The Gazette 1989

GAZETTE

SEPTEMBER

1989

The "European Economic Interest Grouping"

The following is an outline of the main features of the European Economic Interest Grouping, what it is and how it works. A) Statutory Basis of the EEIG 1. The Regulation on the European Economic Interest Grouping was adopted on 25th July 1985 by the Council of Ministers of the European Communities and came into force on 1st August 1989. A Regulation, unlike a Directive, is binding in its en- tirety and is directly applicable in all Member States without further national implementing legislation. In this instance, however, supplementary legisla- tion will be needed to fulfil certain requirements of the Regulation. 2. The Company Law section of the Department of Industry and Commerce has prepared a Statutory Instrument (S.I. No. 191 of 1989) entitled European Communities (European Econ- omic Interest Groupings) Regulations, 1989. This Instru- ment gives full effect to Council Regulation 2137/85. It provides a legal framework for groupings of natural persons, companies and other legal entities to enable them to co-operate effectively in economic activities across national frontiers within the European Community. The Statutory Instrument is divided into two parts, Part I relating to Formation and Registration of Groupings, Part II relating to Membership of Groups. There are two schedules attached to the I ns t rumen t, the first consisting of the full text of the Council Regulation and the second consisting of forms relating to EElGs. B) What is an EEIG? 1. An EEIG is unlike anything known to Irish law, being

neither a company nor a partnership but having some of the characteristics of both. Basically, it is a hybrid form of undertaking designed to link together two or more busi- nesses from separate Member States for the purpose of promoting co-operation within the Common Market. 2. Its raison d'etre is to enable its members to become more profitable by pooling activities,

5. The above limitations apart, the EEIG is entirely autonomous, having full legal capacity. The regulation leaves Member States the option whether to accord it legal personality. The view favoured in Britain is that the EEIG should be given full legal personality. C) For what purpose can the EEIG be used? 1. The concept of the EEIG is based on the French GIE (Groupement d'lnteret Econom- ique) which was introduced in France in 1967 and has been used in large scale international co-operations such as the Airbus and the Ariane Space Project. Since its inception in 1967, 9,000 GlEs have been formed in France. 2. The EEIG can undertake activities in a multitude of fields. However, it must pursue an activity or activities which each of its members has in common and which would justify its existence. 3. The most obvious use of the EEIG is for the provision of services i.e. as a service company to provide manage- ment or specialist services (e.g. accountancy), or for joint leasing, selling, buying or distribution or joint research and development. Within its parameters, the use to which the EEIG can be put is varied and flexible. D) Differences between en Irish compsny and an EEIG An EEIG differs in many respects from a company registered under the Companies Act 1963 in Ireland e.g.: 1. A company can be formed for a wide variety of purposes. An EEIG is required to be formed solely for the purpose of facil- itating and developing the econ- omic activities of its members.

By Anne M . Neary, Solicitor, and Richard Caplan, Solicitor*

resources and services. It cannot be formed for the purpose of making a profit for itself, but there is no prohibition on making a profit as a con- sequence of its activities. 3. It is intended to facilitate and develop the business activities of its members, while respect- ing their legal and economic independence. Therefore, it can only carry on activities which are related to but no more than ancillary to the business of its members. 4. The economic link between the EEIG and its members is essential and entails two kinds of restrictions. Firstly, it cannot be used to create a new activity that has no connection with the activities of its members. This would necessitate the forming of a company. Secondly, the EEIG must not replace the economic activities of its mem- bers or become so important that their activities are taken over by it or become dependent on it. If that were to happen, it would behave like a company under the cloak of an EEIG.

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