COMMISSION OF THE EUROPEAN COMKONITIES 
v. 
C0M(89) 268 final - SYN 218 and 219 
Brussels, 25 August 1989 
C0M(89) 268 final - SYN 218 
Proposal for a 
COUNCIL REGULATION 
on the Statute for a European company 
C0M(89) 268 final»- SYN 219 
Proposal for a 
COUNCIL DIRECTIVE 
complementing the Statute for a European company 
with regard to the involvement of employees 
In the European company 
(presented by the Commission) 
IntroductIon 
The European company (Latin Socletas Europaea, "SE") Is designed to enable 
companies governed by the laws of different Member States to choose a 
structure for cooperation and restructuring suited to the dimensions of the 
large market to be achieved in 1992. It alms to free companies from the 
legal and practical constraints arising from the existence of twelve 
separate legal systems by offering them an optional structure based on 
Community law and independent o.f national laws In so far as these have not 
been harmonized. As long ago as 1970, the Commission put forward a proposal 
based on Article 235 of the EEC Treaty. This proposal was amended in 1975. 
The Council suspended work on It In 1982. It was suggested that this 
project should be revived as part of the drive towards completing the 
internal market. In June 1987 the European Council In Brussels requested 
the institutions concerned "to make swift progress with regard to the 
company law adjustments required for the creation of a European company." 
On 15 July 1988 the Commission submitted a memorandum describing the main 
difficulties and sketching solutions1. 
The text now proposed is in two parts. It brings together In a Regulation 
based on Article 100a all the rules necessary for the creation and 
operation of the SE, except those dealing with the involvement of employees 
in the SE. The latter rules form the subject of a complementary Directive, 
in view of the diversity of national rules and practices on that subject. 
The Regulation and the Directive form a composite whole, and must be 
applied together. 
In order to make the form attractive to small businesses, the minimum 
capital requirement has been lowered from ECU 250 000 to ECU 100 000 
(Title I). 
1 C0M(88)320, 15 July 1988 

-1a-
Tltle II, on methods of formation, Is based on the 1975 proposal. An SE 
may be set up by merger, by the formation of a holding company, or by the 
formation of a Joint subsidiary. The procedure for formation by merger Is 
based largely on the Third Company Law Directive (78/855/EEC), supplemented 
to take account of the cross border aspect of the proposal for a 
Tenth directive. 
Title 111, on capital, shares and debentures, has been revised in the light 
of the Second Directive (77/91/EEC). 
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The structure of the SE Is dealt with in Title IV; here the proposal takes 
account of progress In the Council's discussion of the proposal for a 
Fifth Directive, and retains the option of either a one-tier board system 
or a two-tier system with a management board and a supervisory board. 
For the preparation, publication and auditing of annual accounts and 
consolidated accounts (Title V), the Statute refers to the accounting 
directives, namely the Fourth, Seventh and Eighth Company Law Directives 
(78/660/EEC, 83/349/EEC and 84/253/EEC). 
The options left to the Member States In the Fourth and Seventh Directives 
have been given to the SE. This has been done In order to avoid having to 
renegotiate those directives. 
The Statute no longer contains any provisions concerning groups (Title VI), 
because there is currently no need for specific rules for SEs In this area. 
The SE will be treated in the same way as other companies governed by the 
legislation of the Member State In which they have their registered office. 
The Commission is studying the need for coordination of the laws of the 
Member States in this respect. 
Winding up and liquidation (Title VII) are matters which have not yet been 
harmonized. The proposed regulation restricts the grounds on which an SE 
may be wound up, and settles only the questions which are essential for the 
protection of the shareholders at this delicate stage of the life of the 
company. 
Given the complexity of the question of the insolvency of an SE, the 
proposal contents Itself with a reference to the law of the Member State In 
which the SE has Its registered office. 
Title VI11 refers to Title II for cross border mergers and to the laws of 
the Member States, as harmonized by the Third Directive, for domestic 
mergers. 
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As far as tax arrangements are concerned (Title IX), the SE will be subject 
to the tax law of the country in which It has Its registered office. 
Losses suffered by an SE's permanent establishments abroad can be offset 
against Its profits. This provision Is Indispensable In order to overcome 
the obstacles which an SE would otherwise encounter In Its business, which 
by its nature is cross border business. 
To avoid any discrimination against other firms carrying on business across 
borders, the same rules will be proposed as a directive for other legal 
forms of undertaking. 
The involvement of employees in the SE is dealt with by means of a 
Directive, which is an Indispensable complement to the regulation. The term 
"employees" corresponds to the "workers" referred to in Tltal III of Part 
Two of the EEC Treaty. It comprises persons with a contract of service, of 
whatever kind, to an employer. It covers the various categories of staff 
employed by businesses In the Community. Employees are to play a part In 
supervision and In the definition of strategy. Three models of 
participation are provided for: participation In determining the membership 
of the supervisory board (model 1), participation through a staff 
representative body distinct from the governing bodies of the company 
(model 2), and a form of participation to be established by collective 
agreement (model 3). A Member State may restrict the choice of models open 
to SEs having their registered office In its territory. The management or 
administrative boards as the case of the founder companies may be and the 
representatives of the employees of those companies are to agree on the 
choice of a model. If they fall to reach the management Board Is to choose 
a model, since these can be no SE without participation, and the models all 
confer equivalent rights on the employees. If model 3 Is chosen but no 
agreement is reached on the form, a standard model Is to be applied, to be 
drawn up by the State and satisfying the information and consultation 
requirements laid down In the Statute. 
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COMMENTARY ON THE ARTICLES OF THE REGULATION 
Title I 
General provisions 
Article 2 
The Statute provides three ways of forming an SE. 
1. Only public limited companies can set up an SE by merger (assets 
merger) or by formation of a holding company. This Is because the 
necessary exchange of shares will only be possible If both the founders are 
pub lie IimI ted companIes. 
If private limited companies wish to form an SE they will first have to 
become public limited companies In accordance with their domestic law. 
2. The scope for setting up an SE by forming a Joint subsidiary is wider. 
Participation Is open to all legal bodies governed by public or private 
law, whether or not they are In company form and Indeed whether or not they 
have legal personality, and regardless of whether they carry on a 
commercial activity or Just an activity with an ultimate economic purpose. 
This very broad concept Is based on that adopted for the European Economic 
Interest Grouping (EEIG).1 
On grounds of legal certainty and for technical reasons It has not been 
possible to make provision for the conversion Into an SE of a company 
incorporated under national law and having branches In several 
The form created by Regulation (EEC) No 2137/85 of 25 July 1985: 
OJ No L 199, 31.7.1989, p. 1. 
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Member States. Such a company could set up an SE by merging at least two 
subsidiaries in different Member States. 
Article 3 
1 and 2. An existing SE may be party to the formation of another SE by 
merger or formation of a holding company or Joint subsidiary. 
3. An SE may also set up one or more subsidiaries, but In order to avoid 
the creation of "cascades" of SEs, an SE which Is Itself a subsidiary of an 
SE cannot create further subsidiary SEs. 
Article 4 
1. The amended proposal of 19752 would have required a minimum capital 
of ECU 250 000 where an SE was set up by merger or formation of a holding 
company and ECU 100 000 where the new SE was a Joint subsidiary or a 
subsidiary of another SE. 
This distinction has been dropped. The minimum capital for an SE Is now 
ECU 100 000 in all cases. The Intention Is to make It easier for small 
businesses to take advantage of the Statute. There Is also the fact that 
once a subsidiary SE has been set up It will have Its own Independent 
existence; It may be bought or may Itself set up subsidiaries. There will 
then be nothing to distinguish It from other SEs set up by merger or by the 
formation of a holding company. 
The figure of ECU 100 000 Is close to that laid down for domestic public 
limited companies In the laws of most of the Member States under the Second 
Company Law directive.3 The capital need only be 25% paid up 
(cf. Article 38(2)). 
2 Supplement 4/75 - Bulletin of the European Communities. 
3 Council Directive 77/91/EEC of 13 December 1976 on the formation of 
pub Iic Iimlted I lab 11l*y companies and the maintenance and alteration of 
their capital: 0J No L 26, 31.1.1977, p. 1. 
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2 and 3. Where an SE Is set up to carry on a regulated activity, It will of 
course be subject to the specific requirements governing that activity. An 
SE may be a credit institution. In that case the minimum capital is that 
required by Article 3 of the proposal for a Second Council Directive on the 
taking up and pursuit of the business of credit institutions, submitted on 
23 February 1988.4 The figure given there is ECU 5 million, which may be 
reduced to ECU 1 million In certain circumstances. 
In the case of insurance undertakings, the text makes reference only to the 
laws of the Member State In which the SE has Its registered office, even 
though there has already been Community-level harmonization In this field. 
The capital required does not correspond In all Member States to the 
"solvency margin" referred to in the relevant Directives 
(Directive 73/239/EEC5. and Directive 79/267/EEC6). 
Article 5 
The registered office of the SE designated in the statutes must be the 
place where it has its central administration, that Is to say its 
siège réel or real seat. This use of the siège réel concept is Important 
in several respects. Firstly, It reflects the dominant thinking In the 
Member States. Secondly, It allows the law of one specific Member State to 
be applied to the SE, either as the normal rule (where an express reference 
is made by the Statute Itself, for example) or In the absence of any other 
rule (e.g. Article 7d)(b)). 
The transfer of an SE's registered office may be decided in the same way as 
an amendment of Its statutes (Article 81(h)). 
4 0J No C 84, 31.3.1988, p. 1 . 
5 First Council Directive of 24 July 1973 on the taking up and pursuit of 
the business of direct insurance other than life assurance: OJ No L 
228, 16.8.1973, p. 3. 
6 First Council Directive of 5 March 1979 on the taking up and pursuit of 
the business of direct life assurance: OJ No L 63, 13.3.1979, p. 1. 
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Article 6 
This Article defines what "controlled undertaking" and "controlling 
undertaking" mean In the Statute. These definitions are needed despite the 
fact that the Statute does not lay down any rules dealing specifically with 
the management of a group headed by the SE, mainly In order to prevent an 
SE from subscribing for or acquiring its own shares through the agency of a 
controlled undertaking (Article 48(1) and Article 49(1) and (9)). They are 
necessary also in order to determine the law applicable under 
Article 114(1) and (2). 
The definition is based on Article 8 of Directive 88/627/EEC.7 The tests 
chosen are simple and easy to apply. 
Article 7 
This Article defines the scope of the Statute in relation to the laws of 
the Member States. A distinction has to be drawn between the matters which 
are regulated by the Statute and those which are not. 
1. Where a matter is regulated by the Statute, the Statute should be as 
independent as possible of national law so as to ensure that from the 
firm's point of view It does represent a simplification and an improvement 
over the existing position. The amended proposal of 1975 excluded the law 
of the Member States entirely. The Statute which resulted was too 
extensive, detailed and Inflexible. The new draft simplifies matters by 
Council Directive of 12 December 1988 on the information to be published 
when a major holding in a listed company is acquired or disposed of: 
OJ No L 348, 17.12.1988, p. 62. 
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referring to the domestic law of the Member State In which the SE has Its 
registered office whenever the company law directives have harmonized or 
are In the process of harmonizing the national rules (disclosure, accounts, 
mergers, etc.). Reference has also had to be made to national law In 
fields where Community rules cannot be expected In the near future (groups 
of companies, winding up and liquidation, etc). 
If a question of law arises on a matter covered by the Statute' but not 
expressly determined by It, the national courts will have to fill the gap 
by looking In the first place at the general principles upon which the 
Statute is based. If the question cannot be settled in that way the 
Statute refers to the law applying to public limited companies In the 
Member Stats In which the SE has Its registered office. 
Thus the demarcation line between the provisions of the Statute and the 
ordinary provisions of national law Is clearly marked out. The adoption of 
the EEIG Regulation, which takes the same approach, shows that coexistence 
of this kind Is possible. 
2. Paragraph 2 makes provision for the special situation in the 
United Kingdom, where Scottish law is different from that In force 
elsewhere. 
3. Provision Is then made for matters which are not governed by the 
Statute. They are excluded from Its scope, and subject to the law of the 
Member States. The law applicable in a particular case Is to be determined 
In accordance with the private International law of the forum. 
4. The Statute requires Member States to treat SEs In the same way as 
public limited companies incorporated under their domestic law. This will 
apply for example with regard to the taking up of various kinds of 
business, capacity to borrow, the Issuing of securities, and the listing of 
such securities on a stock exchange. The only privilege that the Statute 
confer? on the SE Is the Community character of Its structure. Companies 
In the form of SEs and companies incorporated under domestic law are thus 
on an equal footing <~t terms of competition. 
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Article 8 
1. An SE Is set up by being entered In a register designated by the law 
of the Member State in which It has Its registered office in accordance 
with Article 3 of the First Company Law Directive.8 The use made here of 
a system which exists In all Member States makes It unnecessary to 
establish a European commercial register and to confer Jurisdiction on the 
Court of Justice of the European Communities to hear actions In respect of 
the formation of any SE. 
2. Any branch opened by an SE In a Member State other than that In which 
It has Its registered office Is to be registered In that other 
Member State, in order to ensure that shareholders and outsiders are fully 
Informed. The procedure to be followed Is the one laid down for branches 
by Articles 1 to 3 of the amended proposal for an 
Eleventh Company Law Directive,® which Is Itself based on the system 
established for companies by the First Directive. 
Article 9 
Documents concerning the SE are to be disclosed by the means laid down In 
the laws of each Member State In accordance with Article 3 of the First 
Company Law Directive. That system consists of entry In a register and 
publication in a national gazette. Only then may those documents be relied 
upon against third parties. 
8 Council Directive 68/151/EEC of 9 March 1969 on disclosure, validity of 
obligations entered Into, and nullity of companies: OJ No L 65, 
14.03.1968, p. 11. 
9 Amended proposal of 5 April 1988 for an Eleventh Council Directive on 
company law concerning disclosure requirements In respect of branches 
opened In a Member State by certain types of companies governed by the 
law of another Member State: OJ No C 105, 21.04.1988, p. t>. 
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Article 10 
Notice Is to be given In the Official Journal of the European Communities 
whenever an SE Is formed or the liquidation of an SE Is terminated. This 
type of publicity seems Important given the nature of an SE's business, 
which Is by definition transnational. But publication of this notice will 
have no legal Implications. The relevant events can be relied upon against 
third parties from the date of the notice referred to In Article 9. 
Article 11 
This Article lists the details which must be supplied on an SE's business 
documents and those of any branch In another Member State. The list Is 
fuller than that In Article 4 of the First Company Law Directive. 
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Title II 
Formation 
Section I 
General 
Article 12 
This Article defines the concept of founder companies for the purposes of 
Title II. This Is necessary since public limited companies are no longer 
the only legal bodies which may participate In forming an SE. 
Articles 13 and 14 
These two Articles relating to the Instrument of Incorporation of the SE 
and to the experts' report on non-cash consideration refer back, as far as 
the conditions to be fulfilled by the latter are concerned, to provisions 
of national law. 
Article 15 
The task of ensuring that the rules governing the formation of the SE are 
complied with is entrusted to the national authorities which carry out that 
task for all other public limited companies. However, the Statute 
stipulates that Member States must ensure that such supervision Is 
effective and that ft covers the conditions laid down both by the Statute 
and by national law. 
Article 16 
This Article defines the date on which the SE begins to exist. 
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SECTION 2 
Formation by merger 
Article 17 
The wording of this Article, which describes the merger process, is based 
on the Third Company Law Directive (78/855/EEC) and on the proposal for a 
Tenth Directive on cross-frontier mergers. The formation of an SE by 
merger Is based on an identical legal mechanism to that laid down by the 
proposal for a Tenth Directive, since It Involves the merging of two 
companies from different Member States. The rights of the employees of the 
merging companies are protected In each Member State In accordance with 
Directive 77/189/EEC. 
Articles 18 and 19 
The draft terms of merger, which are common to all the founder companies, 
set out certain details, an exhaustive list of which Is given In the 
interests of greater clarity. 
The arrangements for publishing the draft terms of merger are the same as 
those laid down for domestic mergers. 
In view of the cross-frontier nature of the merger, however, more extensive 
publication of certain information Is required. 
Articles 20 and 21 
The Board of each of the merging companies Is required to draw up a 
detailed report to shareholders Justifying the merger. This report Is 
examined by experts who are responsible In particular for checking, on 
behalf of shareholders, whether the share exchange ratio Is fair and 
reasonable. 
Article 22 
A merger has always to be approved by a general meeting of each of the 
founder companies. The resolution approving the merger Is subject to the 
same conditions as apply In the case of domestic mergers. 
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Article 23 
Claims which originated prior to publication of the draft terms of merger 
and which have not yet reached maturity at the time of publication are 
governed by those provisions of the national law governing the founder 
companies which relate to the arrangements for protecting the interests of 
creditors. 
Articles 24 and 25 
The provisions relating to the supervision and control of compliance with 
merger requirements lay down certain rules for synchronizing supervisory 
procedures so as to prevent Irreversible situations. The date on which the 
merger takes effect thus follows the completion of all the checks carried 
out on the founder companies and Is determined by the law of the Member 
State In which the SE Is to have Its registered office. 
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Art le les 26 and 27 
The merger must be made public before it can become effective against third 
parties. 
The merger entails the transfer of all the assets and liabilities of the 
founder companies to the SE. 
Article 28 
The liability of members of the administrative board or management board 
and of the experts of the founder companies Is governed by the law of the 
Member State in which the founder company concerned has Its registered 
office, subject to the minimum requirements laid down In the Third 
Directive being observed. 
Article 29 
This Article limits the grounds on which a merger may be declared nui I and 
void to cases where one or other of the supervisory procedures has not been 
carrled out. 
It also seemed desirable, in order to limit the danger of mergers being 
declared null and void, to protect the cross-frontier merger from such a 
declaration where it Is not provided for in the law of the State In which 
the SE has its registered office, since that company only comes Into 
existence when the merger has been completed. 
Article 30 
This Article lays down the rules applicable to the formation of an SE by 
merger where one of the founder merging companies holds all or part of the 
capi tal of the other. 
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SECTION 3 
Formation of an SE holding company 
Article 31 
The economic aim underlying the formation of a holding company Is to enable 
the shareholders of the founder companies to participate In the profits of 
the holding company; for that reason, an exchange of shares has to take 
place. As a result of that exchange, the holding company becomes the sole 
holder of all the shares In the founder companies; It Is therefore 
appropriate that the application of national provisions providing for the 
founder companies to be wound up In such cases should be expressly 
excluded. 
Article 32 
The provisions of this Article relating to the formation of an SE holding 
company refer to the provisions relating to formation by merger. 
Article 33 
This Article introduces a system for Informing the employees of founder 
companies about the Implications of the formation of the holding company. 
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SECTION 4 
Formation of a Joint subsidiary 
Articles 34 and 35 
The provisions relating to the formation of a Joint subsidiary are worded 
so that the decision to set up an SE Is not a matter for the boards of the 
founder companies but for their general meetings; the Statute governs the 
approval of the formation of a Joint subsidiary only where one of the 
parent companies Is an SE. 
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SECTION 5 
Formation of a subsidiary by an SE 
Art le les 36 and 37 
This is the only case where the formation of an SE does not presuppose the 
existence of two companies from different Member States; this requirement 
of a foreign element Is nevertheless observed In the formation of the 
parent SE. 
Unlike national public limited companies, therefore, an SE, acting alone 
may set up a subsidiary having the same legal form as the parent company. 
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TITLE Ml 
Article 38 
Paragraph 2 
The rule that shares must be 25% paid up represents an average of the rates 
In the Member States, and has been taken over from the Second Company Law 
Directive (77/91/EEC). 
The obligation to transfer in full any consideration other than cash Is a 
protection against fictitious consideration, and one of the simplest ways 
-f ensuring that a subscriber offering consideration other than cash does 
In fact transfer It. 
Paragraph 3 
Contributions must be realizable. In order to provide security for 
creditors, promises to perform work or to supply services which cannot be 
converted Into money are not permitted. 
Article 39 
This Article provides some security for creditors. It accepts, however, 
that professional Intermediaries placing shares may buy them below par: the 
difference representing payment for their services. 
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Article 41 
This Article states a general principle deriving from the dual nature of 
share capital, which is at the same time the sum of the contributions which 
allow the company to be set up and the company's fund for safeguarding 
creditors. Shareholders cannot be dispensed from the obligation to furnish 
their consideration, except in the event of a reduction In the subscribed 
capital. 
