The Federal Labor Court (BAG) has clarified the situation with three landmark decisions dated November 26, 2024 (Ref. 1 ABR 37/20, 1 ABR 3/23, and 1 ABR 6/23): European public limited companies (SEs – Societas Europaea) that do not employ any staff at the time of their formation are not subject to the obligation to repeat the employee participation procedure, even if staff are hired or assigned at a later date.
This decision creates considerable planning and legal certainty for entrepreneurs and investors whose investment decisions depend on structures that are not subject to co-determination.
Advantages at a glance:
- No obligation to repeat the co-determination process if employees are acquired at a later date.
- Reduced transaction costs for M&A and IPOs.
- Time savings due to the elimination of time-consuming participation procedures.
- Co-determination-free corporate structure is retained – even in the event of subsequent expansion.
The Federal Labor Court (BAG) has clarified the situation with three landmark decisions dated November 26, 2024 (Ref. 1 ABR 37/20, 1 ABR 3/23, and 1 ABR 6/23): European public limited companies (SEs – Societas Europaea) that do not employ any staff at the time of their formation are not subject to the obligation to repeat the employee participation procedure, even if staff are hired or assigned at a later date.
This decision creates considerable planning and legal certainty for entrepreneurs and investors whose investment decisions depend on structures that are not subject to co-determination.
Advantages at a glance:
No obligation to retroactively implement co-determination in the event of subsequent acquisition of employees
Reduced transaction costs for M&A and IPOs
Time savings due to elimination of complex participation procedures
Co-determination-free corporate structure remains in place – even in the event of subsequent acquisition of employees According to the Federal Labor Court, the prohibition of abuse under Section 43 SEBG also applies only under narrow conditions. Even in cases of abuse, the court believes there is no obligation to introduce co-determination retroactively – an important signal for the design of SE structures in dynamic markets.
The current BAG rulings position listed SEs with no employees at the time of formation as a particularly attractive platform for IPOs, company acquisitions, and strategic realignments – with a clear advantage in terms of flexibility, efficiency, and legal certainty.
Instant IPO also relies on SE shell companies that precisely meet the requirements of current BAG case law. The shell companies offered were established without co-determination rights and meet the requirements for permanent takeover and operation without any obligation to catch up on co-determination. Instant IPO thus offers not only a legally sound structure, but also a particularly fast and efficient one for IPOs and company takeovers – in line with the clarification of labor law by the BAG. Case of subsequent expansion.
About INSTANT IPO SE:
INSTANT IPO is Europe’s first independent specialist focusing on fast IPOs and is the German market leader in shell companies.
As an official capital market partner of the Düsseldorf Stock Exchange, INSTANT IPO implements customized, time- and cost-efficient IPOs for companies in all industries. In addition to implementing traditional initial public offerings (IPOs) or pure listings, INSTANT IPO’s special expertise lies in particular in the segment of shell company/SPAC transactions (reverse IPOs, reverse mergers, reverse takeovers, cold IPOs), as shell companies offer considerable advantages to companies seeking to go public.
