Comparison of an EEIG and an SE in the light of Relevant Legislation and Case Law

Introduction

Many businesses seek to expand their operations outside of their home countries in the increasingly globalized business world. The European Economic Interest Grouping (EEIG) and the European Company (SE) are two of the legal structures that the European Union (EU) offers for businesses to operate across its member states. Both provide chances for cross-border trade, but they have different legal systems, liability policies, and governance frameworks. The EEIG and SE structures are compared critically in this study, highlighting major distinctions and their business ramifications using pertinent legal case law and legislation. This essay seeks to provide a thorough understanding of the benefits and drawbacks of each structure by looking at different legal forms and to help businesses make educated decisions when extending their cross-border operations in the EU.

1. European Economic Interest Grouping “ EEIG’’

The European Economic Interest Group is a legal entity which is regulated by the Council Regulation (EEC) No 2137/85 . An EEIG is an exclusive type of partnership created to enhance collaboration between businesses, people, and legal entities based in one or more Member States, as well as to promote and facilitate economic operations by pooling resources and expertise.

An EEIG is an association of two or more organizations or people from several EU member states who work together to conduct business operations. It is merely a contractual agreement without a distinct legal identity. Member States shall determine whether or not EEIG has legal personality. As a result, the debts and liabilities of the EEIG are owed by the members jointly and severally. EEIG companies cannot aim to provide profit on their own behalf, the profit from the company's activities is shared among its members.

The Regulation on the EEIG is above domestic law and directly applicable in all member states. The binding provisions of the charter relate to the conditions for the establishment of a group, certain areas of internal transactions, and the protection of third parties.

EEIG is designed to help businesses establish and maintain connections with companies in other member countries. Especially for smaller firms, mergers, acquisitions, joint ventures, which are other options, can be very expensive and complex. EEIG is an alternative way to establish connections in other Member States without losing individual identity and independence. That can be counted as its importance.

An EEIG should have at least two members from different member states. The members of the group may be natural persons, companies, or other legal entities. Parties wishing to form a group are required to prepare a contract and register it in the member state where the legal address of the EEIG was created. The minimum information that this establishment agreement should contain is clearly stated in the Charter. The name of the group, the legal treatment center, the duration, and how to determine the subject of business are specified in the bylaws.The processing center of the EEIG must be registered in the member state where its legal address is located.

2. Societas Europaea “SE”

SE came up with the idea of creating a type of company specific only to the European Community. As a joint stock company, SE provides companies with a European Company structure along with their structures at the national level and Regulation No. 2157/2001/EC, which sets out the rules of company law and enters into direct application in the member states, and the European Company status is regulated by two pieces of legislation, the Directive No. 2001/86 / EC of October 8, 2001 on the Participation of Employees, which the member states need to transfer to domestic law, and the Directive No. 2001/86 / EC of October 8, 2001. These regulations entered into force after the end of the three-year transition period, that is, from October 8, 2004.

With the entry into force of the regulations on the European Joint Stock Company, a legal instrument that has been prepared for a long time has been brought into EU law. However, the SE that emerged with this Charter has become quite different from the company in the first draft. The fact that the charter reflects a compromise reached between the member states has led to its Deceleration in many ways. Within this framework, the mobility of the founders is limited in terms of the forms of establishment of SE and the content of the articles of association. To summarize, SE is a public limited company that can be formed in the EU, with its registered office in one member state, and which can operate in other member states without having to set up subsidiaries. It has separate legal personality, limited liability.

3. Main differences between EEIG and SE, and relevant case law

EEIG operates under the responsibility of each partner and there is no joint responsibility between the partners. This situation allows the partners to focus on their areas of responsibility in accordance with the purpose of cooperation. On the other hand, since SE operates under a single legal entity, there is no sharing of responsibilities between the partners, and all partners are responsible for each other's obligations. This means that the SE is responsible for its own debts and obligations, and its members are not personally liable. An additional distinction between an EEIG and a SE is the flexibility of the SE's governance structures. An EEIG has a management body and an assembly of members, but a SE might have a one- or two-tier board structure. Additionally, there are more opportunities for employee involvement in the SE's governance. The case law has taken these variations in governance structure into consideration.

Furthermore, the effects of these differed legal frameworks on enterprises can vary. For instance, an EEIG allows partners to focus on their own areas of responsibility, while an SE does not include sharing responsibility between partners. Therefore, a company's choice of legal structure will be influenced by elements like the goal of cooperation, the liability regime, and management regulations. Also as mentioned above, an SE could be formed by a company incorporated under the law of any Member State, whereas the formation of an EEIG requires the participation of companies from at least two different Member States. Those differences are also reflected in case law.

For instance, in Cartesio case (Case C-210/06), the Court of Justice of the European Union (CJEU) acknowledged that a SE and an EEIG have different laws regarding registered office transfers, and that a corporation can move its registered office to another Member State without first having to cease activities there.

Conclusion

As a result, the Societas Europaea (SE) and the European Economic Interest Group (EEIG) are two distinct legal forms of collaboration in the European Union. While both offer a framework for international business collaboration, there are significant differences between them, including in terms of their legal frameworks, formation necessities, obligations, and taxation. Some of these differences are highlighted by the case law and legislation described in this article, which also emphasizes how crucial it is to comprehend the legal ramifications of selecting one legal form over another. It is conceivable that the legal framework controlling these assets will alter as the European Union continues to grow and develop.