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European Economic Interest Group (EEIG)
EEIG is the first type of enterprise which is subject to the European law and which is the basis for the pursuit of economic interests.
On 25 July 1985 the Council has passed the EEC ordinance No. 2137/85 for the creation of a European Economic Interest Group (German: EWIV, French: GEIE) and made available a new supranational type of enterprise which should facilitate co-operation in European research projects especially for small and medium-sized enterprises (SMEs).
Within an EEIG, potential partners of research projects within the Member States do not have to deal with the difficult decision on the national law system that should serve as contractual basis, as the statutory framework stays all about the same (see EEIG implementing ordinance of 1988-04-14 as amended on 1988-06-22).
In the Federal Republic of Germany the EEIG is considered as trading company under section 1 of the EEIG implementing ordinance; consequently, the national law applies analogously for the EEIG based in the FRG.
The EEIG differs from other companies first and foremost in its purpose. The EEIG should help its members to develop or improve their own fields of activity. Thus, the EEIG can be used to develop certain common activities, which would be too expensive for single members, in order to increase its efficiency. Because of this auxiliary nature the activity of an EEIG has to be connected to the economic activity of its members. Even though the EEIG does not have a profit-making character itself, it can contribute to the efficient result of its members.
Not only SMEs, but basically every company or firm and all institutions governed by public or private law can be a member of an EEIG and improve their competitive position by means of strategic co-operation beyond borders.
The formation of an EEIG imperatively requires the participation of at least two members from two Member States as well as the performance of an economic activity. The concept of performing an economic activity is construed extensively. Thus private and public institutions can found an EEIG if some activities have an economic character.
Basically, nothing gets in the way of the creation of an EEIG for research purposes. Even though at first the matter of interpreting the concept of economic activity was left undecided - which allows the formation of an EEIG - the Commission and the Member States construe this concept extensively. Thus, not only activities with economic purpose, which are part of many research activities.
As the EEIG has full legal capacity, the EEIG can participate in so-called research and development actions by submitting proposals.
Without going into detail, some of the formal conditions for the formation of an EEIG should be mentioned:
The formation of an EEIG requires a contract in written form and the association’s entry at a register office in the Member State where the EEIG is based.
The memorandum of association has to include the minimum contents provided for in art. 5 of the EEC ordinance: name of the EEIG, place of the EEIG, organisation matter, duration of the EEIG, details on the members.
Furthermore, the contract should regulate rights and duties of the members according to the ordinance. A notarial record of the contract is not required.
The entry will be announced in the national official register of the Member State in which the EEIG has been formed, as well as in the Official Journal of the European Union. The declaration, registration, deposit and bulletin at the formation of the EEIG are based on national law.
In addition to the conditions of the EEIG formation, the ordinance includes a number of bans in order to cope with the auxiliary function of the EEIG. An EEIG is allowed to employ at max. 500 persons. This so-called size ban applies for the EEIG itself, but not for its members, in order not to undermine the right of co determination.
Furthermore, the bans on the top management of a group and on the holding are applicable. An EEIG must not assume either management or control. The members are jointly and fully liable without limitation for the commitments of the association. The consequences of liability are defined by the law of the country in which the association has its seat. This reference is particularly important for the required balance among the Member States and for the liability of new and resigning members.
In order to implement the EEIG flexibly, a starting capital of the association is abandoned. But any kind of share is possible for the formation of an EEIG, e.g. by means of funds, fixed assets or industrial assets as well as by means of know-how and technologies. A combination of different financing possibilities is allowed. The regular payment of contribution by the members is the most frequent financing modality. The taxation out of the EEIG’s activity is realised by means of special tax rates of the Member States; thus it depends on whether the national tax law accepts the allocation of profits under commercial law or not.