Tallinn , March 19 , 2009

1. Tallinn, March 19, 2009

2. SE- aspects of practical applicationDeutsch-Baltische Handelskammer Jevgeni Robakov Lawyer Tallinn, March 19, 2009

3. European Company European Public Limited Company • Establishment available since Oct. 2004 • Council Regulation on the Statute of a European company Tallinn, March 19, 2009

4. The idea of SE is considered as old as the EC in its basic form Draft statue submitted in1959 Working party set up on the initiative of the French government in 1965 Primary aim was to construct a substitute to national company legislations Supranational legislation to support internal market Historical background Tallinn, March 19, 2009

5. Historical background Commission's proposal in 1970 on SE statues Creation Management and organization Accounting Labor law aspects Revision Liquidation Taxation Tallinn, March 19, 2009

6. Historical background • 1975 a new proposal submitted by the Commission to the Council • Criticized for being too radical MSs did not want to accept rules on management of groups of companies and employee involvement • Battles between 1976-82 showed the difficulty of reaching the compromise, common taxation system abandoned Tallinn, March 19, 2009

7. Historical background • 1989 a totally new draft of provisions Majority of MSs agreed with urgent necessity of introduction of SE Statues • Taxation and concern provisions left out • Employment regulated in the separate directive • First references to national legislation and co-ordination by European company law directives • A lot of inspiration from Fifth CLD Tallinn, March 19, 2009

8. Historical background • 1997 Davignon report settled employment disparities (14 MSs) Spain continued to block dossier until 2000 • Meeting of heads of states and heads of government in Nice in 2000 • In October 2004 the SE Company regulation was adopted Tallinn, March 19, 2009

9. Political expectations • Statement of the Commission accompanying proposal for Regulation “To create a European Company with its own legislative framework. This will allow companies incorporated in different Member States, to merge or form a holding company or joint subsidiary, while avoiding the legal and practical constraints arising from the existence of fifteen different legal systems. To arrange for the involvement of employees in the European company and recognize their place and role in the company.” Tallinn, March 19, 2009

10. Political expectations Commission’s assertions pointed out • Optional new instrument • Flexible and less bureaucratic management of cross-border enterprise • Improved competitiveness of Community companies • Directly applicable common legislation for all MSs Tallinn, March 19, 2009

11. Political expectations Expected advantages • Reduced administrative costs • Options for fast and easy restructuring • Freedom of movement • Optimizing groups of companies • Attraction investors and private venture capital for trans-European projects • “European dimension” Tallinn, March 19, 2009

12. Formation • Cannot be incorporated solely through investment of private capital • Two legal enterprises under different national legislations • Establishment governed by the legislation of the MS where SE has its seat • Legal status in the MS of registration • Subscribed capital120 000 EUR Tallinn, March 19, 2009

13. Formation • Merger • Creation of a holding • Incorporation of a subsidiary SE • Conversion General regulation requirement for registered office and actual seat of the participating companies to be situated within the Community No specific register or registration procedure Tallinn, March 19, 2009

14. Management of SE • Option to choose between one-tier and two-tier system Regulated areas • SE organs, appointment, duration • Authorization of transactions • Quorum and decision taking • Confidentiality and liability Tallinn, March 19, 2009

15. Employee involvement • MSs divided into ones supporting participation and ones preferring information and consultation • General principal: upon establishment of an SE it shall be attempted to preserve systems of companies forming an SE • Creation of SE requires prior determination of modalities of employee involvement • Parties have an option to call of negotiations in favor of national legislation Tallinn, March 19, 2009

16. Freedom of Establishment • Article 43 of the EC Treaty prohibits application of restrictions on the nationals of one MS in another MS • Fortification for establishment of branches, agencies and subsidiaries • Condition to be registered within the framework of EC Tallinn, March 19, 2009

17. Transfer of Seat Seat principle • Location of seat determines applicable legislation • Central administration and principal place of business Incorporation principle • Companies are recognized on a sole condition of a lawful establishment within the EC Tallinn, March 19, 2009

