CELEX: 51989PC0268(02)
Language: en
Date: 1989-08-25
Title: PROPOSAL FOR A COUNCIL DIRECTIVE COMPLEMENTING THE STATUTE FOR A EUROPEAN COMPANY WITH REGARD TO THE INVOLVEMENT OF EMPLOYEES IN THE EUROPEAN COMPANY

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)
 ---pagebreak---  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 solutions 1 .
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
 ---pagebreak---  ---pagebreak---                                   -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).
 ---pagebreak---                                       - 2 -
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.
 ---pagebreak---                                            - 3
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.
 ---pagebreak---                                        - 4 -
                  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.
 ---pagebreak---                                          - 5 -
  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 1975 2 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.
 ---pagebreak---                                             - 6 -
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
                          5                                6
(Directive 73/239/EEC . and Directive 79/267/EEC ).
                                         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 7 d ) ( 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.
 ---pagebreak---                                          - 7 -
                                       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.
 ---pagebreak---                                      - 8 -
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.
 ---pagebreak---                                            - 9 -
                                        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
                                                                8
  with Article 3 of the First Company Law Directive.               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>.
 ---pagebreak---                                    - 10 -
                                 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.
 ---pagebreak---                                       - 11 -
                                    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.
 ---pagebreak---                                      - 12 -
                                   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.
 ---pagebreak---                                  - 12 a -
                                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.
 ---pagebreak---                                          - 13 -
                                 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.
 ---pagebreak---                                         - 14 -
                                      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.
 ---pagebreak---                                    - 15 -
                                  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.
 ---pagebreak---                                     - 16 -
                                  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.
 ---pagebreak---                                    - 17 -
                                 TITLE M l
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.
 ---pagebreak---                                      - 18 -
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.
 ---pagebreak---                                        19 -
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.
 ---pagebreak---                                       - 20 -
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.
 ---pagebreak---                                       - 21 -
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.
 ---pagebreak---                                       - 22 -
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.
 ---pagebreak---                                    - 23 -
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.
 ---pagebreak---                                   - 24 -
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.
 ---pagebreak---                                       - 25 -
                                     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
                                               1
structure   of   public   limited   companies;     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.
 ---pagebreak---                                      - 26 -
                                    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.
 ---pagebreak---                                    - 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).
 ---pagebreak---                                     - 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.
 ---pagebreak---                                      - 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.
 ---pagebreak---                                     - 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.
 ---pagebreak---                                    - 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.
 ---pagebreak---                                    - 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.
 ---pagebreak---                                      - 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.
 ---pagebreak---                                     - 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.
 ---pagebreak---                                       - 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.
 ---pagebreak---                                      - 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.
 ---pagebreak---                                       - 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.
 ---pagebreak---                                            - 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.
 ---pagebreak---                                     - 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.
 ---pagebreak---                                          - 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.
 ---pagebreak---                                     - 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.
 ---pagebreak---                                      - 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).
 ---pagebreak---                                       - 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.
 ---pagebreak---                                    - 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.
 ---pagebreak---                                          - 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.
 ---pagebreak---                                      - 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.
 ---pagebreak---                                     - 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
 ---pagebreak---                                    - 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.
 ---pagebreak---                                         - 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
 ---pagebreak---                                          - 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.
 ---pagebreak---                                       - 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.
 ---pagebreak---                                      - 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.
 ---pagebreak---                                    - 53 -
                                 Title v i n
                            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».
 ---pagebreak---                                      - 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.
 ---pagebreak---                                    - 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.
 ---pagebreak---                                     - 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.
 ---pagebreak---                                       - 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.
 ---pagebreak---                                         - 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.
 ---pagebreak---                                      - 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.
 ---pagebreak---                                        - 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
 ---pagebreak---                                       - 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.
 ---pagebreak---                                      - 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;
 ---pagebreak---                                         - 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;
 ---pagebreak---                                       - 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;
 ---pagebreak---                                       - 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/EEC 1   and the Seventh Council      Directive 83/349/EEC 2 , 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.
 ---pagebreak---                                        - 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.
 ---pagebreak---                                       - 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:
 ---pagebreak---                                       - 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.
 ---pagebreak---                                       - 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.
 ---pagebreak---                                         - 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.
 ---pagebreak---                                         - 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 K b ) .
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/EEC 1 .
       OJ No L 65, 14.3.1968, p. 8; English Special Edition 1968(1), p. 41.
 ---pagebreak---                                         - 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
                                                                                 1
Member State In accordance with Article             of Council Directive
                                      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.
 ---pagebreak---                                       - 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.
 ---pagebreak---                                        - 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
                                                                        1
registered office, pursuant     to Article 10 of Directive 77/91/EEC , 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.
 ---pagebreak---                                   -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.
 ---pagebreak---                                         - 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
                                  1
effect to Directive 77/187/EEC.
                                     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.
 ---pagebreak---                                   - 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.
 ---pagebreak---                                       - 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
                            1
15 of Directive 78/855/EEC    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.
 ---pagebreak---                                       -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.
