An EEIG is a mechanism through which businesses within the EU can engage in cross-border commerce.
The creation of the EEIG is an effort to develop economic activity throughout the EU and to create a single market offering conditions similar to those of a national market. It is designed to minimise the legal and fiscal difficulties that natural persons, companies, firms and other bodies face in cooperating across borders.
EEIG’s are regulated under SI No. 191 of 1989 – European Communities (European Economic Interest Groupings) Regulations 1989, and SI No. 447 of 2010 European Communities (European Economic Interest Groupings) (Amendment) Regulations 2010.
The purpose of the grouping is to facilitate or develop the economic activities of its members by a pooling of resources, activities or skills. This is intended to produce better results than the members acting alone.
It is not intended that the grouping should make profits for itself. The profits of an EEIG will be deemed to be the profits of its members and will be apportioned either according to the relevant clause in the contract or, failing such a clause, in equal shares. The profits or losses of an EEIG will be taxable only in the hands of its members.
To balance the contractual freedom which is at the basis of the EEIG and the fact that members are not required to provide a minimum amount of capital, each member of the EEIG has unlimited joint liability for its debts.
An EEIG must be formed in accordance with the rules described below:
- An EEIG can be formed by companies, firms and other legal entities governed by public or private law which have been formed in accordance with the law of an EU country and which have their registered office in the EU. It can also be formed by individuals carrying on an industrial, commercial, craft or agricultural activity or providing professional or other services in the EU.
- An EEIG must have at least two members from different EU countries.
- Each member has one vote, although the contract for its formation may give certain members more than one vote provided that no one member holds a majority of the votes.
An EEIG must have:
- At least two members acting collectively and
- At least one manager who must be an individual
The manager(s) represent and bind an EEIG in its dealings with third parties even where their acts do not fall within the objects of the grouping.
- The contract for the formation of an EEIG must include its name, its official address and objects, the name, registration number and place of registration, if any, of each member of the grouping and the duration of the grouping, except where this is indefinite. The contract must be filed at the Registry designated by each EU country. In Ireland, this is the Companies Registration Office. Registration in this manner confers full legal capacity on the EEIG throughout the EU.
- An EEIG may not invite investment by the public.
- An EEIG does not necessarily have to be formed with capital. Members are free to use alternative means of financing.
- An EEIG cannot employ more than 500 persons.