Article 42 
Paragraph 1 
Article 38 has already laid down a minimum proportion In which the shares 
must be paid up on the formation of the company; the same proportion 
applies to an increase in capital. 
Paragraph 2 
The "requirement of a report on the valuation of any consideration other 
than cash represents a safeguard for those subscribing cash and for 
creditors. The valuation must be objective, and therefore carried out 
outside the company by Independent valuers. 
Paragraph 4 
An Increase In the subscribed capital can be regarded as an amendment of 
the statutes. The requirement of a resolution of the general meeting Is 
therefore an indispensable safeguard. 
Paragraph 5 
The restriction to available reserves Is Intended to ensure that reserves 
legally required cannot be capitalized, while anything In excess may be. 
Proportionate distribution of new shares protects the existing 
shareholders. An exemption has been provided for to allow for distribution 
of the new shares to the employees. 
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Article 43 
Paragraph 1 
Provision Is made for authorizing an Increase In capital, with a maximum 
set by the statutes or the general meeting In the Interests of the 
shareholders. But any Increase in the subscribed capital 's not to exceed 
one half of the capital already subscribed. 
Paragraphs 2 to 4 
These paragraphs make It clear that the powers of the management board or 
.-,e administrative board are merely delegated powers In relation to the 
powers of the general meeting. 
Article 44 
The principle of a preferential right of subscription Is laid down In order 
to provide protection for the existing shareholders when the capItai is to 
be Increased by the Issue of new shares for cash. The shareholder Is 
entitled not to see his own participation In the SE reduced by the issue of 
new shares. But exceptions have to be made In order to prevent this 
individual safeguard for the shareholder from damaging the Interests of the 
company and making It more difficult to obtain outside finance. Where any 
such exception Is to be made the shareholders must have been properly 
informed. 
Article 45 
Paragraph 1 
the procedure laid down for reductions of capital Is Intended to ensure 
equal treatment of shareholders. 
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Paragraph 2 
This paragraph also represents an application of the principle of equal 
treatment of shareholders. 
Paragraph 3 
A reduction of capital may not bring the capital below the prescribed 
minimum, except In response to losses. But In that case the capital must 
then be brought back to the prescribed minimum or above It. 
Paragraph 4 
A reduction in capital In response to losses must not make It possible to 
circumvent safeguards for creditors. The economic purpose of a reduction 
Is to allow the capital to be Increased at the same time or later, so as to 
obtain fresh resources for an SE in difficulties. An Increase will be 
impossible while the balance sheet shows a loss and the accounting value of 
the old shares Is therefore below par. 
Article 46 
Creditors who dealt with the SE before Its capital was reduced must be 
protected. They are generally to be entitled to security; the manner In 
which this right Is exercised Is to be governed by the law of the 
Member State where the company has its registered office. 
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Article 48 
Paragraph 1 
An SE may not subscribe for its own shares. This ban extends to 
undertakings It controls, as otherwise the major part of a stake held by 
the SE In a controlled undertaking could find Its way back Into Its own 
capital via a stake held by the controlled undertaking In the parent SE. 
This would Indirectly reduce the SE's capital. 
Paragraph 2 
This paragraph extends the protection of the capital provided by paragraph 
1 where the company subscribes for Its own shares through a person acting 
on Its behalf. 
Paragraph 3 
This sanction provides greater flexibility than would nullity of the 
subscription, without Introducing Joint and several liability. 
Article 49 
Acquisition by an SE of its own shares infringes the principle that the 
capital must be kept Intact, and Is therefore generally prohibited. 
Paragraph 2 sets out certain exceptions, which involve no appreciable 
danger to third parties or shareholders. It Is enough that they should be 
regulated, and this Is done In paragraphs 3 and 4. 
Paragraph S 
This ban Is an extension of the rule In paragraph 1. The holder of a right 
of usufruct may have voting rights (Article 92(4)), and this extension is 
necessary to avoid the danger of abuse which would arise if the company 
could exercise voting rights attached to Its own shares. 
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Paragraph 9 
In line with paragraph 1, any undertaking coming under the SE's control is 
also required to dispose of any shares It holds In the SE. 
An SE which acquires its own shares as a result of a universal transfer of 
assets does not thereby Infringe the ban In paragraph 1. But the shares 
must be disposed of within 18 months. 
Paragraph 10 
This provision covers distribution to the employees. 
Paragraph 11 
This provision prevents any abuse of the SE's own shares, and ensures that 
the obligation to dispose of or distribute shares will be complied with. 
The acquisition by a company of Its own shares can be regarded as repayment 
of capital. Such a share therefore has no Intrinsic value in the SE's 
capital. It no longer forms part of the net assets; the holding of a stake 
in the net assets Is not based on the share, except In a purely formal 
sense, but In reality on the contribution made. Consequently, no rights 
should attach to a share In the company which Is held as part of the 
company's own assets. 
Article 50 
This provision reflects a fundamental concern for clarity In relations 
within companies. The purpose Is to Identify any shareholder able to 
exercise influence in the SE. 
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Article 52 
Paragraph 1 
The ban on fixed interest represents an application of the principle that 
there should be no distribution without profit. 
Paragraphs 2 and 3 
Non-voting shares are permitted under specified conditions. 
There can be no other restriction or extension of voting rights. This 
would in particular prohibit shares carrying a right to nominate members of 
the supervisory board. 
Paragraph 5 
This represents an application of the principle of equal treatment of 
shareholders. 
Article 58 
Paragraph 1 
It is right and proper that the Issue of debentures convertible Into shares 
in conjunction with an increase In capital should be governed by the same 
rules with regard to the powers of the decision-making bodies Involved and 
the same procedure followed as a straightforward Increase In capital. 
Paragraph 3 
This provision protects the holders of convertible debentures. The 
proportion of holders whose rights may be affected Is restricted by the 
second sentence. 
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Article 59 
In the Interests of the shareholders It Is appropriate to require that any 
Issue of debentures carrying the right to a share in profits be decided In 
the same way as an amendment to the statutes, and that the shareholders be 
given a right of subscription similar to their right In the event of an 
Issue of convertible debentures. 
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TITLE IV 
GOVERNING BODIES 
Article 61 
On the question of governing bodies, the Statute is based on national 
company law and on the amended proposal for a Fifth Directive on the 
structure of public limited companies;1 It makes provision for a 
separation of powers between the general meeting of shareholders, which is 
to decide certain major Items of business, and the bodies which are to 
manage and represent the SE. 
7h3 management and representation of the SE Is to be the function either of 
a management board, with a supervisory board monitoring Its activities (the 
two-tier board system)» or of a administrative board (the single-tier 
system). The SE s founder companies are authorized to choose between the 
two systems; detailed rules for each system are spelt out In Section 1 and 
Section 2. Section 3 sets out rules common to both systems, while 
Section 4 contains detailed rules governing the general meeting. 
1 OJ No C 240, 9 September 1983. 
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SECTION 1 
Two-tier board system 
SUB-SECTION 1 
Management Board 
Article 62 
The most Important characteristic of the two-tier system Is that the 
members of the management board are always to be appointed by the 
supervisory board; the two bodies are kept separate by a rule preventing 
the same person from serving on both at the same time. 
SUB-SECTION 2 
Supervisory board 
Article 63 
The members of the supervisory board are to be appointed by the general 
meeting and, where the SE uses a model of employee participation which so 
requires, by the employees too. 
Article 64 
To be able to perform Its function the supervisory board is to receive a 
quarterly report on the company's affairs. The supervisory board must be 
able to require the management board to provide Information or a special 
report on any matter concerning the company at any time, and must be able 
to carry out any enquiries necessary for the performance of its duties. 
Any member may also require that Information be given to the supervisory 
board as a whole; but In order to avoid duplication such requests must be 
made through the chairman of the board. 
- 27 -
Article 65 
To ensure that the supervisory board functions properly It Is to be 
Convened noj* only at the chairman's Initiative or at the request of the 
management board but likewise at the request of any of Its members. Like 
the preceding article, this provision Is necessary In order to avoid any 
possibility of collusion between the management board and a majority on the 
supervisory board. 
SECTION 2 
Single-tier system 
Article 66 
This Article defines the fundamental characteristics of the single-tier 
structure. The administrative board must have at least three members, 
appointed by the general meeting and, where the model of participation In 
use requires It, by the employees. All the members are to designate one 
or more executive members from among Its own members, and to delegate the 
management and representation of the company to them; the main function of 
the other members Is to supervise the executive members; In order to 
strengthen the position of the non-executive members, they are to be more 
numerous than the executive members. 
Article 67 
The board Is to meet at least once every quarter to allow the executive 
members to report to the whole board, and so to enable the non-executive 
members to supervise the management and progress of the company's affairs. 
All members of the administrative board have the same rights and 
obligations, apart from the actual management of the company; It does not 
appear necessary to make provision for an Individual right of access to 
Information or of enquiry as In Article 64(3) and (4). 
- 28 -
SECTION 3 
Rules common to the single and two-tier board systems 
Article 68 
The better to ensure that the members of the governing bodies can be held 
responsible for their acts It was felt useful to state the principle that 
they can be appointed only for a specific period of time, which is not to 
exceed six years. 
Article 69 
The functions of the members of the governing bodies are such that they can 
properly be carried out only by natural persons. The admission of legal 
persons to any of these bodies has therefore to be subject to special 
rules, first and foremost the requirement that such a legal person must 
appoint a natural person to represent It In the performance of Its duties 
on the relevant board. 
Paragraph 4 has been Included to allow representation of a minority of 
shareholders on the administrative or supervisory board. Particularly 
where an SE has been set up as a Joint subsidiary. It may be Important to a 
founder company with a minority holding In the capital to have the 
assurance that Its Interests will be represented on the board. There would 
be no such assurance If the members of the administrative or supervisory 
board were elected under the general rules In Article 94(2), according to 
which resolutions of the general meeting are to require a majority. 
Article 70 
The main purpose of this Article Is to allow a list of alternate members to 
be elected, so that there will be no need to set the expensive election 
procedure In motion every time there Is a vacancy on the board. 
Article 71 
This provision deals with the representation of the company in dealings 
with third parties, and Is closely based on the rules in the First Company 
Law Directive, Directive 68/151/EEC, both as regards the question of 
whether those acting for the company are to do so together or may do so 
alone and as regards the appointment of persons with general authority to 
represent the company. 
- 29 -
Article 72 
The supervisory board or non-executive members are confined to supervising 
the management of the company. But It does not contradict this principle 
to require that development programmes and strategies and other measures of 
major importance to the company be decided by the management board or the 
executive directors only with the agreement of the supervisory board or of 
the administrative board as a whole. Even though authorization for a 
particular operation has to be obtained, It is the Management Board or the 
executive directors who will take the decision and Implement It. 
Article 73 
This provision Is Intended to prevent members of the governing bodies from 
abusing their powers in their personal Interest and to the detriment of the 
company. It does not prohibit transactions of the kind at Issue, but seeks 
to provide an effective means of control by making them subject to 
authorization. 
Article 74 
Every member of a board Is to have the same rights and obUgat Ions even 
though certain responsibilities of the board may be entrusted to particular 
members. One of the main obligations of board members Is the obligation to 
protect confidential Information. This Article also makes It clear that 
the fundamental duty of the members of the governing bodies of the company 
is to act In the Interests of the company. 
Article 75 
The general rule Is that the power to appoint the members of the 
supervisory board or the administrative board Is accompanied by the power 
to remove them at will. 
- 30 -
This Article also lays down a procedure for the removal of members by the 
courts, acting on the application of bodies or persons who do not have 
power to appoint the members concerned. This exception Is also necessary 
where, In accordance with the model of employee Involvement, members of the 
board are coopted. 
Article 76 
This provision lays down the basic rules for the quorum and majority 
required for board decisions. 
Article 77 
This Article and those following It deal with the liability of the 
governing bodies of the SE for loss wrongly caused to the company. There 
is to be liability only if the company has suffered damage. Thus there has 
to be a causal link between the act done and the damage Itself. 
Where the governing body has more than one member, It Is difficult for an 
outsider to know which member may have caused the damage; the provision 
therefore makes all the members of the relevant body Jointly and severally 
liable, whatever the nature of the act. 
Under the ordinary principles of civil law a person who has suffered damage 
Is required to prove that the person who caused It was at fault. This rule 
here would defeat many actions for liability, as It would be very difficult 
for an outsider to verify what was done Inside the company. The burden of 
proof has therefore been reversed, and the members of the board required to 
prove that no fault Is attributable to them personally. 
- 31 -
Article 78 
This provision sets out to clarify the procedural rules governing actions 
brought on the company's behalf against members of the governing bodies. 
An action may be brought by the administrative board or by the supervisory 
board; an action must be brought If the general meeting so decides. 
The provision also gives minority shareholders and creditors the right to 
bring actions on behalf of the SE. 
- 32 -
Article 79 
This provision allows the SE to waive Its right to bring an action for 
damages, but Imposes certain conditions to ensure that the rights to bring 
such actions conferred by the earlier articles do not become Illusory. 
Article 80 
The severity of the rules on liability Is balanced by the Imposition of a 
period of limitation, which In view of the cross-border character of the SE 
Is set at five years. 
- 33 -
SECTION 4: GENERAL MEETING 
Article 81 
A number of major steps require a resolution of the general meeting: the 
list given here Is not an exhaustive one. 
The Statute draws no distinction between ordinary and extraordinary general 
meetings. It does however require a qualified majority rather than a 
simple majority in certain cases. 
The provisions set out In this Section are Intended to protect the rights 
of shareholders at general meetings and to provide safeguards against 
certain decisions which may be taken by such meetings. 
Article 82 
In accordance with a principle common to all Member States, a general 
meeting must be held at least once a year. This Is made necessary by the 
need to approve the annual accounts. 
But given the long list of matters necessitating a resolution of the 
general meeting, It must be possible to call a general meeting as the 
conduct of the company's affairs requires. The management board or the 
administrative board must therefore be entitled to call a general meeting 
at any time, and this power must not be restricted by the statutes. 
Article 83 
A minority of shareholders as defined in Article 75 must also be able to 
require a general meeting. 
While shareholders must be prevented from abusing this power, the governing 
bodies of the company cannot be allowed to have the last word, so the 
shareholders should be authorized to refer the matter to the courts If 
their request Is not complied with within one month. 
- 34 -
Article 84 
The method of calling the general meeting must be such that news of It can 
reach all shareholders. 
The minimum Information which must be provided by the notice of the meeting 
Is laid down in the Statute. There Is no need to comment on the details 
listed, although It Is Important that the shareholder should know whether 
he Is being called to an ordinary, extraordinary or special meeting, since 
the rules for the quorum and majority will be different depending on the 
nature of the meeting. 
The laws of all Member States lay down a minimum period between notice and 
meeting, but the periods set vary between five days and one month depending 
on the Member State. 
Shareholders have to be allowed sufficient time to prepare to attend the 
general meeting or to arrange to be represented there; It must be borne In 
mind that a stead Ily growing number of shareholders may be resident outside 
the country where the company has Its registered office, and that short 
deadlines would prevent them from attending. Nor would the arrangements 
for proxies and for the amendment of the agenda by a minority be able to 
function without sufficiently long deadlines. The Statute therefore lays 
down a period of one month. 
Article 85 
A minority of shareholders equal to that entitled to call a general meeting 
should also be In a position to have one or more additional items Included 
on the agenda of a general meeting already called. It may be that for one 
and the same meeting various minorities will cause various amendments to be 
made to the agenda. As the notice of the meeting Is to be published 
one month before the meeting takes place» requests for the Inclusion of 
additional Items are to be put forward within seven days of the first 
notice; this will enable the company to notify all shareholders of the 
amended agenda, through the same channels as those laid down for the 
calling of the meeting, not less than seven days before the meeting takes 
place. 
- 35 -
Article 86 
The Statute prevents attendance at the general meeting being made subject 
to conditions other than procedural formalities such as the deposit of 
share certificates with a notary, a bank or the company itself, 
notification by the shareholder of his Intention to attend the meeting, or 
proper recording of registered shares In the company register. The 
statutes may not, for example, require possession of a stated number of 
shares as a qualification for attendance. 
Article 87 
It often happens that the shareholder Is unable or unwilling to attend the 
general meeting, particularly If he Is not resident In the country In which 
the company has Its registered office. Representation by proxy Is provided 
for in all Member States. The Statute recognizes this right and prohibits 
any provision to the contrary In the statutes. 
In certain companies It may be useful to restrict the categories of persons 
who may be appointed as proxies. These restrictions are to be laid down by 
the law of the place where the company has Its registered office or In the 
statutes; a shareholder may always appoint another shareholder as his 
proxy. 
To make It easier to verify the proxy's credentials, he must be nominated 
to the company In writing; the company Is to preserve the document for at 
least three years, the same period as that laid down for the other 
documents relating to the meeting such as the attendance list and the 
minutes. 
Article 88 
Article 87 will not be sufficient where bodies such as associations of 
shareholders or credit Institutions ask the shareholders to give them 
proxies and themselves designate later the persons who are to exercise 
them. Additional guarantees are needed here to ensure that the proxy votes 
In accordance with the Instructions given. 
- 36 -
By way of exception the proxy may depart from the shareholder's 
Instructions or the statement made to the shareholder; he must then inform 
the shareholder accordingly as soon as possible and provide all necessary 
explanations. 
Article 89 
The notice convening the general meeting does not provide the shareholders 
with sufficient Information regarding certain particular decisions to be 
taken^by It. The Statute therefore provides that certain documents are to 
be available to every shareholder, at the latest by the date of dispatch or 
publication of the notice. The main such documents are the annual accounts 
and the auditors' report; the texts of agreements requiring approval by the 
general meeting must also be available. 
Article 90 
It Is not enough to give the shareholders the right to put questions to the 
management at the general meeting; the management must also be required to 
supply the Information requested. 
The Information requested may be refused If it would be likely to cause 
harm to the company or If Its disclosure would be Incompatible with a legal 
obligation of confidentiality. 
Apart from these restrictions on the duty to supply Information, the 
statutes may not make provision for any other grounds of refusal. 
The board Is responsible for supplying Information. If the board and the 
shareholder disagree as to whether Information asked for should be 
supplied, the power to settle the matter cannot be left with the general 
meeting, where an objective decision cannot be guaranteed. The Regulation 
provides for an appeal to the court to check the validity of the refusal. 
- 37 -
Article 91 
The Statute here follows a principle common to the laws of ail 
Member States by prohibiting the general meeting from taking decisions on 
any matters not on the agenda communicated or published in accordance with 
Art icles 84 and 85. 
But this principle need not apply where all shareholders are present or 
represented at the meeting and no shareholder objects. 
Article 92 
The shareholder's voting rights must be proportionate to his stake in the 
capital as represented by his shares. Only two exceptions are permitted, 
and only if they are provided for in the statutes. 
Thus double or multiple voting rights are prohibited. 
The Statute itself lays down two cases In which the right to vote may not 
be exercised, and refers to the law of the State in which the SE has Its 
registered office for certain other cases. 
Article 93 
In the case of certain conflicts of Interest between the company and the 
shareholder, the shareholder must be prevented from exercising his voting 
rights. The Regulation sets out the circumstances In which this is so. 
These prohibitions apply not only to shareholders but to their proxies as 
well. They apply to shareholders whether or not they own the shares 
carrying the voting rights in question. 
Article 94 
This Article defines the majority needed for resolutions of the general 
meeting: as an absolute majority of the votes attached to the capital 
represented. 
- 38 -
The statutes may require larger majorities for all or for certain 
resolutions. An exception is made in order to facilitate the appointment 
or dismissal of board members. 
The Regulation itself also requires higher majorities for certain 
résolut ions. 
Art icle 95 
This provision gives the general meeting power to make any amendment to the 
statutes, with carefully defIned'except ions. 
Where the general meeting empowers the Board to do certain things which 
require amendment of the statutes, it must be possible to empower the Board 
to amend the statutes accordingly. For example, an authorization to 
increase the subscribed capital up to a fixed maximum may include an 
authorization to amend the issued capital in the statutes; this may also be 
the case where convertible debentures are to be converted. 
Article 96 
The Information which under Article 84(2) must be included In the notice 
convening the general meeting is not sufficient where shareholders are 
required to decide on an amendment to the statutes. In that case the full 
text of the amendments proposed must be included too. 