18. Mobility of SE • Regulation clearly states that the registered as well as the head office of an SE shall be located in the same MS→ determination of nationality? • Possible avoidance of “mailbox companies” or Delaware effect • No winding up or creation of new companies during the process of transfer • Obligation to transfer both registered and the head office deprives from advantages of incorporation Tallinn, March 19, 2009

19. Mobility of SE • Change of applicable law upon transfer of seat→ dependence on national regimes • Criteria of “common good”, avoidance of tax fraud and money laundering As a result escaping requirement of re-incorporation still leaves a requirement to conform with rules of a new home state Any significant differences from national LL companies? Tallinn, March 19, 2009

20. Supranationality • Big part of applicable law derived from national legislations References to MS frameworks: • Capital and its maintenance • Shares • Registration • Powers of general meeting • Annual/consolidated accounts • Winding up, liquidation, insolvency Tallinn, March 19, 2009

21. Supranationality • Totally 65 references and 32 options out 65 substantial articles Creates an image of SE as of 28 different legal entities that are similar only in the original theory Weak prospect of eliminating national differences craving time→ SE will most certainly remain the subject of legal uncertainty for some time “…the lowest common denominator in relation to original intensions, being a lot closer to national limited liability companies than it was ever intended.” C. Huschka (1992) Tallinn, March 19, 2009

22. Practical perspective Allianz SE One of the biggest German insurance and financial service companies • Necessity of becoming “more international”, particularly in questions of administration and management • Centralization of company governance • Improvement of customer focus CEO Mr. Michael Diekmann, through canceller Tallinn, March 19, 2009

23. Practical perspective Elcoteq SE One of the leading electronics manufacturing services company. • First Finish SE • Important aim was transfer of seat to Luxembourg • As amendments common taxation and accountig rules were named Ms. Minna Aila, projects director Tallinn, March 19, 2009

24. Practical perspective Donata Holding SE Italian web-creation and -advertising corporation • Course of internal market towards trans-national character and unification • Importance of corporate movement for simultaneous operation in several MSs Mr. Cesare Casadonte, owner and director Tallinn, March 19, 2009

25. Practical perspective Galleria di Brennero BBT SE EU financed infrastructure project for building a railway tunnel • Facilitation of cross-border mergers • Transfer of seat from Austria to Italy for technical reasons of construction • Both participating countries got equal influence and control over the project Ms. Patrizia Fink, magistrate Tallinn, March 19, 2009

26. Practical perspective MAN Diesel SE World’s leading provider of diesel engines for marine and power plant applications, Germany • Showing “single face” to customers • Faster integration into new markets and better competitiveness • International status while retain parity structure Katia Langmann, assistant of communications Tallinn, March 19, 2009

27. Practical perspective Plansee SE Worlds leading supplier of refractory metals and composite material products, Austria • Option to apply one-tier system→ forum shopping within EC framework? Mr. Karlheinz Wex, head of finance and accounting Tallinn, March 19, 2009

28. Practical perspective Nordea Bank AB • Uniting of national markets • Institution comprising several legally separate companies may act as one integrated enterprise • Enhanced operational efficiency, reduced risks and complexity • Considered necessary development of merger options Commission’s Consultation opinion, 2006 Tallinn, March 19, 2009

29. Practical perspective Hermes Investment Management Ltd Institutional fund manager • General results of SE adoption considered insignificant • Yet an elegant way to reduce size of German supervisory boards • Example of Allianz success Commission’s Consultation opinion, 2006 Tallinn, March 19, 2009

30. Practical perspective • Theoretical and socio-political aspects seem to dominate the practical establishment and actual business application • May SE be considered a “hybrid” essentially similar to national limited liability companies? • General lack of interest for establishment or just poor marketing?→ ≈ 70 registrations • Option to avoid certain national restrictions or apply narrow but essential possibilities? Tallinn, March 19, 2009

31. Practical perspective National entity VS European company Tallinn, March 19, 2009

32. Tallinn, March 19, 2009