First European company in the Baltic states
Currently Loze, Grunte & Cers is actively working on the establishment of the first European company (Societas Europaea) in the Baltic States on the basis of Council Regulation (EC) on the Statute for a European company that took effect on October 8, 2004.
The firm's client is a company that is currently operating in Latvia, Lithuania and Estonia through separate public stock companies. After establishing the SE, the company will be incorporated in Estonia as a single legal entity with its branches in Latvia and Lithuania.
Although the single market does exist in the European Union, companies and undertakings of EU member states operate through dependent companies in various states, taking into consideration the different national regulations effective in these states. The Council Regulation (EC) on the statute for a European company offers companies operating within the framework of international projects in the European Union the possibility to operate as one legal entity with a single regulation in all EU member states.
This provides a unified management system for all such companies and the opportunity to engage in commercial activity through its branches located in other member states. This is also a cheaper option than establishing dependent companies, with each having its capital and management system. In this particular case, before legal formalities were started, a detailed analysis of tax consequences was conducted, and as a result all nuances related to establishment of the SE were assessed to find the most favorable solution for the client.
Although the minimum subscribed share capital of the SE may not be under 120,000 euros 's and this is considerably larger than that of public limited companies incorporated in Latvia 's the SE is a European public stock company with uniform legal regulation throughout all EU member states. It can change its registered office from one EU member state to another without liquidation or establishing a new company in another EU member state.
No doubt, it should be taken into consideration that when moving the registered office to another EU member state the European company retains its liability for obligations that have been established in the previous member state. It should also be noted that in this particular case, the situation is complicated due to a lack of practical examples not only in Latvia but also in other EU states, where the establishment of such a company is quite a rarity. Formalities that have not been mastered in detail and peculiarities of laws and regulations of individual states that can be met during the SE formation process, on the one hand, makes establishing an SE difficult. On the other hand, this also provides valuable experience and know-how basis for similar restructuring.
The establishment of the first SE also serves as an excellent example of a crossborder transaction among Baltic law offices - Loze, Grunte & Cers, Tark & Co and Sutkiene, Pilkauskas & Partneriai, which jointly participated in the tender for bids. This ensured the participation of experts in EU law and national law of all three Baltic states, which is necessary for creating a single company that has its main charter included in EU regulations, which contrasts to three companies subject to laws of three different states.
Andra Rubene is attorney at law
at Loze, Grunte & Cers in Riga.