Art icle 97 
Following the example of the laws of most Member States, the Statute 
requires a qualified majority for a resolution of the general meeting to 
amend the statutes. 
- 39 -
In a limited liability company a shareholder's only obligation is to pay up 
the amount he has agreed to contribute. It follows that an increase in the 
obligations of the shareholders cannot be decided simply by the majorities 
required for amendment of the statutes. All the shareholders concerned 
must approve. An amending resolution must be made public. 
Article 98 
Additional rules are needed where the company has issued different kinds of 
shares. If the measures envisaged would also change the relationship 
between the classes of share, there must in addition to a resolution of the 
general meeting also be a separate vote of each class of shareholder whose 
rights are affected by the resolution. 
Article 99 
Minutes are to be drawn up for each session of the general meeting. The 
Regulation lays down the minimum information which must be included. 
The minutes are addressed primarily to the shareholders. It does not 
appear necessary to require that they be registered and published. 
Article 100 
Actions for the annulment of resolutions of the general meeting are of 
great importance to the shareholders and to outsiders. Both would wish to 
see any such actions brought quickly. Paragraph 3 therefore restricts the 
period In which such an action may be brought to three months from the 
closure of the general meeting. 
- 40 
The grounds for annulment are fairly broad: any Infringement of the 
Regulation or of the company's statutes is sufficient. This would Include 
an infringement of the shareholders' entitlement to Information, to the 
extent that It influenced the general meeting. The ordinary grounds of 
annulment under general principles of law, such as abuse of a majority 
position, might also be Invoked. 
Annulment or suspension of a resolution is valid against third parties, and 
the court's decision is to be disclosed by registration and publication in 
the ordinary way. 
A declaration that a resolution is void can be prevented if, on the order 
of the court or before the court has delivered Judgement, the general 
meeting amends the resolution challenged. The court retains a wide 
discretion with regard to the resolutions concerned in this Article. 
- 41 -
TITLE V 
Annual account» and consolidated account» 
The Council has adopted three Directives relating to the preparation, 
auditing and publication of annual accounts and consolidated accounts. 
These are the Fourth Councl I Directive (78/660/EEC) of 25 July 1978 on 
annual accounts, the Seventh Council Directive (83/349/EEC) of 13 June 1983 
on consolidated accounts and the Eighth Council Directive (84/253/EEC) of 
10 April 1984 on the approval of persons responsible for carrying out the 
statutory audits of accounting documents. In addition, the Council adopted 
on 8 December 1986 a Directive (86/635/EEC) which specifically relates to 
the annual accounts and consolidated accounts of banks and other financial 
Institutions. The annual accounts and consolidated accounts of Insurance 
companies are the subject of a further proposal for a Directive which Is 
currently before the Council. The provisions of Title V refer extensively 
to this Community legislation. 
The SE must comply with the provisions of the Fourth and 
Seventh Directives. It will be able to make use of the options which the 
above Directives grant Member States. 
Those European companies which are credit Institutions or Insurance 
companies have to apply the national provisions adopted pursuant to the 
Directives on those subjects. 
- 42 -
TITLE VI 
GROUPS OF COMPANIES 
Article 114 
1. The question of rule» dealing specifically with groups arises In 
connection with the European Company Statute because two of the ways of 
setting up an SE (creation of a holding company or of a Joint subsidiary) 
automatically entail the formation of a group of companies. What, then, 
are the rules which will govern relations between the SE and Its 
subsidiaries? 
The aim of the original draft of the European Company Statute was to enable 
those setting up an SE to opt for a special group status, which would 
facilitate management of the company as a single economic unit, while at 
the same time ensuring appropriate protection for the Interests of 
third parties (e.g. minority shareholders and creditors). 
The Memorandum on the European Company Statute asked, however, whether the 
Statute was the proper place to create a body of rules governing groups 
(Suppl. 3/88 - Bull. EC, p. 15). 
2. At present the laws of Germany and Portugal are the only ones which 
recognize the right of a parent company of a group to manage its 
subsidiaries In the Interests of the group, and which consequently lay down 
specific safeguards for minority shareholders and creditors. 
In the 1985 White Paper on the Internal market the Commission stated that 
It was considering a proposal to coordinate the national law on the subject 
In the light of comparative law studies In progress (point 144). 
- 43 -
3. If specific rules are included In the Statute at this stage they will 
prejudge the outcome of those studies, and will Jeopardize the rapid 
adoption of the regulation establishing the Statute. 
Debate on the Commission's 1970/75 proposal came to a halt In 1982 because, 
before stating a view on the arrangements for groups where one member of 
the group Is an SE, delegations wanted to know what the Commission would be 
proposing for the harmonization of the Member States' legislation on groups 
in general. 
Specific rules would certainly be useful to facilitate the management of a 
group headed by an SE. But they are not Indispensable. An SE can be 
treated as a public limited company governed by the legislation of the 
Member State In which It has Its registered office, and Its rights and 
obligations can be determined by reference to the rules governing such a 
company, whether It Is the parent company or the subsidiary In a group. 
On the basis of the rules and principles of private International law 
generally accepted In the Member States It can be presumed that the law 
applicable to a subsidiary will determine the rights and obligations of a 
parent company which Is Itself governed by a different set of national laws 
from that applying to the subsidiary. 
4. If we follow this approach It should be stated In the regulation 
establishing the European Company Statute that where an SE Is a subsidiary 
company or, In the language of the Statute, a "controlled undertaking". It 
is to be treated like any other public limited company governed by the laws 
of the Member State In which It has Its registered office. 
On the other hand, If It Is the SE which Is exercising control, the 
regulation establishing the Statute does not need to lay down specific 
rules, which will be supplied by the law governing the company controlled 
by the SE. 
- 44 -
The rights conferred and the obligations Imposed on a firm as a result of 
the control It exercises over another which Is governed by separate 
legislation do not however affect any obligations which may be Incumbent on 
the controlling undertaking under Its own proper law, for example as 
regards the preparation of consolidated accounts. 
- 45 
TITLE VI I 
Article 115 
This Article sets limits to the procedures for the winding up of an SE. In 
the interests of legal certainty and the protection of shareholders the 
grounds for automatic winding up must be restricted. The Statute 
prescribes only the case where the duration of the company laid down In the 
statutes expires; this possibility exists In the laws of all 
Member States. As the documents are a matter of public record, the 
duration of the company is an incontestable fact which can be verified by 
anybody. 
In allowing the general meeting of shareholders to decide to wind up the 
company the Statute .is likewise accepting a rule which is generally 
recognized; the mechanisms are governed by Article 116. 
Failing a decision of the general meeting, winding up requires a court 
decision; such a decision may be granted on a ground contemplated In the 
law of the place where the SE has its registered office or In the statutes, 
or where no disclosure of annual accounts has taken place, or where the 
issued capital has been reduced below the legal minimum. 
Article 116 
On the one hand the Statute limits the grounds for automatic winding up; 
but on the other It seeks to facilitate the taking of a decision to wind up 
the company by the shareholders, in order as far as possible to avoid the 
need for court proceedings. A distinction Is made as regards the majority 
needed at the general meeting. Where the ground of winding up Is one 
contemplated by law or by the statutes, a simple majority is sufficient. 
- 46 -
In all other cases a decision to wind up the company represents an 
amendment to the statutes, for which the laws of all Member States require 
a qualified majority. It should be emphasized that this rule represents a 
minimum requirement, and the statutes may Impose stricter conditions. 
Article 117 
It has already been observed that the power conferred on the courts to 
decide that an SE Is to be wound up can only be a residual one; the power 
to decide Is to lie In the first place with the shareholders. 
As a matter of principle it will be for the Member States to regulate the 
procedure to be followed before the court. But it does appear necessary to 
make rules on who is entitled to Initiate such proceedings. First and 
foremost there would be the governing bodies of the company. The general 
meeting, however, would be entitled to decide by Itself to wind up the 
company. However, to avoid any abuse of the majority requirements In 
Article 116, any shareholder or person showing a legitimate Interest must 
also be in a position to refer the matter to the court. 
in a case where the Irregularity which forms the ground for winding up can 
be remedied, the court must be able to grant the company sufficient time to 
do so. 
Article 118 
To ensure that shareholders and third parties are properly protected, there 
must be proper disclosure of the decision to wind up the company. 
- 47 -
Article 119 
This provision Is Intended to clear up the uncertainty as to whether a 
decision to allow a company to continue in business Is possible after the 
decision to wind It up has been taken by the general meeting of 
shareholders. Clearly the fresh decision must require at least the same 
majority as that required for the Initial decision to wind up the company. 
But a decision to continue must be ruled out once any distribution has been 
made In the course of the liquidation. The general meting may also review 
an automatic winding up which takes place because the duration of the 
company has expired. The decision to continue will require a change In the 
objects of the company and must be disclosed. 
The Statute does not deal with the grounds on which a winding-up decision 
made by a court may be reviewed. 
Article 120 
Any winding up leads automatically to the liquidation of the assets. Once 
the decision to wind up has been taken, the company continues to exist only 
for purposes of the liquidation. 
Liquidation Is everywhere administered either by one or more liquidators. 
Clearly the appointment of liquidators Is of particular Importance to the 
shareholders. To safeguard their role In the choice of liquidators, the 
Statute lays down a set of rules on the shareholders' powers. 
Under this scheme liquidators may be appointed In the first place by the 
statutes or by methods set out therein. Such clauses can of course be 
amended, even after a decision to wind up the company, but only In the 
manner required for the amendment of those documents. Secondly, the 
general meeting of shareholders may appoint liquidators, which Is a 
- 48 -
generally accepted rule. To facilitate a decision the Statute requires a 
simple majority of the votes cast. Individual shareholders are protected 
against any abuse on the part of the majority by Article 131, which makes 
It possible to have a liquidator removed by a court on showing cause. In 
the third place. In case the general meeting falls to appoint liquidators, 
a power of appointment must be conferred on a court. To speed up the 
appointment and to give maximum protection to those concerned, the matter 
may be brought before the court not only by the governing bodies of the 
company but also by any shareholder, whatever his stake In the capital. 
But this power In any event remains a subsidiary one, to be exercised 
falling appointment under the statutes or Instrument of Incorporation or by 
the general meeting. 
The set of rules on the appointment of liquidators would be incomplete 
without provision for the case where the statutes are silent and neither 
the general meeting nor the court has made an appointment. In that case 
the members of the administrative or management body are to be deemed to be 
liquidators until the powers already referred to have been exercised. 
Finally, the general meeting, or falling that the court, Is to set the 
remuneration of the liquidators. 
- 49 -
Article 121 
The rules on the appointment of liquidators in Article 120 must be 
supplemented by rules on their removal. The fact that a liquidator has 
been appointed under the statutes should not prevent his removal by the 
general meeting of shareholders, acting by a majority of the votes cast. 
This is all the more true of the withdrawal of an appointment originally 
made by the general meeting. However, it appears appropriate to give the 
court a general power of removal, alongside that of the general meeting, 
not only in the interest of those managing the company, but above all In 
order to protect Individual shareholders against any negligence on the part 
of the majority of shareholders which might allow a liquidator who fails 
properly to perform his duties to continue in office. Any removal of a 
liquidator is to be disclosed. 
Article 122 
The Regulation adopts the quite general rule that the liquidators may do 
anything, even undertaking new transactions, to the extent necessary for 
the purposes of the liquidation, which has become the new object of the 
company. 
The liquidators are to have power to bind the company In dealings with 
third parties and in legal proceedings. To ensure protection for third 
parties provision is made here for disclosure of the appointment and 
termination of office of liquidators and the extent of their power to 
represent the company. 
Article 123 
The Regulation requires certain safeguards as regards the civil liability 
of liquidators. Firstly, the civil liability of liquidators may In no case 
be less strict than that of the members of the single board or management 
board. Any reduction in the liability of liquidators as compared with the 
- 50 -
the liability of the members of the relevant board Is therefore prohibited, 
and thus may not be provided for by clauses in the statutes. 
Article 124 
It Is normal practice to draw up a statement of assets and liabilities at 
the date on which liquidation begins. The Regulation requires that such a 
statement be drawn up, but does not seek to regulate its contents or to 
require disclosure. The document must be supplied on request to any 
shareholder, member or creditor. 
To avoid any misunderstanding in this matter, the Regulation leaves no 
doubt that the winding up and liquidation of a company in no way affects 
its obligations under the rules on company accounts, which are to apply 
subject to the specific requirements of the liquidation. 
Article 125 
The winding up of any company must be disclosed In accordance with 
Article 9. 
But disclosure of this kind is not sufficient to ensure equivalent 
protection of the company's creditors throughout the Community. The 
Statute therefore goes on to make the same disclosure requirements apply to 
the invitation to creditors to lodge their claims and to the Indication of 
the date after which distributions may be made. Any known creditor of the 
company is to receive a similar invitation individually. To avoid any 
misunderstanding the Regulation makes no provision for a cut off date for 
creditors who do not come forward by the date indicated. The date to be 
indicated merely represents information supplied to creditors, and In no 
way affects their claims on the company in liquidation. 
- 51 -
Article 126 
According to a general principle governing liquidation all creditors of the 
company must be paid in full before there can be any distribution of the 
net assets remaining. The statutes may determine the beneficiaries of any 
such distribution. In the absence of such a clause the net assets are to 
be distributed among the shareholders. That distribution is to be in 
proportion to their holdings in the capital of the company, unless the 
statutes provide otherwise. There is a particular problem where the 
capital has not been paid up in equal proportions. In that case, in order 
to ensure that the shareholders are treated equally, all considerations 
paid up are to be repaid, and the net assets remaining are to be 
distributed by the proportional rule. 
Lastly, no distribution may be made until adequate security has been set 
aside for claims which have not yet fallen due, or which are In dispute, or 
where the creditor cannot be Identified. 
Article 127 
For the better protection of the shareholders against any failure to comply 
with the principles of distribution in Article 126, the liquidators must 
draw up a distribution pian after the date Indicated in the invitation to 
creditors Issued under Article 125. This document must be brought to the 
attention of the general meeting and of any beneficiary designated In the 
statutes. The Regulation requires that the general meeting be Informed, 
but does not require Its approval. 
- 52 -
The protection provided takes the form of a right to challenge the plan 
before a court, a right held by any shareholder and any beneficiary, but 
not by a creditor, who at this stage should already have been paid In full. 
In the event of any such challenge it will be for the court in question to 
decide whether, and if so to what extent, any partial distribution may be 
made pending the final decision. 
Article 128 
The liquidation is terminated once the distribution has been made. 
Where after the liquidation has been terminated previously unknown assets 
or liabilities of the company come to light, the liquidation may be 
reopened, but only by a decision of the court, which must appoint the 
liquidators. 
The fact that a liquidation has been terminated is subject to a disclosure 
requirement. 
Articles 129 and 130 
In all Member States there are special rules governing companies which are 
the subject of proceedings for insolvency or suspension of payments, and 
the Regulation does not affect those rules. 
A draft convention aligning these Insolvency procedures has been drawn up 
on the basis of Article 220 of the EEC Treaty. The draft is before the 
CouncII. 
Decisions taken in the course of proceedings for insolvency or suspension 
of payments are subject to a disclosure requirement. 
- 53 -
Title vin 
Articles 131 and 132 
Title VIII allows an SE to merge with other SEs and with public limited 
companies Incorporated under national law, either by taking them over or by 
forming a new SE Jointly with them. The reverse procedure Is also 
authorized: an SE may be taken over by a national public limited company, 
and may set up a new national public limited company together with another 
such company or with another SE or other SE». 
- 54 -
Title ix 
Article 133 
It Is In the nature of an SE that It should operate across borders. It Is 
primarily a new tool of cross-border cooperation, facilitating links 
between companies In different Member States. 
It Is essential, therefore, that the SE should be able to overcome the 
handicap which this would otherwise Impose on It In terms of taxation. 
Where an SE conducts taxable business through permanent establishments 
abroad, losses suffered by those establishments would, generally speaking, 
not be taken into account for tax purposes In Its country of residence If 
profits from foreign business are exempt from tax In that country under 
national tax law or bilateral conventions. This rule could result In an SE 
being more heavily taxed. To avoid this, paragraph 1 provides that such 
losses may be deducted against an SE's profits. 
To safeguard the Interests of the Member State of the SE, paragraph 2 
provides that subsequent profits made by such permanent establishments are 
to be added to the SE's profits, up to the amount of the losses previously 
deducted. 
Paragraph 4 takes account of the fact that in Member States applying the 
Imputation system a tax treatment Identical to that under paragraphs 1 to 3 
Is already applled. 
- 65 -
Titles X and XI 
To deal with the Involvement of employees In the SE, appropriate provisions 
should be adopted by means of a Directive so as to enable Member States to 
take account of their national rules and practices when Implementing the 
Directive In their national law. 
Article 135 does not lay down a rule of law. It merely refers to the 
provisions of the Directive dealing with the Involvement of employees In 
the SE, which Is complementary to this Regulation. 
Article 136 provides that an SE may be formed In any Member State which has 
implemented In Its national law the provision» of Directive ... dealing 
with the Involvement of employee» In the SE. By so doing It prohibits the 
creation of an SE In a State which has not Incorporated those provisions. 
Article 137 postpones the applicability of the Regulation so as to make Its 
entry Into force coincide with the date by which Member States must 
Implement the Directive. 
- 56 -
COMMENTARY ON THE ARTICLES OF THE DIRECTIVE 
The purpose of the Directive I» to recognize the Involvement of employees 
in the company, to make them feel that the business of the firm Is their 
business. The three models proposed each provide a structure through which 
this involvement can operate. 
Article 2 clarifies the concept of employee participation as being not in 
the day-to-day running of the firm, which Is the function of management, 
but in supervision and strategic development. 
Article 3 determines the mechanisms for choosing between the various models 
.f participation; It allows a Member State to restrict the choice to two 
models or even a single model. 
- 57 -
There are different possibilities. If only one model Is permitted the SE 
will have to adopt that one. Where the choice Is between two or three, the 
managements of each of the founder companies are to choose a model, If 
possible with the agreement of the representatives of their own employees 
provided for by the law or practice of the relevant Member State. If the 
management and employee representatives cannot reach agreement on the model 
proposed by management, management may decide to propose another model 
acceptable to the employees; but It must not be forgotten that the SE 
cannot be set up without the approval of the general meeting of 
shareholders. It would be unrealistic to give the employees a right of 
veto which might prevent formation of the SE, or Induce management to 
locate Its registered office In another Member State. If no agreement Is 
reached, therefore, the model is to be chosen by management. 
If the representatives of the employees of company A and company B disagree 
between themselves on the choice of model proposed by management, the 
majority will prevail. An SE may never be set up until a model of 
participation has been chosen. 
After the SE has been formed It may prove necessary to change the model 
chosen at the time of formation. Such a change will be possible if there 
Is agreement between the management of the SE and the representatives of 
Its employees. The agreement is to be approved by the general meeting. 
In view of the great flexibility of the Statute, which will allow models of 
participation to be adopted which will operate In different ways according 
to national traditions, paragraph 4 requires each Member State to determine 
the details of the practical application of the participation models which 
may be used by SEs having their registered offices In Its territory. 
- 58 -
Art le le 4 makes provision for a model of employee participation either on 
the supervisory board (the two-tier system) or on the administrative board 
with a definition of management and supervisory functions (the single-tier 
system). 
If this model is chosen all the employees of the SE and its various 
establishments, In whatever Member State they are employed are to elect 
representatives to the supervisory board (or administrative board) of the 
SE itself; these board members (at least one-third and not more than 
one-half) will sit alongside the shareholders' representatives (at least 
one-half and not more than two-thirds). 
Pursuant to Article 74 of Council Regulation all board members, 
whether they represent employees or shareholders, are to have the same 
rights and obligations. However the power to authorize certain operations 
(listed In Article 72 of the Regulation) will rest with a majority of the 
members. A minority will be Informed and consulted; It will in any event 
be able to express its view, even If it is not in a position to decide on 
the operation itself. In one Member State the general meeting and the 
employees do not designate their representatives directly. Article 4 (II) 
takes account of this original system of appointing the Supervisory board. 
If this system were adopted by an SE, the shareholders and the employees or 
thier representatives would have the same rights to recommend, or to object 
to, the appointment by the supervisory board of a new member of that board. 
Article 5 makes provision for a model of employee participation through a 
body which represents the employees at company level but is separate from 
the company supervisory or management structure. If this model is chosen 
all employees of the company and Its various establishments. In whatever 
Member State they may be employed, are to elect representatives to sit on 
this body, where they will enjoy the same rights of Information (cf. 