 ---pagebreak---                                           - 77 -
 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.
 ---pagebreak---                                    - 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
 ---pagebreak---                                             - 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
 ---pagebreak---                                   - 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.
 ---pagebreak---                                        - 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.
 ---pagebreak---                                    - 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.
 ---pagebreak---                                          -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.
 ---pagebreak---                                     - 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.
 ---pagebreak---                                         - 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.
 ---pagebreak---                                   - 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:
 ---pagebreak---                                    - 82 -
(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).
 ---pagebreak---                                      - 83 -
                                    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.
 ---pagebreak---                                        - 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.
 ---pagebreak---                                            - 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.
 ---pagebreak---                                          - 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).
 ---pagebreak---                                        - 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.
 ---pagebreak---                                     - 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.
 ---pagebreak---                                       - 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.
 ---pagebreak---                                          - 90 -
 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.
 ---pagebreak---                                        - 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.
 ---pagebreak---                                        - 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.
 ---pagebreak---                                          - 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
                        1
 Directive 80/390/EEC,      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/EEC 2   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.
 ---pagebreak---                                       - 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.
 ---pagebreak---                                         - 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.
 ---pagebreak---                                        - 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.
 ---pagebreak---                                        - 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
 ---pagebreak---                                         - 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.
 ---pagebreak---                                        - 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
         the statutes not
                        not exceeding
                            AYCAAdlnn six
                                       « I Y years.
                                             vsars.
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.
 ---pagebreak---                                     - 100 -
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.
 ---pagebreak---                                    - 101 -
                                 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.
 ---pagebreak---                                      - 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.
 ---pagebreak---                                    - 103 -
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.
 ---pagebreak---                                       - 104 -
                                    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.
 ---pagebreak---                                         - 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.
 ---pagebreak---           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.
 ---pagebreak---                                     - 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;
 ---pagebreak---                                       - 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.
 ---pagebreak---                                    - 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   K b ) , 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.
 ---pagebreak---                                     - 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).
 ---pagebreak---                                    - 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.
 ---pagebreak---                                        - 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).
 ---pagebreak---                                           - 113 -
 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.
                                       A r t i c l e 92
                                    (Voting rights)
1.     A shareholder's voting rights shall be proportionate to the fraction
of the subscribed capital which his shares represent.
 ---pagebreak---                                         - 114 -
 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.
 ---pagebreak---                                          - 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.
 ---pagebreak---                                       - 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.
 ---pagebreak---                                      - 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.
 ---pagebreak---                                        - 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.
 ---pagebreak---                                      - 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.
 ---pagebreak---                                           -120-
 (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.
 ---pagebreak---                                         - 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/EEC 1 . 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.
 ---pagebreak---                                     - 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.
 ---pagebreak---                                       - 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.
 ---pagebreak---                                        - 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.
 ---pagebreak---                                       - 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.
 ---pagebreak---                                       - 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
           1
86/635/EEC   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.
 ---pagebreak---                                     - 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.
 ---pagebreak---                                    - 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.
 ---pagebreak---                                       - 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.
 ---pagebreak---                                       - 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.
 ---pagebreak---                                      - 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.
 ---pagebreak---                                            - '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.
 ---pagebreak---                                           - 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.
 ---pagebreak---                                              - 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.
 ---pagebreak---                                         - 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.
 ---pagebreak---                                       - 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.
 ---pagebreak---                                        - 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.
 ---pagebreak---                                    - 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.
 ---pagebreak---                                      - 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 S E ] .
                                 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
 ---pagebreak---                                       - 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;
 ---pagebreak---                                    - 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:
 ---pagebreak---                                     - 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.
 ---pagebreak---                                        - 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.
 ---pagebreak---                                      - 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.
 ---pagebreak---                                          - 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.
 ---pagebreak---                                        - 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.
 ---pagebreak---                                           - 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.
 ---pagebreak---                                       - 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
 ---pagebreak---  ---pagebreak---            ANNEX - CALENDAR FOR THE REGULATION AND THE DIRECTIVE
TRANSMISSION TO THE COUNCIL, THE EUROPEAN PARLIAMENT
AND THE ECONOMIC AND SOCIAL COMMITTEE                         AUGUST 1989
OPINION OF THE EUROPEAN PARLIAMENT ON FIRST
READING AND OF THE ECONOMIC AND SOCIAL COMMITTEE              DECEMBER 1989
COMMON POSITION OF THE COUNCIL                                MARCH 1990
OPINION OF PARLIAMENT ON SECOND READING                       JULY 1990
ADOPTION BY COUNCIL                                           OCTOBER 1990
APPLICATION OF THE REGULATION                                 1 JANUARY  1992
NOTIFICATION OF THE DIRECTIVE TO THE
TO THE MEMBER STATES                                          NOVEMBER 1990
IMPLEMENTATION OF THE DIRECTIVE
IN NATIONAL LAW                                              1 JANUARY 1992
 ---pagebreak---  ---pagebreak---  ---pagebreak---                                                                      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