“If SMEs want to do business in several member states, they have to set up subsidiaries using different company forms,” said EU Internal Market Commissioner Charlie McCreevy. “Setting up and running subsidiaries, for example, as an SARL in France, a limited company in the UK and a GmbH in Germany requires knowledge of three different legal systems. This is time-consuming. It is also very expensive,” he added. The proposed legal instrument would allow small business runners to form and operate a European Private Company, referred to also by its Latin name as ‘Societas Privata Europaea’ (SPE), according to the same uniform principles in all EU member states.

McCreevy said the potential savings on legal costs of the SPE could be between €2,000 (about $3,120) and €10,000 for setting-up companies and between €750 and €8,000 for day-to-day operating costs. However, the new legal instrument does not regulate matters related to labor law, tax law, accounting, or the insolvency of the SPE. Nor does it deal with the contractual rights and obligations of the SPE or those of its shareholders other than those deriving from the articles of association of the SPE. These matters will continue to be governed by the relevant national and EU law. In order to facilitate start-ups, the commission also proposed to set the minimum capital requirement for the SPE at €1. “This could result in cost savings of up to 35,000 in some member states,” McCreevy said.

The proposal needs approval from EU governments and the European Parliament to become law, which was expected before the end of May 2009. (people.com.cn)