Article 64) of the Regulation) and of consultation in the implementation of 
the same decisions (listed in Article 72 of the Regulation) as those In the 
model defined In Article 4. 
- 59 -
Article 10 makes It clear that the rights of Information and consultation 
conferred on the separate body referred to In Article 5 In no way diminish 
the rights enjoyed under the laws of the various Member State» by the 
representatives of the employees of the SE's establishment» there: 
Betrlebsrate. shop stewards. Conseils d'entreprise and so on are to retain 
the rights they exercise on behalf of the employees they represent In the 
various establishments of the SE. 
Article 6 
This article allows other models of participation to be established In the 
SE by means of a collective agreement, to be negotiated between the 
managements of the founder companies and the representatives of those 
companies' employees. 
The Commission takes the view, for example, that the three-way model 
proposed by Parliament In 1974, and Incorporated In the Commission's 
amended proposal of 1975, could be established within the SE by agreement. 
Other models would also be possible, as long as the agreement ensured that 
the employees or their representatives had the same rights of Information 
and consultation as those provided by the other two models provided for In 
Articles 4 and 5. Paragraph 3 therefore empowers a "works committee" type 
of representation to ask the management for the Information It needs to 
perform Its functions, in the same way as the "separate body" representing 
the workers may do under Article 5(2)(b). Paragraph 4 covers 
confidentiality of Information along the lines laid down In the laws of a 
majority of Member States. Paragraph 5 nevertheless allows the management 
to withhold certain sensitive Information If the law of the Member State 
permits. One might Imagine, for example, that the agreement concluded 
would provide for Information and consultation of a general meeting of the 
company's employees, as Is done In certain companies. In that case, steps 
would have to be taken to prevent Information from being disclosed which 
might seriously Jeopardize the Interests of the SE or disrupt Its projects. 
- 60 -
Paragraph 8 authorizes a Member State which so desires to make provision 
for another model, known as a "standard model", In conformity with the most 
advanced practice In the country. The standard model would apply In the SE 
where the two parties so decided or where no agreement was reached. This 
possibility comes close to merely relying on national practice; the 
Commission has accepted It only on condition that the SE's employees or 
their representatives are guaranteed the rights of information and 
consultation referred to In Article 6: that Is to say the quarterly 
Information referred to In paragraph 2(a), the Information and consultation 
referred to In paragraph 2(b) and, where the employees are represented by a 
collegiate body, the right of that body to require the Information 
necessary for the performance of Its duties under paragraph 3. 
Article 7 
All employees of the SE are automatically entitled to vote to elect their 
representatives under any of the three models of participation. 
Provision must be made to ensure that representatives represent roughly 
equal numbers of employees, so that particular groups of employees are not 
over-represented, and. In models 2 and 3, that the number of 
representatives Is not too great. 
In model 1 the proportion between employees' representatives and 
shareholders' representatives will determine the number of seats available: 
either It will be one-third to one-half of the whole, or the whole board 
wl II be co-opted. 
In all other respects the rules governing elections will have to be laid 
down In the Member States, If this has not already been done. 
Article 8 
The proportional rule Is to apply before the SE Is formed, too. In order to 
prevent all the representatives of the employees of the founder companies, 
who may in some companies be very numerous and yet represent only a small 
- 61 -
proportion of employees, from all having an equal say, together with 
management In the choice of the model of participation or the setting-up of 
the supervisory board where the number of places is limited to between one-
third and one-half vis-à-vis the shareholders' representatives. The 
separate body must not comprise a very large number of members either, even 
If Article 4 does not stipulate the number, which Is therefore to be laid 
down In the statutes In consultation with the representatives of the 
employees. The representatives designated In accordance with Article 8 
will continue to perform their duties until the new members elected by the 
employees of the SE take up their duties. 
Article 9 provides that the employees' representatives are to be provided 
with premises and other financial and material resources enabling them to 
meet, to consult their voters (telephone, telex etc.), to travel and to 
obtain expert assistance, In order to be able to perform their duties 
properly. Close consultation between the management and employees' 
representatives Is the best way of making a reasonable assessment of the 
real needs of the employees' representatives. 
Article 10 has been commented on In connection with Article 5. 
Article 11 is not a further model of participation, as It would be 
difficult to ensure that It was equivalent to the other three. It is not 
easy to be certain that the same Information and consultation is available 
here as with the other three models. It Is nevertheless useful to make 
provision for agreements providing for employee participation In the SE's 
profits or losses. 
- 62 -
Proposal for a 
COUNCIL REGULATION 
on the Statute for a European company 
THE COUNCIL OF THE EUROPEAN COMMUNITIES, 
Having regard to the Treaty establishing the European Economic Community, 
and in particular Article 100a thereof, 
Having regard to the. proposal from the Commission, 
In cooperation with the European Parliament, 
Having regard to the opinion of the Economic and Social Committee, 
Whereas the completion of the internal market within the period set by 
Article 8a of the Treaty, and the improvement it must bring about in the 
economic and social situation throughout the Community, mean not only that 
barriers to trade must be removed, but also that the structures of 
production must be adapted to the Community dimension; for this purpose it 
is essential that companies whose business is not limited to satisfying 
purely local needs should be able to plan and carry out the reorganization 
of their business on a Community scale; 
Whereas such reorganization presupposes that existing companies from 
different Member States have the option of combining their potential by 
means of mergers; whereas such operations can be carried out only with due 
regard to the competition rules of the Treaty; 
- 63 -
Whereas restructuring and cooperation operations involving companies from 
different Member States give rise to legal and psychological difficulties 
and tax problems; whereas the approximation of Member States' company law 
by means of directives based on Article 54 of the Treaty can overcome some 
of these difficulties; whereas such approximation does not, however, remove 
the need for companies governed by different legal systems to choose a form 
of company governed by a particular national law; 
Whereas the legal framework in which business still has to be carried on in 
Europe, being still based entirely on national laws, thus no longer 
corresponds to the economic framework in which it must develop if the 
objectives set out in Article 8a of the Treaty are to be achieved; whereas 
this situation forms a considerable obstacle to the creation of groups 
consisting of companies from different Member States. 
Whereas it is essential to ensure as far as possible that the economic unit 
and the legal unit of business in Europe coincide; whereas for this purpose 
provision should be made for creating, side by side with companies governed 
by a particular national law, companies formed and carrying on business 
under the law created by a Community regulation directly applicable in all 
Member States; 
Whereas the provisions of such a regulation will permit the creation and 
management of companies with a European dimension, free from the obstacles 
arising from the disparity and the limited territorial application of 
national company laws; 
Whereas such a regulation forms part of the national legal systems and 
contributes to their approximation, thus constituting a measure relating to 
the approximation of the laws of the Member States with a view to the 
establishment and functioning of the internal market; 
- 64 -
Whereas the Statute for a European company (SE) is among the measures to be 
adopted by the Council before 1992 listed in the Commission's White Paper 
on completing the internal market, approved by the European Council of June 
1985 in Milan; whereas the European Council of 1987 in Brussels expressed 
the wish to see such a Statute created swiftly; 
Whereas since the presentation by the Commission in 1970 of a proposal for 
a Regulation on the Statute for a European company, amended In 1975, work 
on the approximation of national company law has made substantial progress, 
so that on those points where the functioning of a European company does 
not need uniform Community rules, reference may be made to the law 
governing public companies in the Member State where it has its registered 
off ice; 
Whereas, without prejudice to any economic needs that may arise in the 
future, if the essential objective of the legal rules governing a European 
company is to be attained, it must be possible at least to create such a 
company as a means of enabling companies from different Member States to 
merge or to create a holding company, and of enabling companies and other 
legal bodies carrying on an economic activity, and governed by the laws of 
different Member States, to form a Joint subsidiary; 
Whereas the European company itself must take the form of a public company 
limited by shares, this being the form most suited, In terms of both 
financing and management, to the needs of a company carrying on business on 
a European scale-, whereas In order to ensure that such companies are of 
reasonable size, a minimum capital should be set which will provide them 
with sufficient assets without making It difficult for small and medium-
sized businesses to form a European company; 
- 65 -
Whereas a European company must be efficiently managed and properly 
supervised; whereas it must be borne In mind that there are at present in 
the Community two different systems of administration of public companies; 
whereas, although a European company should be allowed to choose between 
the two systems, the respective responsibilities of those répons lb le for 
management and those responsible for supervision should be clearly defined; 
Whereas, having regard to the approximation effected by the Fourth Council 
Directive 78/660/EEC1 and the Seventh Council Directive 83/349/EEC2, as 
last amended in both cases by the Act of Accession of Spain and Portugal, 
on annual accounts and consolidated accounts, the provisions of those 
directives can be made applicable to European companies and such companies 
may choose between the options offered by those provisions; 
Whereas under the rules and general principles of private International 
law, where one undertaking controls another governed by a different legal 
system, its ensuing rights and obligations as regards the protection of 
minority shareholders and third parties are governed by the law governing 
the controlled undertaking, without prejudice to the obligations Imposed on 
the controlling undertaking by its own law, for example the requirement to 
draw up consolidated a counts-, 
1 OJ No L 222, 14.8.1978, p. 11. 
2 OJ No L 193, 18.7.1983, p. 1. 
- 66 -
Whereas, without prejudice to the consequences of any later coordination of 
the law of the Member States, specific rules for the European company are 
not at present required In this field; whereas the rules and general 
principles of private international law should therefore be applied both In 
cases where the European company exercises control and in cases where it is 
the controlled company; 
Whereas the rule thus applicable in the case where the European company Is 
controlled by another undertaking should be specified, and for this purpose 
reference should be made to the law governing public companies In the State 
where the European company has its registered office; 
Whereas for purposes of taxation the SE must be made subject to the 
legislation of the State In which it is resident; whereas provision should 
be made for deduction of losses incurred by the SE's permanent 
establishments abroad; whereas in order to avoid any discrimination against 
other firms carrying on cross-border business, similar provisions will be 
proposed by means of a directive for all other legal forms of business; 
Whereas each Member State must be required to apply in respect of 
infringements of the provisions of this Regulation the sanctIons applIcable 
to public limited companies governed by its law; 
Whereas the rules on the involvement of employees in the European company 
are contained in Directive ... based on Article 54 of the Treaty, and its 
provisions thus form an Indissociable complement to this Regulation and 
must be applied concomitantly. 
- 67 -
Whereas, on matters not covered by this Regulation, the provisions of the 
law of the Member States and of Community law are applicable, for example 
on: 
(I) social security and employment law, 
(II) taxation and competition law, 
(ill) intellectual property law, 
(Iv) Insolvency law; 
Whereas the application of this Regulation must be deferred so as to enable 
each Member State to incorporate into its national law the provisions of 
the above-mentioned Directive and to set up In advance the necessary 
machinery for the formation and operation of European companies having 
their registered office In Its territory, so that the Regulation and the 
Directive may be applied concomitantly, 
HAS ADOPTED THIS REGULATION: 
- 68 -
Title I 
General provisions 
Article 1 
(Form of the European company (SE)) 
1. Companies may be formed throughout the Community In the form of a 
European public limited company (Socletas Europaea, 'SE') on the conditions 
and in the manner set out In this Regulation. 
2. The capital of the SE shall be divided into shares. The liability of 
the shareholders for the debts and obligations of the company shall be 
limited to the amount subscribed by them. 
3. The SE shall be a commercial company whatever the object of its 
undertaking. 
4. The SE shall have legal personality. 
Article 2 
(Formation) 
1. Public limited companies formed under the law of a Member State and 
having their registered office and central administration within the 
Community may form an SE by merging or by forming a holding company, 
provided at least two of them have their central administration In 
different Member States. 
2. Companies or firms within the meaning of the second paragraph of 
Article 58 of the Treaty and other legal bodies governed by public or 
private law which have been formed In accordance with the law of a 
Member State and have their registered office and central administration In 
the Community may set up an SE by forming a joint subsidiary, provided that 
at least two of them have their central administration in different 
Member States. 
- 69 -
Article 3 
(Formation with participation of an SE) 
1. An SE together with one or more other SEs or together with one or 
more limited companies incorporated under the laws of a Member State and 
having their registered office and central administration within the 
Community may form an SE by merging or by forming a holding company. 
2. An SE together with one or more other SEs, or together with one or 
more companies or legal bodies within the meaning of Article 2(2), may set 
up an SE by forming a Joint subsidiary. 
3. An SE may itself form one or more subsidiaries in the form of an SE. 
Such a subsidiary may not, however, itself establish a subsidiary in the 
form of an SE. 
Article 4 
(Minimum capital) 
1. Subject to paragraphs 2 and 3, the capital of an SE shall amount to 
not less than ECU 100 000. 
2. Where an SE carries on the business of a credit Institution It shall 
be subject to the minimum capital requirements laid down by the laws of the 
Member State in which it has its registered office in accordance with 
Article ... of Council Directive ...1 
3. Where an SE carries on the business of an Insurance undertaking It 
shall be subject to the minimum capital requirements laid down by the laws 
of the Member State In which it has its registered office. 
Second Council Directive on the taking up and pursuit of the business 
of credit institutions. 
- 70 -
Article 5 
(Registered office of SE) 
The registered office of an SE shall be situated at the place specified in 
its statutes. Such place shall be within the Community. It shall be the 
same as the place where the SE has its central administration. 
Article 6 
(Controlled and controlling undertakings) 
1. A "controlled undertaking" means any undertaking in which a natural 
or legal person: 
(a) has a majority of the shareholders' or members' voting rights; 
or 
(b) has the right to appoint or remove a majority of the members of the 
administrative, management or supervisory board, and Is at the same 
time a shareholder In, or member of, that undertaking; 
or 
(c) is a shareholder or member and alone controls, pursuant to an 
agreement entered Into with other shareholders or members of the 
undertaking, a majority of the shareholders' or members' voting 
r Ights. 
2. For the purposes of paragraph 1, the controlling undertaking's rights 
as regards voting, appointment and removal shall include the rights of any 
other controlled undertaking and those of any person or body acting In his 
or Its own name but on behalf of the controlling undertaking or of any 
other controlled undertaking. 
- 71 -
Article 7 
(Scope of the Regulation) 
1. Matters covered by this Regulation, but not expressly mentioned 
herein, shall be governed: 
(a) by the general principles upon which this Regulation is based; 
(b) if those general principles do not provide a solution to the problem, 
by the law applying to public limited companies In the State in which 
the SE has its registered office. 
2. Where a State comprises several territorial units, each of which has 
its own rules of law applicable to the matters referred to in paragraph 1, 
each territorial unit shall be considered a State for the purposes of 
identifying the law applicable under paragraph Kb). 
3. In matters which are not covered by this Regulation, Community law 
and the law of the Member States shall apply to the SE. 
4. In each Member State and subject to the express provisions of this 
Regulation, an SE shall have the same rights, powers and obligations as a 
public limited company Incorporated under national law. 
Article 8 
(Registration) 
1. Every SE shall be registered in the State In which it has Its 
registered office in a register designated by the law of that State In 
accordance with Article 3 of Directive 68/151/EEC1. 
OJ No L 65, 14.3.1968, p. 8; English Special Edition 1968(1), p. 41. 
- 72 -
2. Where an SE has a branch in a Member State other than that In which 
it has Its registered office, the branch shall be registered In that other 
Member State under the procedures laid down in the laws of that 
Member State In accordance with Article of Council Directive 1 
Article 9 
(Publication of documents) 
Publication of the documents and particulars concerning the SE which must 
be published under this Regulation shall be effected in the manner laid 
down in the laws of each Member State in accordance with Article 3 of 
Directive 68/151/EEC. 
Article 10 
(Notice In the OJ) 
1. Notice that an SE has been formed, stating the number, date and place 
of registration and the date and place of publication and the title of the 
publication shall be published for information purposes in the Official 
Journal of the European Communities after the publication referred to In 
Article 9. The same shall be done where a liquidation is terminated. 
2. The Member States shall ensure that the particulars referred to in 
paragraph 1 are forwarded to the Official Publications Office of the 
European Communities within one month of the disclosure referred to in 
Article 9. 
Eleventh Council Directive on company law concerning disclosure 
requirements in respect of branches opened in a Member State by 
certain types of companies governed by the law of another State. 
- 73 -
Article 11 
(Documents of SE) 
Letters, order forms and similar documents shall state legibly: 
(a) the name of the SE, preceded or followed by the Initiais "SE" unless 
those In I ta Is already form part of the name; 
(b) the place of the register in which the SE is registered In accordance 
with Article 8(1), and the number of the SE's entry In that register; 
(c) the address of the SE's registered office-, 
(d) the amount of capital Issued and paid up; 
(e) the SE's VAT number; 
(f) the fact that the SE Is in liquidation if that Is so. 
Any branch of the SE, when registered in accordance with Article 8(2), must 
give the above particulars, together with those relating to its own 
registration, on the documents referred to in the first paragraph emanating 
from that branch. 
- 74 -
Title II 
Formation 
SECTION 1 
General 
Article 12 
(Founder companies) 
The founder companies of an SE for the purposes of this Title are the 
companies, firms and other legal bodies which may form an SE by the means 
of formation provided for in Articles 2 and 3. 
Article 13 
(Instrument of incorporation and statutes of the SE) 
The founder companies shall draw up the instrument of Incorporation and the 
statutes, if the statutes are a separate instrument, in the forms required 
for the formation of public limited companies by the law of the State In 
which the SE is to have its registered office. 
Article 14 
(Experts; verification) 
The provisions of national law concerning the examination of consideration 
other than cash, adopted in the State In which the SE is to have Its 
registered office, pursuant to Article 10 of Directive 77/91/EEC1, shall 
apply. 
Article 15 
(Supervision of formation) 
The procedures for ensuring that the requirements of this Regulation and, 
where appropriate, of applicable national law, are complied with in regard 
to the formation of an SE and its statutes shall be those provided in 
respect of public limited companies under the law of the State In which the 
SE is to have its registered office. Member States shall take the measures 
necessary to ensure that such procedures are effective. 
0J No L 26, 31.1.1977, p. 1. 
-74 a -
Article 16 
(Legal personality) 
The SE shall have legal personality as from the date set by the law of the 
State in which it is to have Its registered office. 
- 75 -
SECTION 2 
Formation by merger 
Article 17 
(Definition) 
1. In the formation of an SE by merger, the merging companies shall 
be wound up without going into liquidation and transfer to the SE all their 
assets and liabilities in exchange for the Issue to their shareholders of 
shares in the SE and a cash payment, If any not, exceeding 10% of the 
nominal value of the shares so issued or, where there is no nominal value, 
of their accounting par value. 
2. A company may participate in the formation of an SE by merger even 
if it Is in liquidation, provided It has not yet begun to distribute its 
assets to the shareholders. 
3. The rights of the employees of each of the merging companies shall 
be protected In accordance with the provisions of national law giving 
effect to Directive 77/187/EEC.1 
Article 18 
(Draft terms of merger) 
1. The administrative or management board of the founder companies 
shall draw up draft terms of merger. The draft terms of merger shall 
Include the following particulars: 
(a) the type, name and registered office of each of the founder companies 
and of the SE; 
(b) the share exchange ratio and, where appropriate, the amount of any cash 
payment ; 
(c) the terms relating to the allotment of shares of the SE; 
(d) the date from which the holding of shares of the SE entitles their 
holders to participate in profits and any special conditions affecting that 
ent itlement; 
1 OJ No L 61, 5.3.1977, p. 26. 
- 75 a -
(e) the date from which transactions by the founder companies will be 
treated for accounting purposes as being those of the SE; 
(f) the rights conferred by the SE on the holders of shares to which 
special rights are attached and on the holders of securities other than 
shares, or the measures proposed concerning them; 
(g) any special advantage granted to the experts appointed under 
Article 21(1) or to members of the administrative, management, supervisory 
or controlling bodies of the founder companies. 
2. The draft terms of merger shall be drawn up and certified in due legal 
form if the law of the Member State in which any of the founder companies 
has its registered office so requires. 
- 76 -
3. The law of the Member State requiring that the draft terms of merger be 
drawn up and certified in due legal form shall determine the person or 
authority competent to do so. Where the laws of several Member States in 
which the founder companies have their registered offices require the draft 
terms of merger to be drawn up and certified in due legal form, this may be 
done by any person or authority competent under the law of one of those 
Member States. 
