Since the adoption of the SE legislation in 2001, the idea of creating a European company form targeted at small and medium-sized enterprises (SMEs) has been on the political agenda. In 2002, a High Level Group of Company Law Experts organized by the European Commission proposed the creation of the European Private Company, or Societas Privata Europaea (SPE). The Commission adopted an SPE proposal in 2003, followed up by a proposal for a Council Regulation on the Statute for a European private company (SPE). The proposal however quickly ran into trouble as it was criticized heavily from many sides. Among the strongest critics have been the ETUC and its member trade unions which fear that this legal form could be used by companies to avoid national rules on worker involvement. Also, the issues of separation of home and host country, minimum capital requirements and taxation issues remain controversial between member states.
ETUC and the SPE
Among the strongest critics of the SPE proposal have been the ETUC and its member trade unions, who for good reason fear that this legal form could be used by companies to avoid national rules on worker involvement. One key issue is whether SPEs would be allowed to register in a different country ('host country') than the country in which their head office is located ('home country').
If a separation of host and home country is allowed, the laws of the host country could have precedence over the laws of the home country in important areas such as worker participation. Thus the SPE could offer a vehicle for companies in countries with strong worker participation to 'escape' by registering as an SPE in a country with weak or no worker participation requirements. Although some attempt has been made in revised versions of the proposal to provide safeguards for worker participation arrangements, these safeguards have been seen by trade unions as too weak for protecting many types of existing arrangements. Strangely enough, although the SPE is supposed to be targeted at SMEs, official proposals have lacked a 'cap' on the number of employees the SPE could have. Thus in principle very large companies would also be allowed to register as SPEs.
The ETUC has been clear on their demands regarding the SPE: this should not be established as a vehicle which allows companies to “escape” their national industrial relations systems and to undermine Social Europe. In March 2011 the ETUC issued a press release stating concern over the Hungarian proposal and in April 2011 the ETUC executive committee approved a resolution calling for a minimum standard on worker information, consultation and participation which would apply to all European company legal forms such as the SPE. Currently the highest standard at the European level for protecting and enabling worker involvement is defined by the SE legislation. Consistent with the principle of Social Europe, EU decision makers would be well advised to promote and respect such minimum standards in any further efforts to promote the SPE.
History of the European Private Company (SPE) Statute
Original table by Arnaud Bouaffre (July 2011), updated.
This table provides an overview of the legislative proposals by European institutions relevant to the adoption of a European legal statute for small and medium-sized companies in Europe, the so-called European Private Company or SPE (Societas Privata Europaea). So far, no political consensus has been reached on legislative measures, as there are deep controversies on four key issues: the required cross-border component (CB); the amount of the minimum capital requirement (MCR); the possibility of having the registered office and the headquarters in different Member States (Split); and the rules governing worker participation, especially at board-level (WP).
| Date | History of the European Private Company statute | Document |
| Feb 2012 | EP resolution on the 14th company law directive On 2 February, the European Parliament adopted its third resolution containing recommendations to the Commission for the adoption of a 14th company law directive on the cross-border transfer of company seats. Already in 2006 and 2009, MEPs called on the Commission to issue a legislative proposal which would help regulate company mobility in Europe by respecting EU freedom of establishment while preventing the use of transfer of seat to circumvent employees’ involvement rights. | 2011/2046(INI) |
| January 2012 | EP vote scheduled for Report on proposed 14th company law directive An own-initiative report from the Legal Affairs Committee (JURI) on the proposed 14th company law directive is scheduled for single reading in the European Parliament plenary session on 1-2 February. After discussion in committee and amendments, the matter will now be taken up again in plenary. | 2011/2046(INI) The procedure file on this initiative is available on the EP’s website. |
| May 2011 | Council: First compromise proposal of the Hungarian Presidency After the failure of the preceding Presidencies, Hungary tried to find a compromise with a new proposal. CB: Yes (an intention to do business in a Member State other than the one in which the SPE is registered; a cross-border business objective laid down in the articles of association of the SPE; a branch or a subsidiary registered in a Member State other than the one in which the SPE is registered; or a member or members resident or registered in more than one Member State or in a Member State other than the one in which the SPE is registered). MCR: 1 euro but Member States can set a higher minimum capital requirement for the SPE of up to 8,000 euros for SPEs registered in their territory. Two years after the date of application of this Regulation, the European Commission shall analyse the effect of permitting Member States to set different minimum capital requirements (within the limit). Split: Transitional period of three years from the date of application of the Regulation, during which SPEs would be obliged to have their registered office and their central administration and/or principal place of business in the same Member State. After that period, national law would apply. WP: General provision: employees’ rights of participation governed by the legislation of the Member State in which the SPE has its registered office. Under certain conditions, there shall be negotiations on arrangements for employee participation between the representatives of employees and the management body of the SPE (on the same model as the SE Directive). To start negotiations, some conditions are necessary:
