EEIG Requirements

A European regulation provides for the establishment of European Economic Interest Grouping (EEIG). The purpose of an EEIG is to facilitate and develop economic activities of members by pooling of resources, activities or skills. It is not intended the grouping should make profits for itself. If it does make any profits they will be apportioned between its members and taxed accordingly. Its activities must be related to the economic activities of members but cannot replace them. An EEIG may not employ more than 500 persons.

An EEIG may be formed by companies, partnerships, traders or other legal persons governed by public or private law which have been established and formed in accordance with the law of a Member State and have their registered offices within the EU. It can also be formed by individuals carrying on industrial commercial craft or agricultural activity or providing professional or other services in the Community.

An EEIG must have at least two members from different States within the EU. The contract for the formation of the EEIG must include its name, official address, objects, registration number, place of registration of each member and duration of the grouping, except where it is indefinite. The contract must be filed at the registry designated by each State. Registration confers full capacity on the EEIG throughout the European Union.

When a grouping is formed or dissolved, a notice must be published in the Official Journal of the European Communities.

Features

A group’s official address must be within the community. It may be transferred from one State to another subject to certain conditions. Each member of an EEIG has one vote. The contract for formation may give certain members more than one vote, provided that no one person holds a majority of votes. The Regulation sets out decisions for which unanimity is required.

The EEIG must have at least two organs; the members acting collectively and the manager or managers. The managers represent and bind the EEIG in dealings with third parties even where their acts do not fall within the objects of the group.

An EEIG may not invite investment by the public. They do not necessarily have to be formed with capital. Members may use alternative sources of funding.

The profits of the EEIG are deemed to be those of its members and they are apportioned according to relevant clauses in the contract or in the absence of apportionment in equal shares. The profits and losses of an EEIG will be taxable only in the hands of its members.

As against freedom which is at the basis of the EEIG and the fact that members are not required to provide a minimal amount of capital, each member has unlimited joint and several liabilities for its debts.

European Company

A Council Regulation provides for a European company (SE).By creating this structure, the EU facilitated the operation of companies wishing to expand their business at the community level. It involves the combined application of the SE regulation and national law

An SE with its headquarters in an EU country is governed: by the provisions of the regulation; and for those aspects not covered by the regulation, by the national provisions adopted in application of European measures targeting the SE specifically and those applicable to public limited liability companies.

A European company is established with at least two companies originating in different EU countries, which means especially that it can only be created from an existing base. It must have a minimum capital of €120 000 and it can be created in the following ways.

  • Merger (to establish a European company) -Public limited liability companies -At least two of the companies must originate in different EU countries
  • Establishment of a European holding company Public limited liability company or a limited liability company At least two of the companies must originate in different EU countries or they must have had a subsidiary or branch in another EU country for at least 2 years
  • Establishment of a European subsidiary Companies, enterprises or other legal entities At least two of the companies must originate in different EU countries or they must have had a subsidiary or branch in another EU country for at least 2 years
  • Conversion -Public limited liability company- The company must have had a subsidiary in another EU country for at least 2 years

In addition, a European company can create one (or more) subsidiaries that are also European companies.

Features

The registered office of the SE must be the place where it has its central administration, that is to say, its true centre of operations. The SE may, however, transfer its registered office within the EU without having to dissolve the original company to form a new one.

The registration and completion of the liquidation of an SE is published for information in the Official Journal of the European Union.

The statutes of the European company can provide for two different systems:

  • the two-tier system that provides for a management board and a supervisory board in addition to the general meeting of shareholders; and
  • the single-tier system that provides simply for the general meeting and an administrative board.

The SE are subject to taxes and charges in all EU countries where their administrative centres are situated.

No SE may be established without a model of employee involvement being selected by agreement between the management and the employees themselves. This agreement must of necessity include information and consultation procedures and, where appropriate, employee involvement in the management bodies of the SE. This involvement is nevertheless only mandatory if the employees already benefited from it before the creation of the SE.

Where the two parties are unable to reach a satisfactory arrangement, a series of standard principles listed in an annex to the directive then apply.

Contact McMahon Legal 

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