Potential business formats 5 Amalgamation of partnerships and companies: cf. company groups German gmbh und co, Kg Joint venture between two or more companies Parent company with(various subordinated levels of) subsidiaries 6 Sui generis EU Company types - EEIG(EESV, EEWiG, GIE) Societas Europea(SE, public limited liability company) Societas Cooperativa Europea(SCE) (Near) future: European Private company(EPC/SPE)? Universiteit Maastricht
Potential business ‘formats’ 5 Amalgamation of partnerships and companies: cf. company groups - German GmbH und Co. KG - Joint venture between two or more companies - Parent company with (various subordinated levels of) subsidiaries 6 Sui generis EU Company types: - EEIG (EESV, EEWiG, GIE) - Societas Europea (SE, public limited liability company) - Societas Cooperativa Europea (SCE) - (Near) future: European Private company (EPC/SPE)?
Companies in Europe - Limited liability companies The best of both worlds-Limited liability concept Explanation European Single Market calls for innovating(therefore risk carrying! )activities Risks being counterbalanced b y(investors' safeguard The privilege of limited liability: risks should not result in deterrence: businessmen going broke should not be sentenced for lifetime Universiteit Maastricht
Companies in Europe - Limited liability companies The best of both worlds - Limited liability concept Explanation: • European Single Market calls for innovating (therefore risk carrying!) activities Risks being counterbalanced by (investors’ safeguard) • The privilege of limited liability: risks should not result in deterrence: businessmen going broke should not be ‘sentenced for lifetime’
Companies in Europe -Limited liability companies Characteristics. at the same time advantages Legal personality: distinct from its members, mutua safeguard for business creditors and private creditors Limited liability of shareholders not managers Transferable shares: uniterrupted business(continuity ) possibility of portfolio investment Delegated management under a board structure fiduciary duty of company officers towards company (treu und Glauben′" bonne foi Investor ownership control rights(resolution making)+ earnings(dividend) Universiteit Maastricht
Companies in Europe - Limited liability companies Characteristics… at the same time advantages • Legal personality: distinct from its members; mutual safeguard for business creditors and private creditors • Limited liability: of shareholders, not managers • Transferable shares: uniterrupted business (continutity!) + possibility of portfolio investment • Delegated management under a board structure + fiduciary duty of company officers towards company (‘Treu und Glauben’, ‘bonne foi’) • Investor ownership = control rights (resolution making) + earnings (dividend)
Companies in Europe -Limited liability companies The other side of the sun . Disadvantages Formation/incorporation Seperation between ownership and control Disclosure requirements and other rules of law Less flexible(cf. Constitution resolution making etc) Universiteit Maastricht
Companies in Europe - Limited liability companies The other side of the sun... Disadvantages • Formation/incorporation • Seperation between ownership and control • Disclosure requirements and other rules of law • Less flexible (cf. Constitution, resolution making, etc.)
Public Limited Company -Terminology To avoid(further) misunderstandings 1 EXpression public' company(unlike French terminology Public company is neither a ' governmental institution nor is it owned by government(cf energy supplying or public transport rendering companies) 2 Only public companies can be listed at stock exchanges Note, however that most public companies are not listed On the occasion companies even decide to de-list! (volatility of stock ratings vulnerability for takeovers) Universiteit Maastricht
Public Limited Company - Terminology To avoid (further) misunderstandings: 1 Expression ‘public’ company (unlike ‘French’ terminology) - ‘Public’ company is neither a ‘governmental’ institution, nor is it ‘owned’ by government (cf. energy supplying or public transport rendering companies) 2 Only public companies can be listed at stock exchanges - Note, however, that most public companies are not listed - On the occasion companies even decide to de-list! (volatility of stock ratings; vulnerability for takeovers)