European Commission consults on little-used new corporate structure

A report issued with the consultation has found, though, that the average cost of using the European Company Statute (SE) is €784,000. The Ernst & Young-produced study said that Allianz paid €95 million to change its status, while BASF's change cost it €5m.

The SE gives companies that operate across EU borders the chance to re-organise their business under one structure.

"This enables them to work within a stable legal framework, reduce the internal costs of operating in several countries and hence be more competitive in the Internal Market," said a Commission statement. "The SE has proved to be very popular in some Member States but it has not taken off in others."

The Commission is now conducting a consultation on the company structure in order to find out why it has not been more widely used by business.

"I believe that the SE can substantially reduce costs for businesses operating across borders," said EU Commissioner for internal markets and services Michel Barnier. "However, it's clear that it has had much more success in some countries than others. I want to find out why and determine whether we need to make improvements to the existing rules."

The Ernst & Young report found that SEs are most popular in the Czech Republic, where 137 are registered, and Germany, where 91 are registered. It found that 10 countries have none at all, and that the UK has just 16.

The report said that one barrier to setting up SEs is cost.

"The SE faces higher set-up costs than the corresponding domestic public limited-liability company," it said. "Furthermore, the companies choosing to form an SE must also bear costs linked with the day-to-day running of the business (e.g. printing of new letter heads, business cards, email signatures) and must finance the communication process linked with the formation of the SE and/or restructuring of the group to explain how this new entity will impact/not impact on the running of the business."

It also said that setting up an SE demands a greater degree of employee say over the running of the company than is common in many EU economies.

"The process regarding employee involvement negotiations entails considerable difficulties, especially as it requires to apply collectively and to coordinate the different laws in the Member States," said the report. "In all cases, the SE Directive requires consultation through a representative body prior to the incorporation of the SE. This general principal applies notwithstanding the fact that the national legislation to which the founding companies forming the SE were subject may not require such consultation."

That report will form the basis of the Commission's consultation and its decisions on the future of SEs, it said.

"The consultation aims to test the findings of the external study and to provide the Commission with input on issues relevant for the assessment of the SE," said the Commission statement. "The questions concern: positive and negative drivers for setting up an SE; main trends in distribution of SEs across the EU/EEA Member States; practical problems encountered by companies in the course of setting up or running an SE; and possible improvements of the current legislative framework."