Article 19 
(Publication of the draft terms of merger) 
1. For each of the founder companies, the draft terms of merger shall be 
made public in the manner prescribed by the laws of each Member State in 
accordance with Article 3 of Directive 68/151/EEC at least one month before 
the date of the general meeting called to decide thereon. 
2. For each of the founder companies, the publication of the draft terms of 
merger referred to in paragraph 1, effected In accordance with Article 3(4) 
of Directive 68/151/EEC shall contain at least the following particulars: 
(a) the type, name and registered office of the founder companies; 
(b) the register in which the documents and particulars referred to in 
Article 3(2) of Directive 68/151/EEC are filed In respect of each founder 
company, and the number of the entry In that register. 
(c) the conditions which determine, in accordance with Article 25, the date 
on which the merger and formation shall take effect. 
3. The publication shall also specify the arrangements made in accordance 
with the provisions of national law giving effect to Articles 13, 14, and 
15 of Directive 78/855/EEC1 and with Article 23 of this Regulation for the 
exercise of the rights of the creditors of the founder companies. 
OJ No L 295, 20.10.1978, p. 36. 
-76 a -
Article 20 
(Board's report) 
The administrative or management board of each of the merging companies 
shall draw up a detailed written report explaining and justifying the draft 
terms of merger from the legal and economic point of view and, In 
particular, the share exchange ratio. 
The report shall also indicate any special valuation difficulties which 
have ar isen. 
Article 21 
(Supervision of the conduct of the merger) 
1. One or more experts, acting on behalf of each founder company but 
independent of them, appointed or approved by a judicial or administrative 
authority In the Member State in which the company concerned has Its 
registered office, shall examine the draft terms of merger and to draw up a 
written report for the shareholders. 
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2. In the report referred to in paragraph 1 the experts must state 
whether, in the their opinion, the share exchange ratio is fair and 
reasonable. The statement must at least: 
(a) indicate the method(s) used In arriving at the proposed share 
exchange ratio; 
(b) .state whether the method(s) used are adequate in the 
circumstances, the values arrived at using each method and an 
opinion on the relative Importance attributed to such methods in 
arriving at the value decided on. 
The report shall also indicate any special valuation difficulties which 
have arisen. 
3. Each expert shall be entitled to obtain from the merging companies 
all relevant Information and documents and to carry out all necessary 
investigations. 
4. Where the laws of all the Member States in which the founder 
companies have their registered office make provision for one or more 
independent experts to be appointed for all the founder companies such 
appointment may be made, at the joint request of those companies, by a 
judicial or administrative authority in any of the Member States. In such 
cases the law of the Member State of the appointing authority shall 
determine the content of the expert's report. 
Article 22 
(Approval of the merger by general meetings) 
1. The draft terms of merger and the Instrument of incorporation of 
the SE and, If the statutes are a separate Instrument, Its statutes shall 
be approved by the general meeting of each of the founder companies. The 
resolution of the general meeting approving the merger shall be subject to 
the provisions giving effect to Article 7 of Directive 78/855/EEC in the 
case of domestic mergers. 
2. For each of the founder companies, the provisions of national law 
adopted in accordance with Article 11 of Directive 78/855/EEC shall apply 
to the information to be provided to shareholders before the date of the 
general meeting called to approve the merger. 
- 77 a -
Article 23 
(Protection of creditors) 
The following provisions of the national law to which the founder companies 
are subject shall apply: 
(a) the provisions relating to the protection of the interests of 
creditors and debenture holders of the companies In the case of a 
domestIc merger ; 
(b) the provisions relating to the protection of the interests of 
holders of securities, other than shares, which carry special 
rights, provided that where the SE Is being formed by the merger 
of public limited companies 
- 78 -
the law of the State in which each of the companies has Its 
registered office shall determine whether a meeting of the holders 
of such securities may approve a change In their rights; 
the law of the State in which the SE Is to have its registered 
office shall determine whether the holders of such securities are 
entitled to require the SE to redeem their securities. 
Article 24 
(Supervision of the legality of mergers) 
1. Where the laws of a Member State governing one or more founder 
companies provide for judicial or administrative preventative supervision 
of the legality of mergers those laws shall apply to those companies. 
2. Where the laws of a Member State governing one or more founder 
companies do not provide for Judicial or administrative preventative 
supervision of the legality of mergers, or where such supervision does not 
extend to all the legal acts required for a merger, the national provisions 
giving effect to Article 16 of Directive 78/855/EEC shall apply to the 
company or companies concerned. Where those laws provide for a merger 
contract to be concluded following the decisions of the general meeting 
held concerning the merger, that contract shall be concluded by all the 
companies involved In the operation. Article 18(3) shall apply. 
3. Where the laws of the State In which the SE Is to have its 
registered office and the laws governing one or more of the founder 
companies provide for judicial or administrative preventative supervision 
ofthe legality of mergers, such supervision shall be carried out first in 
resepct of the SE. The supervision may be carried out In respect of the 
founder companies only when it can be shown that such supervision has been 
carried out in respect of the SE In accordance with Article 15. 
4. Where the laws governing one or more of the founder companies 
taking part in the merger provide for judicial or administrative 
preventative supervision of the legality of mergers whereas the laws 
governing one or more of the other founder companies taking part In the 
- 78 a -
merger do not, such supervision shall be carried out on the basis of the 
documents drawn up and certified in due legal form referred to In Article 
16 of Directive 78/855/EEC. 
Article 25 
(Effective date) 
The date on which the merger and the simultaneous formation of the SE takes 
effect shall be determined by the law of the State In which the SE has Its 
registered office. That date must be after all necessary supervision has 
been carried out and, where appropriate, the certified documents referred 
to in Article 24 have been drawn up for each of the founder companies. 
- 79 -
Article 26 
(Publicity) 
For each of the founder companies, the merger must be publicized In the 
manner prescribed by national law, In accordance with Article 3 of 
Directive 68/151/EEC. 
Article 27 
(Effects of the merger) 
A merger shall have the following consequences Ipso Jure and 
simultaneously: 
(a) the transfer, both as between the founder companies and the SE and 
as regards third parties, of all the assets and liabilities of the 
founder companies to the SE; 
(b) the shareholders of the founder companies become shareholders of 
the SE: 
(c) the founder companies cease to exist. 
Article 28 
(Liability of board members) 
The liability of members of the administrative or the management board of 
founder companies and of such companies' experts shall be governed by the 
provisions of national law giving effect to Articles 20 and 21 of Directive 
78/855/EEC In the State in which the founder company concerned has Its 
registered office or, where appropriate, by this Regulation. 
However, in the case of an appointment under Article 21(4), the liability 
of the expert or experts shall be governed by the law of the Member State 
of the judicial or administrative authority which appointed them. 
- 79 a -
Article 29 
(Nullity) 
The question of the nullity of a merger that has taken effect pursuant to 
Article 25 shall be governed by the national law of the company concerned 
but a merger may be declared null and void only where there has been no 
Judicial or administrative preventative supervision of Its legality or 
where there is no certified documentation where such supervision or the 
drawing up of such documentation Is laid down by the laws of the Member 
State governing the relevant company. However, where the laws of the 
State in which the SE has its registered office do not provide for a merger 
to be declared null and void on such grounds, no such nullity may be 
declared. 
-80 -
Article 30 
(Merger: Shareholdings between fellow founder companies) 
Articles 17-29 shall also apply where one of the founder companies holds 
all or part of the shares of another founder company. In such a case, 
shares in founder companies which come Into the possession of the SE as 
part of the assets of a founder company shall be cancelled. 
SECTION 3 
Formation of an SE holding company 
Article 31 
(Definition) 
1. If an SE is formed as a holding company, all the shares of the 
founder companies shall be transferred to the SE in exchange for shares of 
the SE. 
2. The founder companies shall continue to exist. Any provisions of 
the laws of the States in which the founder companies have their registered 
office, requiring that a company be wound up if all its shares come to be 
held by one person shall not apply. 
Article 32 
(Draft terms of formation) 
1. The administrative or management board of the founder companies 
shall draw up draft terms for the formation of an SE holding company 
containing the particulars referred to in Article 18(1)(a), (b) and (c) and 
Article 21 and shall prepare the report provided for in Article 20. 
2. The provisions of Article 21 shall apply to the supervision of 
the formation of the holding company in respect of each founder company. 
3. The provisions of Article 22 shall apply to the approval of the 
formation of the holding company by the general meeting of each of the 
founder companies. 
- 80 a -
4. The provisions of Article 28 on the liability of board members 
shalI apply. 
5. The formation of an SE holding company may be declared null and 
void only for failure to supervise the formation of the holding company in 
accordance with Article 29. 
6. For the purposes of applying the provisions of Section 2 on 
formation by merger, merger shall be read as formation of an SE holding 
company. 
Article 33 
(Matters affecting employees) 
The administrative or management board of each of the founder companies 
shall discuss with the representatives of Its employees the legal, economic 
and employment Implications of the formation of an SE holding company for 
the employees and any measures proposed to deal with them. 
- 81 -
SECTION 4 
Formation of a joint subsidiary 
Article 34 
(Draft terms of formation) 
If a joint subsidiary Is formed In the form of an SE, the administrative or 
the management board of each of the founder companies shall draw up draft 
terms for the formation of the subsidiary Including the following 
part iculars: 
(a) the type, name and registered office of the founder companies and 
of the proposed SE; 
(b) the size of the shareholdings of the founder companies in the SE; 
(c) the economic reasons for the formation. 
Article 35 
(Approval of the formation) 
1. The draft terms of formation and the instrument of incorporation 
of the SE and its statutes, if the statutes are a separate instrument, its 
statutes shall be approved by each of the founder companies in accordance 
with the law which governs it. 
2. Founder companies incorporated under national law shall be subject 
to all the provisions governing their participation in the formation of a 
subsidiary in the form of a public limited company under national law. 
3. Where a founder company Itself has the form of an SE, the 
following provisions shall apply: 
(a) the instrument of Incorporation and the statutes shall be 
authorized in accordance with Article 72 of this Regulation; 
(b) if the decision on the participation of the SE in the formation of 
the subsidiary falls within the matters to be decided by the 
general meeting, the instrument of incorporation and the statutes 
must also be approved by the general meeting. 
- 81 a -
SECTION 5 
Formation of a subsidiary by an SE 
Article 36 
(Draft terms of formation) 
If an SE forms a subsidiary in the form of an SE, the administrative or 
management board shall draw up draft terms for the formation of the 
subsidiary. Those draft terms shall include the following particulars: 
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(a) the name and registered office of the founder company and the 
instrument of Incorporation of the subsidary or its statutes, If 
the statutes are a separate instrument; 
(b) the economic reasons for the formation. 
Article 37 
(Approval of the formation) 
The instrument of incorporation of the subsidiary or Its statutes, If the 
statutes are a separate instrument, shall be approved In accordance with 
Article 35 (3). 
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Title I 11 
Capital - Shares - Debentures 
Article 38 
(Capital of the SE) 
1. The capital of the SE shall be denominated in ecu. 
2. The capital of the SE shall be divided into shares denominated In ecu. 
Shares Issued for a consideration must be paid up at the time the company 
is registered in the Register referred to in Article 8(1) to the extent of 
not less than 25% of their nominal value. However, where shares are Issued 
for a consideration other than cash at the time the company Is registered, 
that consideration must be transferred to the company In full within five 
years of the date on which the company was incorporated or acquired legal 
personality. 
3. The subscribed capital may be formed only of assets capable of 
economic assessment. However, an undertaking to perform work or to supply 
services may not form part of these assets. 
Article 39 
1. Shares may not be issued at a price lower than their nominal value. 
2. Professional intermediaries who undertake to place shares may be 
charged less than the total price of the shares for which they subscribe in 
the course of such a transaction. 
Article 40 
All shareholders in like circumstances shall be treated In a like manner. 
- 84 -
Article 41 
Subject to the provisions relating to the reduction of subscribed capital, 
the shareholders not may be released from the obligation to pay up their 
contrI but ions. 
Article 42 
(Increase in cap!tal) 
1. The capital of the SE may be increased by the subscription of new 
capital. An increase in capital shall require amendment of the statutes. 
Shares issued for a consideration in the course of an Increase In 
subscribed capital must be paid up to not less than 25% of their nominal 
value. Where provision is made for an issue premium, it must be paid In 
full. 
2. Where all or part of the consideration for the Increase in capital is 
In a form other than cash, a report on the valuation of the consideration 
shall be submitted to the general meeting. The report shall be prepared 
and signed by one or more experts Independent of the SE and appointed or 
approved by the court within whose Jurisdiction the registered office of 
the SE is situated. 
3. The expert's report shall be published in accordance with Article 9. 
4. Any increase in subscribed capital must be decided upon by the general 
meeting. Both this decision and the increase In the subscribed capital 
shall be published In accordance with Article 9. 
5. Where the capital is Increased by the capitalization of available 
reserves, the new shares shall be distributed amongst the shareholders In 
proportion to their existing shareholdings. 
However, in Its decision on the increase In capital, the general meeting 
may decide that some or all of the new shares shall be distributed amongst 
the employees of the SE. 
- 85 -
Article 43 
(Authorization of future increase In capital) 
1. The statutes or instrument of Incorporation or the general meeting, 
the decision of which must be published in accordance with Article 9, may 
authorize an increase in the subscribed capital, provided that such 
increase shall not exceed one-half of the capital already subscribed. 
2. Where appropriate, the increase In the subscribed capital up to the 
maximum authorized under paragraph 1 shall be decided by the administrative 
or the management board. The power of such body In this respect shall be 
for a maximum period of five years, and may be renewed one or more times by 
the general meeting, each time for a period not exceeding five years. 
3. The administrative or the management board must register decisions 
authorizing a future increase in capital. 
The administrative or the management board must register, and publicize In 
accordance with Article 9, all issues of shares up to the maximum 
authorised capital limits and the consideration furnished for those shares. 
In addition, the board shall report each year in the notes on the accounts 
on the use it has made of the authorization. 
4. Where the authorized capital has been fully subscribed or where the 
period referred to In paragraph 2 has elapsed with only part of the 
authorized capital having been subscribed, the administrative or the 
management board shall amend the statutes to indicate the new total 
capital. 
Where the authorization to increase capital has not been used, the 
administrative or the management board shall decide to delete the 
authorization clause referred to in paragraph 1. The board shall register 
such decisions. 
- 86 -
5. Where an increase in capital Is not fully subscribed, the capital 
shall be increased by the amount of the subscriptions received only If the 
conditions of the Issue so provide. 
Article 44 
(Subscription rights of shareholders) 
1. Whenever capital Is increased by consideration In cash, the shares 
must be offered on a pre-emptive basis to shareholders In proportion to the 
capital represented by their shares. 
2. Any offer of subscription on a pre-emptive basis and the period within 
which this right must be exercised shall be published in accordance with 
Article 9. However, it may be provided that such publication is not 
required where all the shares of the SE are registered. In such case, all 
the shareholders must be informed in writing. The right of pre-emption must 
be exercised within a period which shall not be less than 14 days from the 
date of publication of the offer or from the date of dispatch of the 
letters to the shareholders. 
3. The right of pre-emption may not be restricted or withdrawn by the 
statutes or the instrument of incorporation. This may, however, be done by 
decision of the general meeting. The administrative or the management board 
shall be required to present to such a meeting a written report indicating 
the reasons for restriction or withdrawal of the right of pre-emption and 
justifying the proposed Issue price. The decision shall require at least a 
two-thirds majority of the votes attaching to the securitlesrepresented or 
to the subscribed capital represented. The decision shall be published In 
accordance with Article 9. 
4. The statutes, the instrument of incorporation, or the general meeting, 
acting In accordance with the rules for a quorum, a majority and 
publication set out in paragraph 3, may give the power to restrict or 
withdraw the right of pre-emption to the administrative or the management 
board which is empowered to decide on an increase In subscribed capital 
within the limits of the authorised capital. This power may not be granted 
for a longer period than the power for which provision is made In Article 
43 (2). 
- 87 -
5. Shareholders may obtain copies of the reports referred to In 
paragraph 3 free of charge from the day on which notice of the general 
meeting is given. A statement to that effect shall be made In the notice 
convening the general meeting. 
Article 45 
(Reduction of capital) 
1. Any reduction in the subscribed capital, except under a court order, 
must be subject at least to a decision of the general meeting acting in 
accordance with the rules for a quorum and a majority laid down In Article 
44 (3). Such decision shall be published in accordance with Article 9. 
The notice convening the general meeting must specify at least the purpose 
of the reduction and the way In which it Is to be carried out. 
2. Where there are several classes of shares, the decision of the 
general meeting concerning a reduction in the subscribed capital shall be 
subject to a separate vote, at least for each class of shareholders whose 
rights are affected by the transaction. 
3. A reduction of capital shall be effected by reducing the nominal value 
of the shares. However, the nominal subscribed capital may not be reduced 
to an amount less than the minimum capital. Only where losses have been 
incurred may the general meeting decide to reduce the capital below the 
minimum capital, and in that case it shall at the same time decide to 
Increase the capital to an amount equal to or higher than the minimum 
capital. 
4. Where the subscribed capital is reduced in order to adjust It to the 
diminished value of the company following losses, and, as a result of the 
reduction, assets exceed liabilities, the difference shall be entered in a 
reserve. This reserve may not be used for the distribution of dividends or 
for the granting of other benefits to shareholders. 
- 88 -
Article 46 
(Protection of creditors In the event of reduction of capital) 
1. In the event of a reduction in the subscribed capital, the creditors 
whose claims antedate the publication of the decision to make the reduction 
shall be entitled at least to have the right to obtain security for claims 
which have not fallen due by the date of that publication. 
The conditions for the exercise of this right shall be governed by the law 
of the State where the company has its registered office. 
2. The reduction shall be void or no payment may be made for the benefit 
of the shareholders until the creditors have obtained satisfaction or the 
court within whose Jurisdiction the registered office of the SE is 
situated, has decided that their application should not be acceded to. 
3. Paragraphs 1 and 2 shall apply where the reduction in the subscribed 
capital is brought about by the total or partial waiving of the payment of 
the balance of the shareholders' contributions. 
They shall not apply to reductions in the subscribed capital for the 
purpose of adjusting It to the real value of the company following losses. 
Article 47 
The subscribed capital may not be reduced to an amount less than the 
minimum capital laid down In accordance with Article 4. However, such a 
reduction may be made If it Is also provided that the decision to reduce 
the subscribed capital may take effect only when the subscribed capital Is 
increased to an amount at least equal to the prescribed minimum. 
Article 48 
(Own shares) 
1. The subscription for shares of the SE by the SE Itself, third parties 
acting on its behalf or undertakings controlled by it within the meaning of 
Article 6 or in which it holds a majority of the shares Is prohibited. 
- 89 -
2. If shares of the SE have been subscribed for by a person acting In his 
own name, but on behalf of the SE, the subscriber shall be deemed to have 
subscribed for them for his own account. 
3. The founder companies of the SE by which or In name of which the 
statutes or the instrument of Incorporation of the SE were signed or in the 
case of an increase in the subscribed capital, the members of the 
administrative or the management board, shall be liable to pay for shares 
subscribed in contravention of this Article. 
Article 49 
1. The acquisition of shares of the SE by the SE Itself, third parties 
acting on its behalf or undertakings controlled by It within the meaning of 
Article 6 or in which It holds a majority of the shares Is prohibited. 
2. Paragraph 1 shall not apply to 
(a) the acquisition by the SE or third parties acting on its behalf of 
shares of the SE for the purpose of distributing them to the employees 
of the SE; 
(b) shares acquired in carrying out a decision to reduce capital; 
(c) shares acquired as a result of a universal transfer of assets; 
(d) fully paid-up shares acquired free of charge or by banks and other 
financial institutions as purchasing commission; 
(e) shares acquired by virtue of a legal obligation or resulting from a 
court ruling for the protection of minority shareholders, in the 
event, particularly, of a merger, a change in the company's object or 
form, transfer abroad of the registered office, or the introduction of 
restrictions on the transfer of shares; 
(f) shares acquired from a shareholder in the event of failure to pay them 
UP; 
(g) shares acquired in order to indemnity minority shareholders in 
controlled companies; 
(h) fully paid-up shares acquired under a sale enforced by a court order 
for the payment of a debt owed to the company by the owner of the 
shares. 
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3. Shares acquired in the cases listed in paragraph 2(c) to (h) above 
must, however, be disposed of within not more than three years of their 
acquisition unless the nominal value of the shares acquired, including 
shares the SE may have acquired directly or indirectly, does not exceed 10% 
of the subscribed capital. 
