Taking counsel: European companies popular in Europe, but not in Lithuania

  • 2006-08-30
  • by Jurgita Matulyte
Recently the Seimas [Lithuania's parliament] enacted the Law on European Cooperative Societies. According to the law, a legal person may establish a European Cooperative Society (SCE) in Lithuania beginning Aug. 18, 2006.

According to the law, legal persons not limited to satisfy purely local needs are given the ability to operate in several EU countries, considering the tax favorable state. This follows a decision a few years ago to adopt the laws on the European Economic Interest Grouping and on European Companies.

The procedure of establishing a European company is quite long. It is expensive too: the subscribed capital of a European company cannot be less than 120,000 euros. Research into a business environment also requires substantial investment. This procedure is also impeded by formalities of the Register of Legal Persons.
A great achievement is the establishment of the first EEIG in Lithuania 's Open Europe Consulting EEIG, on March 2, 2006. This grouping is the first in Eastern and Central Europe. According to the Law on the EEIG in Lithuania, such a grouping is a private legal person. However, according to Council Regulation No 2137/85 of July 25, 1985 on the EEIG such a legal entity is non-profit. In this case, it is unclear what activities such a grouping can develop in Lithuania.

According to the data of the Register of Legal Entities, there has been no European company in Lithuania since 2004. On Aug. 17, 2006 the first step was taken 's AB "Sampo Gyvybus Draudimas" was registered as "initiating the establishment of a European company via merger." Estonia has been chosen for the registered office of the new European company.
The number of SEs in the EU is rapidly increasing. If last autumn only five SEs were operating in the EU (in Sweden, Germany, Austria, Belgium and Netherlands) currently there are already 38 such companies registered in the EU according to data of the Web site dedicated to the entity. Most of the SEs are being established in the fields of real estate, construction, financial services, trade, healthcare, and similar: Germany (12), Austria (5), Belgium (5), Netherlands (5) or Sweden (4) are among the countries with the registered offices of SEs.

SEs most often choose a two-tier structure. Some of the SEs have no employees, and that raises some doubts about the purposes of establishing a European company. Before establishing such company there must be consultations and negotiations with employees of the initiating companies, and their participation in making decisions on the issues of European company must be ensured. The number of employees in other SEs ranges from 3 to 31 000. Some SEs were created as "empty forms" without employees. Probably there will be attempts to sell them profitably in the future.
In the near future some six more SEs are planned to be established in the EU. Such giants as SEB, Nordea Bank AB, AS Sampo Elukindlustus (which was mentioned before), DaimlerChrysler, Eurotunnel, TeliaSonera, etc. are interested in adopting this legal form.

The establishment of SEs is difficult not only due to a long and expensive procedure, but also because the necessary conditions are not ready yet 's a legal database is not prepared and institutions, which are directly related to the establishment of the companies have a careless attitude.
In Lithuania, prior to July 1, 2006 the forms of the Register of Legal Persons had no such legal form as European economic interest grouping (EEIG) or European company (SE), as well as status of a legal person "initiating an Establishment of the European company by merger" or "European company, whose registered office is being transferred," etc. Furthermore, there were no supplementary separate forms of the EEIG member or the transfer of registered office of legal person from other EU country, etc.

Jurgita Matulyte is associate advocate of Jurevicius, Balciunas ir Bartkus, a member of Baltic Legal Solutions, a pan-Baltic integrated legal network of law firms including Teder Glikman & Partnerid in Estonia and Kronbergs & Cukste in Latvia, dedicated to providing a quality 'one-stop shop' approach to clients' needs in the Baltics