On 9 April 2014, the EC published the proposal for the introduction of the Societas Unius Personae (‘SUP’), a single-member company (COM 2014/212). The proposal aims to limit the restrictions on the freedom of establishment when incorporating a subsidiary in another member state.
According to the proposal, all member states will be asked to provide a national company law form as part of their legal system following the same rules as the other member states. Instead of introducing a supranational form for a single-member company, the proposal seeks to harmonize national rules. In general the SUP will be governed by national law, with the exception of certain provisions which will be equal for each member state. As a consequence, it is doubtful whether the decrease of incorporation and operational costs envisaged by the EC will be accomplished by this proposal.
The SUP has the following key characteristics:
- it is formed by conversion of a national legal entity or by incorporation by a natural or legal person;
- it will have only one shareholder, may issue only one share, and the share capital must be at least one euro;
- a standard template will be prepared containing the provisions that must be included in the articles of association of the SUP at its incorporation;
- it will have full legal personality upon registration with the trade register and will be governed by the national law of the member state where the SUP is registered;
- the registration of the SUP can be fully completed electronically, without the founder being required to be physically present in the country of registration. The registration of the SUP must be completed within three business days;
- a distribution to the sole shareholder may only take place upon a proposal by the managing board. High level protection of the company's creditors is achieved by the requirement of a balance-sheet test and a solvency statement; and
- the sole shareholder is authorised to instruct the managing board.
For more information we refer to our Corporate Update of 8 May 2014.