4. If the shares are not disposed of within the period laid down in 
paragraph 3 they must be cancelled. 
5. The SE may not accept its own shares as security or acquire any rights 
of usufruct or other beneficial rights over them. 
6. An SE may not advance funds, nor make loans, nor provide security, 
with a view to the acquisition of Its shares by a third party. 
7. Paragraph 6 shall not apply to transactions concluded by banks and 
other financial institutions In the normal course of business, nor to 
transactions effected with a view to the acquisition of shares by or for 
the employees of the SE or a controlled company. However, these 
transactions may not have the effect of reducing the net assets of the SE 
below the amount of its subscribed capital plus the reserves which by law 
or under the statutes may not be distributed. 
8. Shares acquired in contravention of paragraph 1 shall be disposed of 
within six months of their acquisition. 
9. If an undertaking comes under the control of the SE or if a majority 
of Its shares are acquired by such an SE, and it holds shares in the SE, 
the undertaking shall dispose of the shares in the SE within 18 months from 
the date of its coming under the control of the SE or from the date when 
the SE acquired a majority of its shares. 
If an SE acquires its own shares by way of universal transfer of assets or 
If an undertaking which is controlled by the SE or the majority of those 
shares are held by the SE acquires shares of the SE In this manner, such 
shares shall be disposed of within the same period. 
10. Shares acquired by the SE pursuant to paragraph 2(a) shall, if they 
have not been distributed to the employees within 12 months of being 
acquired, be disposed of within the following six months. 
- 91 -
11. No rights may be exercised in respect of the shares referred to In 
paragraphs 8, 9 and 10 until they have been disposed of or distributed to 
the employees. 
Article 50 
(Disclosure of holdings) 
Holdings of the SE in other companies shall be disclosed in accordance with 
the provisions of national law giving effect to Directive 88/627/EEC.1 
Article 51 
(Indivisibility of shares) 
The rights attached to a share shall be Indivisible. Where a share Is 
owned jointly by more than one person, the rights attached to it may be 
exercised only through a common representative. 
Article 52 
(Rights conferred by shares) 
1. Shares may carry different rights in respect of the distribution of 
the profits and assets of the company. Payment of fixed Interest may be 
neither made nor promised to shareholders. 
2. Non-voting shares shall may be Issued subject to the following 
condit ions: 
(a) their total nominal value shall not exceed one half of the capital; 
(b) they must carry all the rights of a shareholder other than the right 
to vote, except that the right to subscribe for new shares may be 
limited by the statutes or by resolution of the general meeting to 
non-voting shares. In addition they must confer special advantages; 
(c) they shall not be Included In computing a quorum or majority required 
by this Regulation or the statutes of the company. 
The above shall be without prejudice to paragraph 5. 
1 OJ No L 348, 17.12.1988, p. 62. 
- 92 -
3. Any other restriction or extension of voting rights, such as shares 
carrying multiple voting rights, Is prohibited. 
4. Shares carrying the same rights shall form a class. 
5. Where there are several classes of shares, any decision of the general 
meeting which adversely affects the rights of a particular class of 
shareholders shall be subject to a separate vote at least for each class 
of shareholder whose rights are affected by the transaction. The provisions 
governing an amendment of the statutes shall apply as regards the convening 
of meetings and the required quorum and majority to the holders of the 
shares of the class concerned. 
Article 53 
(Issue of bearer and registered shares) 
1. Shares shall be in either bearer or registered form. The statutes may 
entitle shareholders to request conversion of their bearer shares into 
registered shares or vice versa. 
2. An SE which issues registered shares shall keep an alphabetical 
register of all shareholders, together with their addresses and the number 
and class of shares they hold. The register shall be open for public 
Inspection on request at the registered office of the SE. 
Article 54 
(Issue and transfer of shares) 
The laws of the State In which the SE has its registered office shall 
govern the issue, replacement and cancellation of share certificates, 
and the transfer of shares. 
- 93 -
Article 55 
(Publication requirements for obtaining stock 
exchange listing and for offering securities 
to the pub Iic) 
1. The provisions of national law giving effect to 
Directive 80/390/EEC,1 shall apply to the listing particulars to be 
published for the admission of securities of the SE to official stock 
exchange 11stIng. 
2. The provisions of national law giving effect to Directive 
89/298/EEC2 shall apply to the prospectus to be published where 
securities are offered to the public. 
Article 56 
(Issue of debentures) 
The SE may issue debentures. 
Article 57 
(Body of debenture holders) 
The laws of the State in which the SE has Its registered office shall 
apply to the body of debenture holders. 
Article 58 
(Debentures convertible into shares) 
1. Articles 43, and 44 shall apply to the Issue of debentures 
convertible Into shares. 
2. The laws of the State In which the SE has Its registered office shall 
apply to the conditions and procedure for the exercise of conversion or 
subscription rights. 
1 OJNOL 100, 17.4.1980, p. 1. 
2 QJNoL 124, 5.5.1989, p. 8. 
- 94 -
3. As long as convertible debentures are outstanding, the SE may not 
decide on any amendment of the statutes affecting the rights of the holders 
of such debentures except where less Kece than 5% of the convertible 4, 
debentures is still outstanding and their holders have the opportunity to 
exercise their conversion or subscription rights In good time before the 
amendment takes effect or if the body of convertible debenture holders has 
approved the proposed amendment. In the latter case, a higher percentage 
may be stipulated in thé loan conditions. 
4. Where conversion or subscription rights attached to convertible 
debentures have been fully exercised or have been exercised only in part 
but the period in which they may be exercised has expired the management or 
the administrative board shall alter the statutes to show the new amount of 
capital. Where subscription or conversion rights are not exercised within 
the prescribed period , the management or the administrative board, shall 
delete from the statutes the clause concerning the issue of convertible 
debentures. 
Such amendments to the statutes shall be published in accordance with 
Article 9. 
Article 59 
(Participating debentures) 
1. The general meeting may, by a resolution which meets the requirements 
for altering the statutes, decide to issue debentures carrying the right to 
share in profits. Such debentures shall be issued for cash and shall carry 
rights determined wholly or partly by reference to the profits of the SE. 
2. Article 58(3) shall apply, mutatis mutandis, to participating 
debentures. 
Article 60 
(Other securities) 
The SE shall not issue to persons who are not shareholders of the SE other 
securities carrying a right to participate in the profits or assets of the 
SE. 
- 95 -
Title IV 
Governing bodies 
Article 61 
The statutes of the SE shall provide for the company to have as its 
governing bodies the general meeting of shareholders and either a 
management board and a supervisory board (two-tier system) or an 
administrative board (one-tier system). 
SECTION 1 
Two-tier system 
SUB-SECTION 1 
Management board 
Article 62 
(Functions of the management board; Appointment of members) 
1. The SE shall be managed and represented by a management board under 
the supervision of a supervisory board. 
2. The members of the management board shall be appointed by the 
supervisory board, which may remove them at any time. 
3. No person may at the same time be a member of the management board and 
the supervisory board of the same SE. 
4. The number of members of the management board shall be laid down In 
the statutes of the SE. 
5. The rules of procedure of the management board shall be adopted by the 
supervisory board, after obtaining the views of the management board. 
- 96 -
SUB-SECTION 2 
Supervisory board 
Article 63 
(Functions of the supervisory board; Appointment of members) 
1. The supervisory board may not participate In the management of the 
company nor represent it In dealings with third parties. However, it shall 
represent the company In its relations with members of the 
management board. 
2. Subject to the measures adopted to give effect to Article 4 of the 
Council Directive [completing the Statute In respect of the 
involvement of employees In SEs] members of the supervisory board shall be 
appointed by the general meeting. 
Article 64 
(Right to Information) 
1. At least once every three months , the management board shall report 
to the supervisory board on the management and progress of the company's 
affairs, including undertakings controlled by It, and on the company's 
situation and prospects. 
2. The management board shall inform the chairman of the 
supervisory board without delay of all matters of importance, including any 
event occurlng In the company or In undertakings controlled by It which may 
have an appreciable effect on the SE. 
- 97 -
3. The supervisory board may at any time require the management board to 
provide Information or a special report on any matter concerning the 
company or undertakings controlled by It. 
4. The supervisory board shall be entitled to undertake all 
Investigations necessary for the performance of Its duties. It may appoint 
one or more of its members to pursue such investigations on its behalf and 
may call In the help of experts. 
5. Any member of the supervisory board may, through the chairman of that 
board, require the management board to provide the supervisory board with 
any information necessary for the performance of Its duties. 
6. Each member of the supervisory board shall be entitled to examine all 
reports, documents and information and the results of enquiries and 
inspections obtained under the preceding paragraphs. 
Article 65 
(Rules of procedure, calling of meetings) 
1. The supervisory board shall adopt its rules of procedure and shall 
elect a chairman and one or more vice-chairmen from among Its members. 
2. The chairman may call a meeting of the supervisory board on his own 
initiative and shall do so at the request of a member of the 
supervisory board or of a member of the management board. 
SECTION 2 
The one-tier system 
- 98 -
Article 66 
(The administrative board; Appointment of members) 
1. The SE shall be managed and represented by an administrative board. 
The board shall be composed of at least three members. It shall adopt its 
rules of procedure and shall elect a chairman and one or more vice-chairmen 
from among Its members. 
2. The management of the SE shall be delegated by the administrative 
board to one or more of it members. The executive members shall be fewer 
In number than the other members of the board. The delegation of 
management responsibilities to an executive member of the administrative 
board may be revoked by the board at any time. 
3. Subject to the measures adopted to give effect to Article 4 of Council 
Directive ...[completing the Statute in respect of the involvement of 
employees in SEs] members of the administrative board shall be appointed by 
the general meeting. 
Article 67 
(Right to information) 
1. The administrative board shall meet at least once every three months 
to discuss the management and progress of the company's affairs, including 
undertakings controlled by It and the company's situation and prospects. 
2. Each member shall inform the chairman of the administrative board 
without delay of all matters of importance, Including any event occurlng In 
the company or in undertakings controlled by it which may have an 
appreciable effect on the SE. 
- 99 -
3. Any member of the administrative board may request the chairman to 
call a meeting of that board to discuss particular aspects of the company, 
if the request has not been complied with within 15 days, a meeting of the 
administrative board may be called by one third of Its members. 
4. Each member of the administrative board shall be entitled to examine 
all reports, documents and information supplied to the board concerning the 
matters referred to in paragraphs 1 and 3. 
SECTION 3 
Rules common to the one-tier and two-tier board systems 
Article 68 
(Term of office) 
1. Members of the governing bodies shall be appointed for a period laid 
down In tha statutes not AYCAAdlnn «IY vsars. down In the statutes not exceeding six years. 
However, the first members of the supervisory board or of the 
administrative board, who are to be appointed by the shareholders shall be 
appointed by the Instrument of incorporation of the SE for a period not 
exceeding three years. 
2. Board members may be reappointed. 
Article 69 
(Conditions of membership) 
1. Where the statutes of the SE allow a legal person or company to be a 
member of a board, that legal person or company shall designate a natural 
person to represent It In the performance of Its duties on the board. The 
representative shall be subject to the same conditions and obligations as 
if he were personally a member. Publication under Article 9 shall refer 
both to the representative and to the legal person or company represented. 
The legal person or company shall be jointly and severally liable without 
limitation for obligations arising from the acts of its representative. 
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2. No person may be a board member who 
under the law applicable to him, or 
as a result of a judicial or administrative decision delivered or 
recognized In a Member State, 
is disqualified from serving on an administrative, supervisory or 
management board. 
3. The statutes may lay down special conditions of eligibility for 
members representing the shareholders. 
4. Notwithstanding the rule laid down in Article 94(2), the statutes of 
the SE may provide voting procedures for the appointment of members of the 
administrative or the supervisory board by the general meeting such that 
one or more members and their alternates may be appointed by a minority of 
the shareholders. 
Article 70 
(Vacancies) 
The statutes of the SE may provide for the appointment of alternate members 
to vacancies. Such appointments may be terminated at any time by the 
appointment of a full member. 
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Article 71 
(Power of representation) 
1. Where the management board, Is composed of more than one member, or 
where the management of the company is delegated to more than one member of 
the administrative board those members have authority to represent the 
company collectively only in dealings with third parties. However, the 
statutes of the SE may provide that a member of the relevant board shall 
have authority to represent the SE alone or together with one or more other 
members of the board or together with a person who has been given general 
authority to represent the company under paragraph 2. 
2. The administrative board or, as the case may be, the management board 
with the approval of the supervisory board, may confer a general authority 
to represent the company on one or more persons. Such authority may be 
revoked at any time, in the same way, by the board which granted It. 
3. Acts performed by those having authority to represent the company 
under paragraphs 1 and 2 shall bind the company vis-à-vis third parties, 
even where the acts in question are not in accordance with the objects of 
the company, providing they do not exceed the powers conferred by this 
Régulât Ion. 
- 102 -
Article 72 
(Operations requiring prior authorization) 
1. The Implementation of decisions on 
(a) the closure or transfer of establishments or of substantial parts 
thereof, 
(b) substantial reduction, extension or alteration of the activities of 
the SE, 
(c) substantial organizational changes within the SE, 
(d) the establishment of cooperation with other undertakings which Is both 
long-term and of importance to the activities of the SE, or the 
termination thereof. 
(e) the setting up of a subsidiary or of a holding company. 
may be effected by the management board only following prior authorization 
of the supervisory board or by the administrative board as a whole. 
Implementation may not be delegated to the executive members of the 
administrative board. 
Acts done In breach of the above provisions may not be relied upon against 
third parties, unless the SE can prove that the third party was aware of 
the breach. 
2. The statutes of the SE may provide that paragraph 1 shall also apply 
to other types of decisions. 
Article 73 
(Conflicts of interest) 
1. Any transaction in which a board member has an Interest conflicting 
with the Interests of the SE shall require the prior authorization of the 
supervisory board or the administrative board. 
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2. The statutes of the SE may provide that paragraph 1 shall not apply to 
routine transactions concluded on normal terms and conditions. 
3. A member to whom paragraph 1 applies shall be entitled to be heard 
before a decision on the authorization is made but may not take part In the 
deliberations of the relevant board when it makes its decision. 
4. Authorizations given under paragraph 1 during any financial year shall 
be communicated to the shareholders not later than at the first general 
meeting following the end of the financial year In question. 
5. Failure to obtain authorization may not be relied upon against third 
parties, unless the SE can prove that the third party was aware of the need 
for, and lack of, such authorization. 
Art le le 74 
(Rights and obligations) 
1. Each member of a board of the SE shall have the same rights and 
obligations, without prejudice to 
(a) any internal allocation of responsibilities between the members of the 
board, and the provisions of the board's rules of procedure governing 
the taking of decisions in the event of a tied vote; 
(b) the provisions concerning the delegation of management responslblIt les 
to executive members. 
2. All board members shall carry out their functions in the Interests of 
the SE, having regard in particular to the interests of the shareholders 
and the employees. 
3. All board members shall exercise a proper discretion In respect of 
information of a confidential nature concerning the SE. This duty shall 
continue to apply even after they have ceased to hold office. 
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Article 75 
(Removal of members) 
1. Members of the supervisory board or the administrative board may be 
dismissed at any time by the same body, persons or groups of persons who 
under this Regulation or the statutes of the SE have the power to appoint 
them. 
2. In addition, members of the supervisory board or the administrative 
board may be dismissed on proper grounds by the court within whose 
juridiction the registered office of the SE Is situated in proceedings 
brought by the general meeting of the shareholders, the representatives of 
the employees, the supervisory board or the administrative board. Such 
proceedings may also be brought by one or more shareholders who together 
hold 10% of the capital of the SE. 
Article 76 
(Quorum, majority) 
1. Unless the statutes of the SE require a higher quorum, a board shall 
not conduct business validly unless at least half of its members take part 
In the deliberat ions. 
2. Members who are absent may take part in decisions by authorizing a 
member who is present to represent them. No member may represent more than 
one absent member. 
3. Unless the statutes of the SE provide for a larger majority, decisions 
shall be taken by a majority of the members present or represented. 
- 105 -
4. Under terms laid down In the statutes of the SE a board may also take 
decisions by procedures under which the members vote In writing, by telex, 
telegram or telephone or by any other means of telecommunication, provided 
that all members are Informed of the proposed voting procedure and no 
member objects to the use of that procedure. 
Article 77 
(Civil liability) 
1. Members of the administrative board, the management board or the 
supervisory board, shall be liable to the SE for any damage sustained by 
the company as a result of wrongful acts committed In carrying out their 
dut les. 
2. Where the board concerned is composed of more than one member, all the 
members shall be jointly and severally liable without limit. However, a 
member may be relieved of liability If he can prove that no fault is 
attributable to him personally. Such relief may not be claimed by a member 
on the sole ground that the act giving rise to liability did not come 
within the sphere of responsibilities delegated to him. 
Article 78 
(Proceedings on behalf of the company) 
1. The administrative board or the supervisory board, may Institute 
proceedings on the company's behalf to establish liability. 
2. Such proceedings must be brought if the general meeting so decides. 
The general meeting may appoint a special representative for this purpose. 
For such a decision the statutes may not prescribe a majority greater than 
an absolute majority of the votes attached to the capital represented. 
A - 106 -
SucW 
3. Proceedings on behalf of the company may also be brought by one or ^ r ^ 
more shareholders who together hold 10% of the capital of the SE. 
4. Such proceedings may be brought by any creditor of the SE who can show 
that he cannot obtain satisfaction of his claim on the company. 
Article 79 
(Waiver of proceedings on behalf of the company) 
1. The SE may waive its right to institute proceedings on the company's 
behalf to establish liability. Such a waiver shall require an express 
resolution of the general meeting taken In the knowledge of the wrongful 
act giving rise to damage for the company. However, such a resolution may 
not be passed if it Is opposed by shareholders whose holdings amount to the 
figure referred to in Article 75. 
2. Paragraph 1 shall also apply to any compromise relating to such 
proceedings agreed between the company and a board member. 
Article 80 
(Limitation of actions) 
No proceedings on the company's behalf to establish liability may be 
instituted more than five years after the act giving rise to damage. 
- 107 -
Section 4 
General meeting 
Article 81 
(Competence) 
The following matters shall be resolved by the general meeting: 
a) increases or reductions In subscribed or authorized capital; 
b) issues of debentures convertible Into shares or carrying subscription 
rights and of debentures carrying the right to share In the profits; 
c) the appointment or removal of members of the administrative board or 
of the supervisory board, who represent the shareholders; 
d) the Institution of proceedings on the company's behalf for negligence 
or misconduct by board members; 
e) the appointment or dismissal of auditors; 
f) approval of the annual accounts; 
g) appropriation of the profit or loss for the year-, 
h) amendment of the statutes; 
i) winding up and appointment of liquidators; 
j) transformation'; 
k) merger of the SE with another company; 
- 108 -
I) transfers of assets. 
Article 82 
(Holding of general meeting) 
1. A general meeting shall be held at least once a year. However, the 
first general meeting may be held at any time In the 18 months 
following the Incorporation of the SE. 
2. A general meeting may be called at any time by the management board 
or the administrative board. 
Article 83 
(Meeting called by minority shareholders) 
1. It shall be provided that one or more shareholders who satisfy the 
conditions set out In Article 75 may request the SE to call the 
general meeting and to settle the agenda therefor. 
2. If, following a request made under paragraph 1, no action has been 
taken within a month, the court within whose juridiction the 
registered office of the SE is situated may order the calling of a 
general meeting or authorize either the shareholders who have 
requested It or their representative to call the meeting. 
Article 84 
(Methods of calling meetings) 
1. a) The general meeting shall be called by a notice published either in 
the national gazette specified in the legislation of the State of the 
registered office In accordance with Article 3 (4) of Directive 
68/151/EEC or In one or more large-circulation newspapers. 
- 109 -
b) However, where all the shares in an SE are registered or where all 
its shareholders are known, the general meeting may be called by any 
means of communication addressed to all the shareholders. 
2. The notice calling the general meeting shall contain the following 
particulars, at least: 
a) the name and the registered office of the SE; 
b) the place and date of the meeting; 
c) the type of general meeting (ordinary, extraordinary or special); 
d) a statement of the formalities, if any, prescribed by the statutes 
for attendance at the general meeting and for the exercise of the 
r ight to vote-, 
e) any provisions of the statutes which require the shareholder, where 
he appoints an agent, to appoint a person who falls within certain 
specified categories of persons. 
f) the agenda showing the subjects to be discussed and the proposals for 
résolut ions. 
