The European Union (EU) was decidedly pleased with its establishment yesterday of a European company statute, despite doubts expressed in the business community of the likelihood of its adoption.
The legislation, earmarked to come into force in 2004, will mean essentially that a company operating in more than one European state will have the choice of establishing itself as a single company under European Community law.
Effectively firms will not have to go through lots of expensive and time-consuming red tape if they wish to set up European subsidiaries.
Under the statute companies wanting to increase their "cross-border operations" will be able to function throughout the EU with a single set of rules and a "unified management system".
Frits Bolkestein, internal market commissioner, said the statute offered "practical steps to encourage more companies to exploit cross-border opportunities".
Provided businesses are based in more than one European country, the statute will allow a European company or "Societas Europaea" (SE) to be set up through the following: the merger of two or more existing Plcs; the creation of a holding company; the forming of a joint subsidiary; or the transformation of an existing company that, for two years at the very least, has had a subsidiary in another member state.
An EU advisory group has estimated that SEs could produce potential administrative savings of up to Eu30bn (£18.8bn) per year, a figure that has been dismissed by businesses as exaggerated.
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