late. The introductory law supplemented the SE-VO in its execution in numerous points or changed - so far expressly permitted by this - the regulations off. Despite uniform legal form of the European company, it can quite lead to different valid regulations in the member states. Probably there are exactly so many Societas Europaea in Europe like how many states there are. The Art. 1 of the introductory law of the European company, i. e. the SE-Ausführungsgesetz (SEAG) (SE executive law), dedicated itself to a large extent to the arrangement of the one-board-system introduced in Germany as well as the protection of minorities during the establishment of a Societas Europaea. 9

The national introductory law regulates just as little as the SE-VO ¹⁰ itself other right areas like the competition right, the insolvency law, the commercial legal protection or the taxation of the enterprise. Special paragraphs both for the tax treatment of the establishment and for current profit taxation are missing on European level completely, so that the competence remains for these fields in the member states. However the European legislator gave directives in this area for the harmonization of the Common Market, which express themselves for example in the merger directive ¹¹ including the taxation of mergers ¹² or in the mother-daughter-directive. 13

The Societas Europaea embodied the guidance saying of the European Union “United in diversity” ¹⁴ in its entirety. It unites the regulations relating to the law on shares of the individual member states under the roof of a uniform European legal form.

⁹ See Neye/Teichmann, AG 2003, p. 169.

¹⁰ See the Regulation Recital 20 of the SE-VO.

¹¹ Directive 2005/56/EC of the European Parliament and of the Council of 26 October 2005 on cross-border mergers of limited liability companies, OJ L 310/1, 25.11.2005.

¹² Council Directive 90/434/EEC of 23 July 1990 on the common system of taxation applicable to mergers, divisions, transfers of assets and exchanges of shares concerning companies of different Member States, OJ L 255/1, 20.8.1990, changed by Council Directive 2005/19/EC of 17 February 2005 amending Directive

90/434/EEC 1990 on the common system of taxation applicable to mergers, divisions, transfers of assets and exchanges of shares concerning companies of different Member States, OJ L 58/19, 4.3.2005.

¹³ Council Directive 90/435/EEC of 23 July 1990 on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States, OJ L 225/6, 20.8.1990, changed by Council Directive 2003/123/EC of 22 December 2003 amending Directive 90/435/EEC on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States, OJ L 7/41,

13.1.2004.

¹⁴ Draft Treaty establishing a Constitution for Europe, Art. IV-1 subpara. 3.