The European Commission has presented a Report to the European Parliament and the Council on the application of the Regulation on the Statute for a European Company (Societas Europaea or SE). In theory, the Statute gives companies operating in more than one Member State the option of establishing themselves as a single company under EU law. This would make them able to operate throughout the EU with one set of rules, including a unified management and reporting system. Today’s Report is part of the review process of the SE Regulation. It includes a description of the positive and negative factors, which influence setting up an SE and highlights trends on the distribution of SEs throughout the EU. It also analyses the main problems encountered when setting up and running an SE. An accompanying Commission Staff Working Document supplements the assessment. It takes inventory of SEs and analyses the flexibility of relevant national legislation in the different Member States.
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1. What is the European Company Statute (SE Statute)?
The European Company Statute gives companies operating in more than one Member State the option of establishing themselves as a single company under EU law. Rather than having to comply with all the different national laws of each Member State where their subsidiaries are based, the Statute would make companies able to operate throughout the EU with one set of rules, including a unified management and reporting system. Furthermore, the European Company offers them the prospect of reduced administrative costs and provides a legal structure more conducive to carrying out activities within the Single Market as a whole.
The European Company Statute was established by two pieces of legislation. Namely, a Regulation (directly applicable in Member States) establishing the company law rules and a Directive (which has been implemented in national law in all Member States) on worker involvement. These rules are supplemented by cross-references to national legislation applicable to public limited-liability companies.
2. Why is the Commission reporting on the European Company Statute now?
The European Company Statute (Regulation 2157/2001) requires the Commission to report on its practical application five years after its entry into force and to put forward amendments where appropriate.
The reason the Report was delayed beyond this five year window was to allow more time for the SE Regulation to be actively in force in all Member States and to allow for a more meaningful report on its application. Since the European Company Statute came into effect, the number of established SEs has increased considerably: there were 9 SEs created in 2004, 16 in 2005, 35 in 2006, 88 in 2007, 179 in 2008, and 156 in 2009.
3. How has the Commission consulted stakeholders?
In 2008 the Commission had an external study carried out on the operation and impact of the SE Statute. The study, which was published in March 2010, was based on questionnaires and interviews with stakeholders concerned.
In May 2010, the Commission launched a consultation on the results of the external study in order to test the study’s results with a wider audience and provide the Commission with stakeholders’ views on issues relevant in assessing the SE Statute. In total 69 stakeholders took part in the consultation. The responses as well as a synthesis of the comments were published on the DG Internal Market and Services’ European Company website.
To complement the consultation process, a high-level conference on the SE Statute was held on 26 May 2010. At this event, various stakeholders had the opportunity to discuss their experiences with the application of the Statute, including the problems they had encountered with it and made suggestions for the way forward. The video recording of the conference is available on the European Company website.
4. What is the content of the Commission Report and the accompanying Commission Staff Working Paper?
The Commission Report includes a description of the main positive and negative factors, which influence setting up an SE, as well as of trends on the distribution of SEs throughout the EU. It also outlines the main problems companies can encounter when setting up and running an SE.
The accompanying Commission Staff Working Document supplements the assessment with an extensive inventory of SEs and an analysis of the flexibility of relevant national legislation in the different Member States. It also further elaborates on the main problems encountered when setting up and running an SE.
5. How many SEs are there and how are they distributed throughout the EU/EEA?
As of 25 June 2010 (reference date of the Report), 595 SEs were registered in 21 out of the 30 EU/EEA Member States. The vast majority of SEs, around 70%, was registered in the Czech Republic (281) and Germany (134). Very few SEs were registered in Southern European Member States, with the exception of Cyprus (12).
The Netherlands (24), the United Kingdom (23), Slovakia (22) and France (19) have a relatively high number of SEs on their territory. The group of countries with the lowest use of the SE Statute includes Portugal and Spain with only 1 SE each – and Bulgaria, Finland, Greece, Iceland, Italy, Lithuania, Malta, Romania, and Slovenia where no SEs have been set up.
6. What are the conclusions of the Study on the application of the SE Statute?
The Report concludes that the European Company has made it possible for companies with a European dimension to transfer the registered seat cross-border, to better reorganise and restructure, and to choose between different board structures. At the same time, it has upheld the rights of employees to be involved in decision-making within companies and has protected the interests of minority shareholders and third parties. The European image and supra-national character are additional advantages that the Statute offers to companies.
The Report acknowledges that the application of the Statute also poses a number of practical problems. First, the SE Statute does not result in a uniform SE legal form across the European Union, but in 27 different types of SEs. Second, the Statute contains multiple references to national law and uncertainty remains as to the legal implications of the Statute’s directly applicable rules and their interface with national law. Third, the uneven distribution of SEs across the European Union suggests that the Statute does not respond sufficiently well to the needs of companies in all 27 Member States.
7. Does the Commission Report on the SE Statute also touch on the SE Directive on employee involvement?
The Commission Report focuses on the SE Regulation and makes reference to employee involvement issues only where they are relevant to assessing the application of the Regulation.
2008 review on the application of the SE Directive
8. What are the next steps after the Report?
The SE Regulation requires that Commission considers whether any modifications are necessary based on the assessment of the application of the SE Regulation.
The Commission is currently reflecting on potential amendments to the SE Statute, with a view to making proposals in 2012, if appropriate. Any such amendments, if put forward, would be carried out in parallel with any possible revision of the SE Directive, which would be subject to the consultation of social partners in accordance with Article 154 of the Treaty. More generally, any measures which the Commission would propose as a follow-up to the Report would be subject to better regulation principles, including an impact assessment.
More information about the SE Statute
Source: European Commission