3. The period between the date of first publication of the notice in 
accordance with paragraph 1 (a), or the date of dispatch of the first 
communication as mentioned in paragraph Kb), and the date of the 
opening of the general meeting shall be not less than 30 days. 
Article 85 
1. One or more shareholders who satisfy the requirements laid down In 
Article 75 may request that one or more additional items be included 
on the agenda of a general meeting of which notice has already been 
given. 
- 110 -
2. Requests for Inclusion of additional agenda Items shall be sent to 
the SE within seven days of the first publication of the notice 
calling the general meeting in accordance with Article 84 (1)(a) or 
the dispatch of the first communication calling the general meeting 
by the means mentioned in Article 84 (1)(b). 
3. Items whose inclusion in the agenda has been requested under 
paragraph 2, shall be communicated or published In the same way as 
the notice of meeting, not less than seven days before the meeting. 
Article 86 
(Attendance at general meeting) 
Every shareholder who has complied with the formalities prescribed by the 
statutes shall be entitled to attend the general meeting. However, the 
statutes may prohibit shareholders having no voting rights from attending 
the meetIng. 
Article 87 
(Proxies) 
1. Every shareholder shall be entitled to appoint a person to represent 
him at the general meeting. 
2. The law of the Member State where the registered office of the SE is 
situated or the statutes may restrict the choice of representative to 
one or more specified categories of persons, but a shareholder may 
not be prevented from appointing another shareholder to represent 
him. 
3. The appointment shall be made in writing and shall be retained for 
the period mentioned in Article 99 (4). 
- 111 -
Article 88 
1. Where the proxies appointed are persons acting In a professional 
capacity, the provisions of Article 87 and the following provisions 
shalI apply: 
a) the appointment shall relate to only one meeting, but It shall be 
valid for successive meetings with the same agenda, without prejudice 
to paragraph 2; 
b) the appointment shall be revocable; 
c) all the shareholders whose names and addresses are known shall be 
Invited, either In writing or by publication in one or more large-
circulation newspapers, to appoint the person in question as their 
proxy; 
d) the invitation to appoint the person in question as a proxy shall 
contain at least the following information: 
the agenda showing the subjects for discussion and the proposals for 
résolut Ions-, 
an indication that the documents mentioned in Article 89 are 
available to shareholders who ask for them; 
a request for instructions concerning the exercise of the right to 
vote in respect of each item on the agenda; 
a statement of the way in which the proxy will exercise the right to 
vote In the absence of any Instructions from the shareholder; 
e) the right to vote shall be exercised in accordance with the 
shareholders' instructions, or in the absence of such Instructions in 
accordance with the statement made to the shareholder. However, the 
proxy may depart from the shareholders' Instructions or the statement 
made to the shareholder by reason of circumstances unknown when the 
instructions were given or the invitation to appoint a proxy issued, 
where voting In accordance with instructions or the statement would 
be liable to prejudice the shareholder's Interests. The proxy shall 
forthwith inform the shareholder and explain the reasons for his 
act ion. 
- 112 -
2. Notwithstanding paragraph 1(a), a proxy may be appointed for a 
specified period not exceeding 15 months. In this case the Information 
indicated in paragraph 1 (d) shall be given to all the shareholders 
referred to In paragraph 1(c) before any general meeting. 
Article 89 
(Avallablity of accounts) 
The annual accounts and, where appropriate, the consolidated accounts, the 
proposed appropriation of profits or treatment of loss where It does not 
appear in the annual accounts, the annual report and the opinion of the 
persons responsible for auditing the accounts shall be available to every 
shareholder at the latest from the date of dispatch or publication of the 
notice of general meeting called to adopt the annual accounts and to decide 
on the appropriât Ion. of profits or treatment of loss. Every shareholder 
shall be able to obtain a copy of these documents free of charge upon 
request. From the same date, the report of the persons responsible for 
auditing the accounts shall be available to any shareholder wishing to 
consult It at the registered office of the SE. 
Article 90 
(Right to Information) 
1. Every shareholder who so requests at a general meeting shall be 
entitled to obtain Information on the affairs of the company arising from 
Items on the agenda or concerning matters on which the general meeting may 
take a decision in accordance with Article 91(2). 
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2. The management board or the executive members of the administrative 
board shall supply this information. 
3. The communication of Information may be refused only where: 
(a) It would be likely to be seriously prejudicial to the company 
or a controlled company, or 
(b) Its disclosure would be incompatible with a legal obligation 
of confident la IIty. 
4. A shareholder to whom Information is refused may require that his 
question and the grounds for refusal shall be entered in the minutes of the 
general meeting. 
5. A shareholder to whom information is refused may challenge the 
validity of the refusal In the court within whose Jurisdiction the 
registered of'fice of the SE Is situated. Application to the court shall be 
made within two weeks of the closure of the general meeting. 
Article 91 
(Decisions-, Agenda) 
1. The general meeting shall not pass any resolution concerning Items 
which have not been communicated or published in accordance with Article 
84(2)(f) or Article 85(3). 
2. Paragraph 1 shall not apply when all the shareholders are present in 
person or by proxy at the general meeting and no shareholder objects to the 
matter in question being discussed. 
Article 92 
(Voting rights) 
1. A shareholder's voting rights shall be proportionate to the fraction 
of the subscribed capital which his shares represent. 
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2. The statutes may authorize: 
a) restriction or exclusion of voting rights In respect of shares 
which carry special advantages; 
b) restriction of votes In respect of shares allotted to the same 
shareholder, provided the restriction applies at least to all 
shareholders of the same class. 
3. The right to vote may not be exercised: 
a) where a call made by the company has not been paid; 
b) on shares held by the SE Itself or by one of its subsidiaries. 
4. The law of the State where the registered office of the SE Is 
situated shall govern the exercise of voting rights In cases of succession, 
usufruct, pledge of shares, or failure to notify substantial holdings. 
Article 93 
(Conflict of interest) 
Neither a shareholder nor his representative shall exercise the right to 
vote attached to his shares or to shares belonging to third persons where 
the subject matter of the resolution relates to: 
a) the assertion of claims by the SE against that shareholder; 
b) the commencement of legal proceedings to establish the liability 
of that shareholder to the company in accordance with Article 78; 
c) waiver of the right to bring proceedings to establish the 
liability of that shareholder to the company in accordance with 
Article 79. 
- 115 -
Article 94 
(Required majority) 
1. Resolutions of the general meeting shall require at least an absolute 
majority of the votes attached to the subscribed capital present or 
represented unless a greater majority Is prescribed by this Regulation. 
2. However, as regards the appointment or dismissal of members of the 
administrative board, the management board or the supervisory board the 
statutes may not require a majority greater than that mentioned in 
paragraph 1. 
Article 95 
(Amendment of statutes) 
1. A resolution of the general meeting shall be required for any 
amendment of the statutes of the instrument of incorporation. 
2. However, the statutes may provide that the administrative board or 
the management board may amend the statutes or the instrument of 
incorporation where the amendment merely Implements a resolution already 
passed by the general meeting, or by the board itself by virtue of an 
authorization given by the general meeting, by the statutes, or by the 
instrument of Incorporation. 
Article 96 
1. The complete text of the amendment of the statutes or of the 
Instrument of Incorporation which Is to be put before the general meeting 
shall be set out In the notice of meeting. 
2. However, the statutes may provide that the complete text of the 
amendment mentioned In paragraph 1 may be obtained by any shareholder free 
of charge upon request. 
- 116 -
Article 97 
1. A majority of not less than two thirds of votes attached to 
subscribed capital represented at the meeting shall be required for the 
passing by the general meeting of resolutions amending the statutes or the 
instrument of Incorporation. 
2. However, the statutes may provide that where at least one-half of the 
subscribed capital is represented, a simple majority of the votes in 
paragraph 1 shall suffice. 
3. Resolutions of the general meeting which would have the effect of 
Increasing the liabilities of the shareholders shall require in any event 
the approval of all the shareholders involved. 
4. A resolution amending the statutes or the Instrument of incorporation 
shall be made public accordance with Article 9. 
Article 98 
(Separate vote of each class of shareholder) 
1. Where there are several classes of shares, any resolution of the 
general meeting shall require a separate vote at least for each class of 
shareholders whose rights are affected by the resolution. 
2. Where a resolution of the general meeting requires the majority of 
votes specified In Article 97 (1) and (2), that majority shall also be 
required for the separate vote of each class of shareholders whose rights 
are affected by the resolution. 
- 117 -
Article 99 
(Minutes) 
1. Minutes shall be drawn up for every meeting of the general meeting. 
2. The minutes shall contain the following particulars, at least: 
a) the place and date of the meeting; 
b) the resolutions passed; 
c) the result of the voting. 
3. There shall be annexed to the minutes: 
a) the attendance list; 
b) the documents relating to the calling of the general meeting. 
4. The minutes and the documents annexed thereto shall be retained for 
at least three years. A copy of the minutes and the documents annexed 
thereto may be obtained by any shareholder, free of charge, upon request. 
Article 100 
(Appeal against resolutions of general meeting) 
1. Resolutions of the general meeting may be declared Invalid as 
Infringing the provisions of this Regulation or of the company's statutes, 
in the following manner. 
2. An action for such a declaration may be brought by any shareholder or 
any person'having a legitimate interest, provided he can show that he has 
an interest In having the Infringed provision observed and that the 
resolution of the general meeting may have been altered or influenced by 
the Infringement. 
- 118 -
3. The action for such a declaration shall be brought within three 
months of the closure of the general meeting, before the court within whose 
jurisdiction the registered office of the SE is situated . It shall be 
taken against the SE. 
4. The procedure In the action for such a declaration shall be governed 
by the law of the place where the SE has its registered office. 
5. The decision declaring the resolution void shall be published in 
accordance with Article 9. 
6. The declaration that a resolution is void may no longer be made by 
the court if that resolution has been replaced by another taken in 
conformity with this Regulation and the statutes of the SE. The court may, 
on Its own Initiative, grant the time necessary to enable the general 
meeting to pass such a new resolution. 
- 119 -
Title V 
Annual accounts and consolidated accounts 
SECTION 1 
Annual accounts 
SUB-SECTION 1 
Preparation of annual accounts 
Article 101 
1. The SE shall draw up annual accounts comprising the balance sheet, 
the profit and loss account and the notes on the accounts. These documents 
shall constitute a composite whole. 
2. The annual accounts of the SE shall be drawn up in accordance with 
the provisions of Directive 78/660/EEC subject to paragraph 3 of this 
Article. 
3.(a) Articles 1, 2(5), final sentence, 2(6), 4(1), final sentence, 
4(2), final sentence,4 (3)(b), final sentence, 4(4), final sentence, 5, 
43(2), 45(1)(b), final sentence, 54, 55 and 62 of Directive 78/660/EEC 
shalI not apply. 
(b) For the purpose of drawing up the annual accounts, the provisions 
of Articles 2, 3, 4, 6 and 7 of Directive 78/660/EEC shall apply. The SE 
may avail Itself of the option provided for in Article 6 of that Directive. 
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(c) For the presentation of the balance sheet, the SE may choose between 
the layouts prescribed by Articles 9 and 10 of Directive 78/660/EEC. It may 
avail Itself of the options provided for in Articles 9, 10, 11, 18, final 
sentence, 20(2) and 21, final sentence, of that Directive. 
(d) For the presentation of the profit and loss account, the SE may 
choose between the layouts prescribed by Articles 23 to 26 of Directive 
78/660/EEC. It may avail Itself of the options provided for In Articles 27 
and 30 of that Directive. 
(e) The Items shown In the annual accounts shall be valued in 
accordance with the principles laid down in Article 31 of Directive 
78/660/EEC. They shall be valued on the basis of the principle of purchase 
price or production cost according to the provisions of Articles 34 to 42 
of that Directive. 
However, the SE may choose to apply one of the three alternative valuation 
methods provided for In Article 33 of that Directive. If the SE avails 
itself of that possibility, it shall ensure that the method applied is 
consistent with the principles laid down in that Article. Details of the 
method applied shall be given In the annex thereto. 
The SE may avail itself of the options provided for in Articles 34(1), 36, 
37(1) and (2), 39(1)(c) and (2) and 40(1) of that Directive. 
(f) In addition to the Information required under other provisions of 
Directive 78/660/EEC, the notes on the accounts must include the 
information provided for in Article 43 of that Directive at least. The SE 
may avail Itself of the options provided for in Articles 44 and 45(1) and 
(2) of that Directive. 
- 121 -
SUB-SECTION 2 
Preparation of the annual rapport 
Article 102 
1. The SE shall draw up an annual report which must include at least a 
fair review of the development of the company's business and of its 
posit ion. 
2. The annual report shall also include the Information provided for 
In Article 46 of Directive 78/660/EEC. 
SUB-SECTION 3 
AudItIng 
Article 103 
1. The annual accounts of the SE shall be audited by one or more 
persons authorized to do so In a Member State in accordance with the 
provisions of Directive 84/253/EEC1. Those persons shall also verify that 
the annual report is consistent with the annual accounts for the same 
financial year. 
2. If the SE meets the criteria laid down In Article 11 of 
Directive 78/660/EEC, it shall not be required to have Its accounts 
audited. In such cases, members of administrative board or the management 
board shall be subject to the sanctions applicable to public limited 
liability companies In the State In which the SE has Its registered office 
where the annual accounts or annual reports are not drawn up in accordance 
with the provisions of this section. 
OJ No L 126, 12.5.1984, p. 20. 
- 122 -
SUB-SECTION 4 
Pub 11 cat ion 
Article 104 
1. The annual accounts, duly approved, and the annual report and audit 
report shall be published as laid down in accordance with Article 3 of 
Directive 68/151/EEC by the laws of the Member State in which the SE has 
Its registered office. 
2. The SE may avail itself of the options provided for in Article 47 
of Directive 78/660/EEC. 
3. Articles 48, 49 and 50 of Directive 78/660/EEC shall apply to the 
SE. 
SUB-SECTION 5 
Final provisions 
Article 105 
Articles 56 to 61 of Directive 78/660/EEC shall apply to the SE. The SE 
may avail itself of the options provided for in those Articles. 
- 123 -
SECTION 2 
Consolidated accounts 
SUB-SECTION 1 
Conditions for the preparation of consolidated accounts 
Article 106 
1. Where the SE is a parent undertaking within the meaning of 
Article 1(1) and (2) of Directive 83/349/EEC, It shall be required to draw 
up consolidated accounts and a consolidated annual report in accordance 
with the provisions of that Directive. 
2. Articles 1(1)(c) last sentence, Kd)(bb), last sentence, 1(d), 
second and third subparagraphs, 4 and 5 of Directive 83/349/EEC shall not 
apply. 
3. The SE may avail Itself of the options provided for in Articles 1, 
6, 12 and 15 of Directive 83/349/EEC. 
Article 107 
1. Where the SE Is a parent undertaking within the meaning of Article 
1(1) and (2) of Directive 83/349/EEC and Is at the same time a subsidiary 
undertaking of a parent undertaking governed by the law of a Member State, 
It shall be exempt from the obligation to draw up consolidated accounts 
subject to the conditions laid down in Articles 7 and 8 of that Directive. 
Article 10 of that Directive shall apply. 
2. Articles 7(1)(b), second subparagraph, 8(1), last sentence, 8(2) 
and (3), and 9 of that Directive shall not apply. 
3. The exemption provided for In paragraph 1 shall not apply where the 
securities of the SE have been admitted to official listing on a stock 
exchange established In a Member State. 
- 124 -
Article 108 
1. Where the SE is a parent undertaking within the meaning of Article 
1(1) and (2) of Directive 83/349/EEC and is at the same time a subsidiary 
undertaking of a parent undertaking which is not governed by the law of a 
Member state, It shall be exempt from the obligation to draw up 
consolidated accounts subject to the conditions laid down In Article 11 of 
that Directive. 
2. Articles 8 (1), second sentence, 8(2) and (3), and 10 of that 
Directive shall not apply. 
3. The exemption provided for in paragraph 1 shall not apply where the 
securities of the SE have been admitted to official listing on a stock 
exchange established in a Member State. 
SUB-SECTION 2 
The preparation of consolidated accounts 
Article 109 
1. The consolidated accounts shall comprise the consolidated balance 
sheet, the consolidated profit and loss account and the notes on the 
accounts. These documents shall constitute a composite whole. 
2. The consolidated accounts shall be drawn up in accordance with the 
provisions of Directive 83/349/EEC subject to paragraph 3 of this Article. 
3. (a) Articles 16(5), final sentence, 16(6), 33(2)(c), first sentence, 
33(3), final sentence, 34, point 12, final sentence, and point 13, final 
sentence, 35(1)(b), second sentence, 40, 41(5) and 48 of Directive 
83/349/EEC shall not apply. 
(b) The SE may avail Itself of the options provided for in Articles 
17(2), 19(1)(b), 20, 26(1)(c), final sentence, 26(2), 27(2), 28, second 
sentence, 29(2)(a), second sentence, 29(5), final sentence, 30(2), 32, 
33(2) (d) and 35(1) of Directive 83/349/EEC. 
- 125 -
SUB-SECTION 3 
Preparation of the consolidated annual report 
Article 110 
1. The consolidated annual report shall include at least a fair review 
of the development of the company's business and the position of the 
undertakings included in the consolidation taken as a whole. 
2. The consolidated annual report shall also include the Information 
provided for In Article 36 of Directive 83/349/EEC. The SE may avail Itself 
of the option provided for in the final sentence of paragraph 2(d) of that 
Article. 
SUB-SECTION 4 
Auditing of the consolidated accounts 
Article 111 
The consolidated accounts shall be audited by one or more persons 
authorized to do so in a Member State in accordance with the provisions of 
Directive 84/253/EEC. Those persons shall also verify that the consolidated 
annual report is consistent with the consolidated accounts for the 
financial year in question. 
SUB-SECTION 5 
Pub 11 cat ion 
Article 112 
1. The consolidated accounts, duly approved, and the consolidated 
annual report, together with the audit report, shall be published as laid 
down In accordance with Article 3 of Directive 68/151/EEC by the laws of 
the Member State in which the SE has its registered office. 
2. Article 38 (3), (4) and (6) of Directive 83/349/EEC shall not 
apply. 
3. The management board and the executive members of the 
administrative board shall be liable to the sanctions provided for [...] if 
the consolidated accounts and consolidated annual report are not published. 
- 126 -
SECTION 3 
Banks and Insurance companies 
Article 113 
1. SEs which are credit or financial Institutions shall comply, as 
regards the drawing up, auditing and publication of annual accounts and 
consolidated accounts, with the rules laid down pursuant to Directive 
86/635/EEC1 by the national law of the State In which the SE has Its 
registered off Ice. 
2. SEs which are insurance companies shall comply, as regards the 
drawing up, auditing and publication of annual accounts and consolidated 
accounts, with the rules laid down, pursuant to Directive [... which, 
supplementing Directive 78/660/EEC, harmonizes the provisions governing the 
annual accounts and the consolidated accounts of insurance companies, by 
the national law of the State in which the company has its registered 
office]. 
OJ NO L 372, 31.A2.1986, p. 1. 
- 127 -
Title VI 
Groups of companies 
Article 114 
1. Where an undertaking controls an SE, that undertaking's consequent 
rights and obligations relating to the protection of minority shareholders 
and third parties shall be those defined by tee law governing public 
limited companies In the State where the SE has Its registered office. 
2. Paragraph 1 shall not affect the obligations Imposed on the 
controlling undertaking by the legal system which governs It. 
- 128 -
Title viI 
Winding up, liquidation, insolvency and suspension of payments 
SECTION 1 
Winding up 
Article 115 
An SE may be wound up: 
1. upon the expiry of the duration laid down for It in the statutes or the 
instrument of Incorporation, 
2. by resolution of the general meeting of shareholders, or 
3. by decision of the court of the place where the SE has Its registered 
office : 
(a) where the subscribed capital of the company has been reduced below the 
minimum capital provided for in Article 4; 
(b) where the disclosure of annual accounts has not taken place in the 
SE's last three financial years; 
(c) on any ground laid down in the law of the place where the SE has its 
registered office or provided for In the statutes or the Instrument of 
Incorporation. 
