Wednesday, 11 Jun 2008
better news for smaller Businesses: the european private company
New regulations designed to facilitate the creation of a European Private Company have been proposed.
Why?
In its review of small and medium sized enterprises (SMEs), the European Commission concluded that although SMEs represent 99.8% of companies in the European Union, the majority operated solely within national borders and rarely expanded their business to other member states.
This was largely due to expensive and time consuming problems caused by differing legal and procedural requirements between countries.
What is a European Private Company?
The European private company is to be a new legal entity named SPE (taken from its Latin name ‘Societus Privata Europaea’) which can exist in all Member States and will enable entrepreneurs to set up their company/subsidiaries with the same management structure regardless of location.
The form of SPEs is quite similar to existing limited companies in the UK. It will have limited liability, share capital (in Euros with a minimum paid up capital of €1), and will have the “SPE” abbreviation after its name.
How would this affect small businesses?
If enacted, this would mean that businesses could start up and operate in the same format across Europe, reducing the burden of having to comply with different incorporation rules in each country.
At present, companies wishing to have European branches – such as a GmbH in Germany or an SAS or SARL in France - would need to set up a subsidiaries in the EU Member States desired and obey the various company laws in those states.
The proposed SPE regulation would allow for the electronic creation of an SPE and for it to be created in the language of the Member State of registration. It would also enable an SPE to have its registered office in one Member State yet be able to conduct its activities in another. An SPE may transfer its registered office to another Member State if wished and is not required to have its headquarters in the same Member State as its registered office. Furthermore, a cross-border element is not required in order to set up an SPE, which is particularly useful for most entrepreneurs who set up in their own Member State before considering development in other countries.
When?
If these measures are adopted, SPEs should be introduced by 2010.
If you would like any further information or advice on this issue, please contact Emma Hill.