The basis of the rules relating to the European Company (Societas Europea: in short "SE") is two official EU acts from 2001: the Regulation on the Statute for a European Company and the Directive supplementing the Statute for a European Company with regard to the involvement of employees.  The stated capital of the company must amount to at least 120,000 Euro. An SE can be set up by the creation of a holding company or a joint subsidiary or by the merger of companies located in at least two Member States or by the conversion of an existing company set up under national law.

Firms which are active Europe-wide can cross borders and merge together in the form of an SE. Doing so will provide a unique, flexible, all-purpose legal personality. This will give enterprises both economic advantages in international competition as well as psychological advantages in international competition as well as psychological advantages.  Instead of needing to build up a network of associated companies (for which different national rules apply), enterprises can now organise themselves in a standard legal way.  That saves time and money in administration.

A big advantage of the SE as a European legal form is that it can easily cross frontiers at any time.  According to the provisions of the EU Regulation, the headquarters of a SE can be transferred from one Member State to another whilst preserving the same legal identity.

Companies can choose between two different management systems:  the dualistic model with a separation of the management board and the supervisory board (as in Germany) or the singular "board"-model (used in England and France).  Characteristics of the latter are:
A board of directors (management board) manages the SE, in particular by deciding and making the policies and ensuring their implementation.
The supervisory board appoints one or more managing directors to the current management.  These are bound to the decisions of the supervisory board and can at any time be recalled.

The rule of co-determination has also changed for German law.  The involvement of an employee in a SE is basically decided by negotiation between a special negotiation body, which represents the employees, and the management of the company.  If the special negotiation body and the management are unable to reach an agreement, standard rules apply:  co-determination rules according to the law of the country which have rules most favourable to the employees apply, if at least 25 percent of the employees work there.

A number of SEs have been incorporated so far, e.g. MPIT Structured Financial Services SE, Bauholding Strabag SE, Elcoteq Network SE or Brenner Basis Tunnel BBT SE.

Although the Member States - under the compulsion of the ECJ's jurisprudence - now follow the incorporation theory, the two main prerequisites for charter competition are not yet fulfilled within the EU.  On the demand side, the new mobility only extends to incorporating companies, not to reincorporating ones.  In fact, European legislators and academic writers seem not yet to have grasped the central role of re-incorporations for the functioning of regulatory competition, since, despite the flood of publication on the new framework of charter competition in Europe, the issue of re-incorporation is not discussed.  On the supply side, robust advantages of attracting incorporations are missing because of the 1969 companies' tax directive.  More indirect or subtle advantages may exist but until now, signs of supply side responses are not visible.  To conclude, regulatory competition in company law in the EU is still a myth, not a reality.