- 129 -
Article 116 
(Winding up by resolution of the general meeting) 
1. A resolution of the general meeting of shareholders to wind up the SE 
on any ground laid down by the statutes or instrument of incorporation 
shall require at least a simple majority of the votes attached to the 
subscribed capital represented. 
2. In all other cases a resolution of the general meeting of shareholders 
to wind up the SE shall require at least a two-thirds majority of the votes 
attached to the subscribed capital represented. The statutes may, however, 
lay down that, when at least half the subscribed capital is represented, 
the simple majority referred to In paragraph 1 is sufficient. 
Article 117 
(Winding up by the court) 
1. Winding-up proceedings may be brought in the court of the place where 
the SE has its registered office by the administrative board, the 
management board or the supervisory board of the SE, by any shareholder, or 
by any person with a legitimate Interest. 
2. Where the SE Is able to remove the ground for winding up, the court may 
grant it a period of time sufficient to allow it to do so. 
Article 118 
(Publication of winding up) 
The winding up shall be published In the manner referred to In Article 9. 
- 130 -
Article 119 
(Wound-up SE to continue in existence) 
1. Where an SE is to be wound up as a result of a resolution to that 
effect of the general meeting of shareholders or upon the expiry of Its 
prescribed duration, the general meeting of shareholders may resolve that 
it is to continue In existence as long as there has been no distribution on 
the basis of liquidation in accordance with Article 126. 
2. The resolution that the company is to continue in existence shall be 
passed In accordance with Article 116(2), and published in the manner 
referred to In Article 9. 
SECTION 2 
Liquidât Ion 
Article 120 
(Appointment of liquidators) 
1. The winding up of an SE shall entail the liquidation of its assets. 
The liquidation shall be carried out by one or more liquidators. 
2. Liquidators shall be appointed : 
(a) by the statutes or Instrument of incorporation, or In the manner laid 
down therein; or 
(b) by a resolution of the general meeting of shareholders acting by the 
simple majority of the votes specified In Article 116(1); or 
(c) failing an appointment pursuant to (a) or (b), by the court In whose 
Jurisdiction the registered office of the SE is situated on the 
application of any shareholder or of the administrative board, the 
management board or the supervisory board. 
3. In the absence of an appointment pursuant to paragraph 2, the duties of 
liquidator shall be performed by the administrative board or the management 
board. 
- 131 -
4. The general meeting shall determine the remuneration of the 
liquidators. Where the liquidators are appointed by a court in whose 
juridiction the registered office of the SE is situated, the court shall 
determine their remuneration. 
Article 121 
(Removal of liquidators) 
The liquidators may be removed before the termination of the liquidation: 
(a) where they were appointed in accordance with Article 120(2), (a) and 
(b) or where Article 120(3) applies, by a decision of the general 
meeting acting by the simple majority of the votes specified In Article 
116(1), 
(b) Irrespective of the manner of appointment, by a court In whose 
jurisdiction the registered office of the SE is situated, on petition 
of any person having a legitimate interest in the matter and showing a 
proper ground. 
Article 122 
(Powers of liquidators) 
1. The liquidators may take all appropriate steps to liquidate the SE and, 
In particular, shall terminate transactions pending, collect debts, convert 
remaining assets Into cash where this is necessary for their realisation 
and to pay the sums owing to creditors. The liquidators may undertake new 
transactions to the extent necessary for the purposes of the liquidation. 
2. The liquidators shall have the power to bind the SE In dealings with 
third parties and to take legal proceedings on Its behalf. 
The appointment, termination of office and Identity of liquidators shall be 
published in the manner referred to in ArtIcle 9. It must appear from the 
disclosure whether the liquidators may represent the company alone or must 
act Jointly. 
- '22 -
Article 123 
(LlablIity of IIquldators) 
The rules on the civil liability of members of the administrative board or 
of the management board of an SE shall also apply to the civil liability of 
liquidators for wrongful acts committed in carrying out their duties. 
Article 124 
(Accounting documents) 
1. The liquidators shall draw up a statement of the assets and liabilities 
of the SE on the date the winding up commenced. Any shareholder or 
creditor of the SE shall be entitled to obtain a copy of this statement 
free of charge, upon request. 
2. The liquidators shall report on their activities to the general meeting 
each year. 
3. The rules concerning the drawing up, auditing and publication of annual 
accounts or consolidated accounts and the approval of persons responsible 
for carrying out the statutory audits of those accounts shall apply 
mutat is mutandis. 
Article 125 
(Information supplied to creditors) 
The notice of the winding up of the company provided for In Article 118 
shall Invite creditors to lodge their claims, and shall Indicate the date 
after which dlstrIbutIons on the basis of liquidation will be made. 
An invitation to lodge claims shall also be sent In writing to any creditor 
known to the company. 
- 133 -
Article 126 
(Distribution) 
1. No distribution on the basis of liquidation may be made to the 
beneficiaries designated In the statutes or the Instrument of 
Incorporation, or falling any such designation to the shareholders, until 
all creditors of the company have been paid in full and the tlme-llmlts 
indicated In Articles 125 and 127(2) have expired. 
2. After the creditors have been paid in full, and anything due to the 
beneficiaries referred to In paragraph 1 has been distributed, the net 
assets of the SE shall, except where otherwise stated In the statutes or 
the instrument of incorporation, be distributed among the shareholders In 
proportion to the nomlnai value of their shares. 
3. Where the shares Issued by the SE have not all been paid up in the same 
proportion, the amounts paid up shall be repaid. In that case only the 
remaining net assets shall be distributed In accordance with paragraph 2. 
If the net assets are not sufficient to repay the amounts paid up, the 
shareholders shall bear the loss in proportion to the nominal value of 
their shares. 
4. Where a claim on an SE has not yet fallen due or Is in dispute or where 
the creditor is not known, the net assets may be distributed only If 
adequate security Is set aside for the creditor or If the assets remaining, 
after a partial distribution represent sufficient security. 
- 134 -
Article 127 
(Dlstr ibut ion plan) 
1. The liquidator or liquidators shall draw up a plan for the distribution 
of the net assets of the company pursuant to Article 126 after the date 
indicated In Article 125. 
2. This plan shall be brought to the attention of the general meeting and 
of any beneficiary designated in the statutes or instrument of 
Incorporation. Any shareholder and any beneficiary may challenge the plan 
In the court of the place where the SE has Its registered office within 
three months of the date on which it was brought to the attention of the 
general meeting or of that beneficiary. No distribution may be made until 
that period has expired. 
3. Where there is a challenge it shall be for the court to decide whether 
and to what extent any partial distributions may be made in the course of 
the proceedings before the court takes its decision. 
Article 128 
(Termination of liquidation) 
1. The liquidation shall be terminated when the distribution Is complete. 
2. Where, after the liquidation is terminated, further assets or 
liabilities of the SE come to light which were previously unknown, or 
further liquidation measures prove necessary, a court in whose jurisdiction 
the registered office of the SE Is situated shall, on the application of 
any shareholder or creditor, renew the mandate of the former liquidators or 
appoint other liquidators. 
3. Termination of liquidation and removal of the SE from the register 
referred to In Article 8(1) shall be published in the manner referred to In 
Article 9. 
4. Following the liquidation, the books and records relating to the 
liquidation shall be lodged at the register referred to in paragraph 3. 
Any Interested party may examine such books and records. 
- 135 -
SECTION 3 
Insolvency and suspension of payments 
Article 129 
In respect of Insolvency and suspension of payments the SE shall be subject 
to the law of the place where It has its registered office. 
Article 130 
1. The opening of insolvency or suspension of payments proceedings shall 
be notified for entry In the register by the person appointed to conduct 
the proceedings. The entry In the register shall show the following: 
(a) the nature of the proceedings, the date of the order, and the court 
making It; 
(b) the date on which payments were suspended, if the court order provides 
for this; 
(c) the name and address of the administrator, trustee, receiver, 
liquidator or any other person having power to conduct the proceedings, 
or of each of them where there are more than one; 
^d) any other information considered necessary. 
2 Where a court finally dismisses an application, for the opening of the 
proceedings referred to In paragraph 1 owing to want of sufficient assets, 
it shall, either of its own motion or on application by any Interested 
party, order its decision to be noted in the register. 
3. Particulars registered pursuant to paragraphs 1 and 2 shall be 
published In the manner referred to in Article 9. 
- 136 -
Title VI I I 
Mergers 
Article 131 
(Types of merger) 
An SE may merge with other SEs or with other public limited companies 
incorporated under the law of one of the Member States in the following 
ways: 
(a) by forming a new SE; 
(b) by the SE taking over one or more public limited companies; 
(c) by a public limited company taking over the SE; 
(d) by forming a new public limited company. 
Article 132 
(Applicable law) 
1. Where the companies participating in the merger have their 
registered offices in the same Member State, the provisions of national law 
giving effect to Directive 78/855/EEC shall apply. 
2. Where the companies participating in the merger have their 
registered offices in different Member States, the provisions of Title M 
shall apply mutat is mutandis. 
- 137 -
Title IX 
Permanent establishments 
Article 133 
1. Where an SE has one or more permanent establishments In a 
Member State or a non-member State, and the aggregation of the profits and 
losses for tax purposes of all such permanent establishments results In a 
net loss, that loss may be set against the profits of the SE in the State 
where it Is resident for tax purposes. 
2. Subsequent profits of the permanent establishments of the SE in 
another State shall constitute taxable income of the SE in the State In 
which it Is resident for tax purposes, up to the amount of the losses 
imputed in accordance with paragraph 1. 
3. Where a permanent establishment is situated in a Member State, the 
imputable losses under paragraph 1 and the taxable profits under paragraph 
2 shall be determined by the laws of that Member State. 
4. Member States shall be free not to apply the provisions of this Article 
If they avoid double taxation by allowing the SE to set the tax already 
paid by its permanent establishments against the tax due from It In respect 
of the profits realised by those permanent establishments. 
- 138 -
Title X 
SanctIons 
Article 134 
The provisions of national law applicable to the infringement of the rules 
relating to public limited companies shall apply to the infringement of any 
of the provisions of this Regulation. 
- 139 -
Title XI 
Final provisions 
Article 135 
The involvement of employees in the SE shall be defined In accordance with 
the provisions adopted to give effect to Directive .... by the Member 
State where the SE has Its registered office. 
Article 136 
An SE may be formed In any Member State which has implemented In national 
law the provisions of Directive [.... on the involvement of employees in 
the SE]. 
Art icle 137 
This regulation shall enter into force on 1 January 1992. 
This regulation shall be binding in its entirety and directly applicable In 
a I I Member States. 
Done at Brussels, For the Commission 
- 140 -
Proposal for a 
COUNCIL DIRECTIVE 
complementing the Statute for a European company with 
regard to the involvement of employees In the 
European company 
THE COUNCIL OF THE EUROPEAN COMMUNITIES, 
Having regard to the Treaty establishing the European Economic Community, 
and In particular Article 54 thereof, 
Having regard to the proposal from the Commission, 
In cooperation with the European Parliament, 
Having regard to the opinion of the Economic and Social Committee, 
Whereas, in order to attain the objectives set out in Article 8a of the 
Treaty, Council Regulation No establishes a Statute for a European 
company (SE); 
Whereas, In order to promote the economic and social objectives of the 
Community, arrangements should be made for employees to participate in the 
supervision and strategic development of the SE; 
Whereas the great diversity of rules and practices existing In the Member 
States as regards the manner In which employees' representatives 
participate in supervision of the decisions of the governing bodies of 
public limited companies makes it Impossible to lay down uniform rules on 
the involvement of employees in the SE; 
- 141 -
Whereas the laws of the Member States should therefore be coordinated with 
a view to making equivalent the safeguards required for the protection of 
the Interests of members and third persons, of public limited companies In 
each Member State, with due regard to the specific characteristics of the 
operation of such companies having their registered office In its 
territory; whereas such coordination must take account of the fact that an 
SE Is created by a restructuring or cooperation operation Involving 
companies governed by the law of at least two Member States; 
Whereas account should be taken of the specific characteristics of the laws 
of the Member States by establishing for the SE a framework comprising 
several models of participation, and authorizing, first, Member States to 
choose the model or models best corresponding to their national traditions, 
and, secondly, the management or the administrative board, as the case may 
be, and the representatives of the employees of the SE or of Its founder 
companies to choose the model most suited to their social environment; 
Whereas the provisions of this Directive form an indissociable complement 
to the provisions of Regulation ... and it Is therefore necessary to ensure 
that the two sets of provisions are applied concomitantly, 
HAS ADOPTED THIS DIRECTIVE: 
- 142 
Article 1 
The coord InatIon measures prescribed by this Directive shall apply to the 
laws, regulations and administrative provisions in the Member States 
concerning the Involvement of employees in the SE. 
These measures are an essential supplement to Regulation ... on the Statute 
for a European company. 
Title 1: Models of participation 
Article 2 
Member States shall take the necessary measures to enable employees of the 
SE to participate in the supervision and strategic development of the SE In 
accordance with the provisions of this Directive. 
Article 3 
1. Subject to the application of paragraph 5, the participation of SE 
employees prescribed by Article 2 shall be determined In accordance with 
one of the models set out in Articles 4, 5 and 6 by means of an agreement 
concluded between the management boards and the administrative boards of 
the founder companies and the representatives of the employees of those 
companies provided for by the laws and practices of the Member States. 
Where no agreement can be reached the management and administrative boards 
shall choose the model applicable to the SE. 
- 143 -
2. An SE may not be formed unless one of the models referred to In 
Articles 4, 5 and 6 has been chosen. 
3. Subject to the application of paragraph 5, the chosen model may be 
replaced by another model In Articles 4, 5 and 6 by an agreement concluded 
between the management or the administrative board and the representatives 
of the employees of the SE. This agreement must be submitted for the 
approval of the general meeting. 
4. Each Member State shall determine the manner in which the 
participation models shall be applied for SEs having their registered 
office In Its territory. 
5. A Member State may restrict the choice of the models referred to in 
Articles 4, 5 and 6 or make only one of these models compulsory for SEs 
having their registered office In Its territory. 
Section 1: Supervisory Board or Administrative Board 
Article 4 
The appointment of members of the supervisory board or the administrative 
board, as the case may be, shall be governed by the following rules: 
(I) at least one-third and not more than one-half of them shall 
be appointed by the employees of the SE or their 
representatives in that company, or 
(II) they shall be co-opted by the board. However, the general 
meeting of shareholders or the representatives of the 
employees may, on specific grounds, object to the appointment 
of a particular candidate. In such cases the appointment may 
not be made until an independent body established under 
public law has declared the objection Inadmissible. 
- 144 -
Section 2: Separate body 
Article 5 
1. A separate body shall represent the employees of the SE. The number 
of members of that body and the detailed rules governing their election or 
appointment shall be laid down in the statutes in consultation with the 
representatives of the employees of the founder companies In accordance 
with the laws or practices of the Member States. 
2. The body representing the employees shall have the right: 
(a) at least once every three months, to be Informed by the 
management board or the administrative board of the progress 
of the company's business, including that of undertakings 
controlled by It, and of Its prospects; 
(b) where it is necessary for the performance of its duties, to 
require from the management board or the administrative board 
a report concerning certain of the company's business or any 
information or documents; 
(c) to be Informed and consulted by the management board or the 
administrative board before any decision referred to in 
Article 72 of Regulation Is implemented. 
3. Article 74(3) of that Regulation shall apply to members of the 
separate body. 
- 145 -
Section 3: Other models 
Article 6 
1. Models other than those referred to In Articles 4 and 5 may be 
established by means of an agreement concluded between the management 
boards and the administrative boards of the founder companies and the 
employees or their representatives in those companies. 
2. The agreement reached shall provide at least for the employees of the 
SE or their representatives: 
(a) once every three months, to be Informed of the progress of the 
company's business, Including that of undertakings controlled by It, 
and of Its prospects; 
(b) to be Informed and consulted before any decision referred to In 
Article 72 of Regulation is implemented. 
3. Where the agreement provides for a collegiate body representing the 
employees, that body may require the management board or the administrative 
board to provide the Information necessary for the performance of Its 
dut les. 
4. The agreement sha11 provide that the employee's representatives must 
observe the necessary discretion in relation to any confidential 
information they hold on the SE. They shall be bound by this obligation 
even after their duties have ceased. 
5. If the law of the State where the SE has Its registered office so 
permits, the agreement may permit the management board or the 
administrative board of the SE to withhold from the employees or their 
representatives any Information the disclosure of which might seriously 
Jeopardize the interests of the SE or disrupt its projects. 
6. The parties to the negotiations may be assisted by experts of their 
choice at the expense of the founder companies. 
- 146 -
7. The agreement may be concluded for a fixed period and re-negotlated 
upon expiry of that period. However, the agreement concluded shall remain 
in force until the entry Into force of the new agreement. 
8. Where the two parties to the negotiations so decide, or where no 
agreement such as is mentioned in paragraph 1 can be reached, a standard 
model, provided by the law of the State where the SE has Its registered 
office, shall apply to the SE. This model shall be In conformity with the 
most advanced national practices and shall ensure for the employees at 
least the rights of Information and consultation provided for by this 
article. 
Sect Ion 4: 
Election of the representatives of the employees of the SE 
Article 7 
The representatives of the employees of the SE shall be elected In 
accordance with systems which take into account, in an appropriate manner, 
the number of staff they represent. 
All employees must be able to participate In the vote. 
The election shall be conducted in accordance with the laws or practices of 
the Member States. 
Article 8 
The first members of the supervisory board or the administrative board to 
be appointed by the employees and the first members of the separate body 
representing the employees shall be appointed by the representatives of the 
employees of the founder companies in proportion to the number of. employees 
they represent and in accordance with the laws or practices of the 
Member States. Those first members shall remain in office until such time 
as the requirements for electing the representatives of the employees of 
the SE are satIsfled. 
- 147 -
Section 5 
Article 9 
1. The management board or the administrative board of the SE shall 
provide the representatives of the employees with such financial and 
material resources as enable them to meet and perform their duties in an 
approprI ate manner. 
2. The practical arrangements for making available such financial and 
material resources shall be settled in consultation with the 
representatives of the employees of the SE. 
Sect Ion 6: 
Representation of employees In the establishments of the SE 
Article 10 
Save as otherwise provided in this Directive, the status and duties of the 
representatives of the employees or of the body which represents them, for 
which provision Is made in the establishments of the SE, shall be 
determined by the laws or practices of the Member States. 
Title 2: Employee participation In the 
capital or In the profit or loss of the SE 
Section 1 
Article 11 
Employee participation in the capital or in the profits or losses of the SE 
may be organised by means of a collective agreement negotiated and 
concluded by the management boards and the administrative boards of the 
founder companies, or of the SE when constituted, and the employees or 
their representatives who are duly authorised to negotiate In those 
compan i es. 
- 148 -
Final provisions 
Article 12 
1. Member States shall bring into force the laws, regulations and 
administrative provisions necessary to comply with this Directive by 1 
January 1992. They shall Immediately communicate the measures taken to the 
Commission. 
The provisions adopted pursuant to the first sub-paragraph shall make 
express reference to this Directive. 
2. Member States shall communicate to the Commission the main provisions 
of domestic law which they adopt in the field covered by this Directive. 
Article 13 
This Directive is addressed to the Member States. 
Done at Brussels, For the Council 

ANNEX - CALENDAR FOR THE REGULATION AND THE DIRECTIVE 
TRANSMISSION TO THE COUNCIL, THE EUROPEAN PARLIAMENT 
AND THE ECONOMIC AND SOCIAL COMMITTEE 
OPINION OF THE EUROPEAN PARLIAMENT ON FIRST 
READING AND OF THE ECONOMIC AND SOCIAL COMMITTEE 
COMMON POSITION OF THE COUNCIL 
OPINION OF PARLIAMENT ON SECOND READING 
ADOPTION BY COUNCIL 
APPLICATION OF THE REGULATION AUGUST 1989 
DECEMBER 1989 
MARCH 1990 
JULY 1990 
OCTOBER 1990 
1 JANUARY 1992 
NOTIFICATION OF THE DIRECTIVE TO THE 
TO THE MEMBER STATES 
IMPLEMENTATION OF THE DIRECTIVE 
IN NATIONAL LAW NOVEMBER 1990 
1 JANUARY 1992 


ISSN 0254-1475 
COM<89) 268 final 
DOCUMENTS 
EN 05 06 
25.8.1989 
Catalogue number : CB-CO-89-367-EN-C 
ISBN 92-77-52575-4 
Office for Official Publications of the European Communities 
L-2985 Luxembourg