Simplified Structure

At the end of June, the European Commission (EC) released its proposal for the creation of a new pan-European corporate legal entity for small and medium-sized business (SME) to be known as the European Private Co., or Societas Privata Europaea (SPE). The EC's previous attempt to create a European corporate brand, the Societas Europaea (SE), for public companies has hardly been a resounding success. In the four years since the SE's creation, only about 100 companies have taken advantage of the opportunity to register as a single European
entity, a status that requires each member state to treat the SE as if it were incorporated in the country where it had its registered office.

"The SE was intended to appeal to large corporations that wanted to present European credentials in their branding, and those engaged in cross-border joint ventures in the EU," says Martin Mendelssohn, a partner at CMS Cameron McKenna in London. "But there has been no headlong rush to use the SE, that's for sure."

"Americans will recognize important similarities with the regime that apply in Delaware," says Paolo Santella, a researcher at the Bank of Italy.

Indeed, it is the very flexibility of the SPE that is behind a widely held belief that its usefulness will easily outstrip the uptake the SE has seen.

"Investors will soon recognize the logic of the SPE," he says. "At first, there may be slow uptake because of vested national interests, but that should fall away over about five years. Ten years hence, I expect the SPE to be the main form of private company in Europe."


Julius Melnitzer

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