The Czech Societas Europaea Puzzle

The European company (Societas Europaea, SE) has become a popular company law form for businesses, and it is most popular in the Czech Republic, which is puzzling. We study the motives of Czech SE founders on the basis of data from the Czech national Commercial Register on all Czech SEs registered in 2010 and 88 interviews with Czech SE users. SE incorporations in the Czech Republic are mainly driven by the desire to economise on board size and the positive European image of the SE (brand management). In addition, Czech SEs are usually purchased from service providers, with the SE assisting the purchaser financially by a loan in the amount of the minimum share capital (€ 120,000). The large number of Czech shelf SEs probably results either from service providers overestimating their advantages and, as a consequence, overestimating the demand for new SEs or, conversely, from users underestimating the beneficial effects of (re)incorporating as an SE. Time will tell which conjecture is closer to the truth.