In case negotiations fail, the standard rules are those of the Member State concerned providing for the highest level of participation rights. Moreover, a sentence is inserted clarifying that the provisions of the draft Regulation are without prejudice to the rights of employees concerning information and consultation in accordance with national provisions, and related EU legislation. ‘Member States may, where the standard rules for employee participation apply and notwithstanding these rules, limit the proportion of employee representatives in the administrative or supervisory board of the SPE to one-third.’ Preservation of the ‘before-and-after’ principle of Recital (16c) and of Paragraph 4 of Article 35. | Interinstitutional File 2008/0130 (CNS) |
| May 2011 | Council: Second compromise proposal of the Hungarian Presidency In the run-up to a meeting of the Competitiveness Council at the end of May 2011, the Hungarian Presidency presented a new proposal for the Permanent Representatives Committee. CB: No change. MCR: No change but the presence of the ‘provisions on minimum capital’ in the review clause in Article 48. Split: Suppression of paragraph 1a on whether SPEs should have their registered office and their central administration and/or principal place of business in the same Member State, and introduction of Recital 6a explaining that this allowance depends on the relevant national law. WP: General provision: employees’ rights of participation governed by the legislation of the Member State in which the SPE has its registered office. Under certain conditions, negotiations on arrangements for employee participation between the representatives of employees and the management body of the SPE (on the same model as the SE Directive) For negotiations to start, some conditions must be met:
In case negotiations fail, the standard rules are those of the Member State concerned providing for the highest level of participation rights. However, the reference to the rights of employees concerning information and consultation in accordance with national provisions and related EU legislation is deleted. ‘Member States may, where the standard rules for employee participation apply and notwithstanding these rules, limit the proportion of employee representatives in the administrative or supervisory board of the SPE to one-third’. Preservation of the ‘before-and-after’ principle of Recital (16c) and of Paragraph 4 of Article 35. Creation of Article 35e: ‘Member States shall ensure that the rights of employees to information and consultation are applied also in situations where the SPE has employees in different Member States, or where employees are situated in a Member State other than where the SPE has its registered office’. Additionally, reference to the provisions on the thresholds laid down for employee participation in the review clause in Article 48. | Interinstitutional File 2008/0130 (CNS) |
| May 2011 | Council: Third compromise proposal of the Hungarian Presidency In the run-up to the Competitiveness Council on 30–31 May 2011, Hungary presented a third proposal. CB: No change. MCR: No change. Split: Paragraph 1 of Article 7: ‘An SPE shall have its registered office and its central administration or principal place of business in the European Union in accordance with the applicable national law’. WP: No change but the threshold of ‘not less than 500’ employees added (in addition to 1/3) in the case of the transfer of the registered office. | Interinstitutional File 2008/0130 (CNS) |
| November 2009 | Council: First compromise proposal of the Swedish Presidency Sweden wanted to continue the attempt to find a compromise on this topic. CB: Yes (an intention to do business in a Member State other than the one in which the SPE is registered; a cross-border business objective set out in the articles of association of the SPE; a branch or a subsidiary registered in a Member State other than the one in which the SPE is registered; or a member or members resident or registered in more than one Member State or in a Member State other than the one in which the SPE is registered). MCR: 1 euro but option enabling Member States to require for the SPEs registered in their territory up to 6,000 euros as minimum capital. Split: In addition to Recital (4), Paragraph 2 of the Article 7: ‘A Member State may oblige an SPE registered in its territory to have its central administration and/or its principal place of business in the same Member State or in the same place as its registered office’. WP: General provision: employees’ rights of participation governed by the legislation of the Member State in which the SPE has its registered office. Under certain conditions, there shall be negotiations for arrangements for employee participation between the representatives of employees and the management body of the SPE (on the same model as the Directive of the SE). For negotiations to start, some conditions must be met:
In case negotiations fail, the standard rules are those of the Member State concerned providing for the highest level of participation rights. ‘Member States may, where the standard rules for employee participation apply and notwithstanding these rules, limit the proportion of employee representatives in the administrative or supervisory board of the SPE to one-third.’ The ‘before-and-after’ principle added: if a transnational employee participation system applies in the SPE at the time of the transfer, it shall continue to apply after the transfer if nothing else is agreed upon between the management and the special negotiating body. Paragraph 4 of the Article 35 added: ‘Member States shall take appropriate measures in conformity with Community law with a view to preventing the misuse of an SPE for the purpose of depriving employees of their right to employee participation or withholding such a right.’ | Interinstitutional File 2008/0130 (CNS) |
| November 2009 | Council: Second compromise proposal of the Swedish Presidency After a COREPER meeting on 13 November 2009, Sweden revised its proposal. CB: No change. MCR: No change. Split: Article 7: ‘For a period of three years after the date of application of the Regulation, the Member State in which the SPE has its central administration and its principal place of business may require the SPE to also have its registered office in that Member State, thereafter national law shall apply’. WP: No change. | Interinstitutional File 2008/0130 (CNS) |
| November 2009 | Council: Third compromise proposal of the Swedish Presidency This political agreement followed the discussion in the Permanent Representatives Committee on 25 November and in view of the meeting of the Competitiveness Council on 3–4 December 2009. CB: No change. MCR: Member States can fix a minimum capital requirement of up to 8,000 euros (instead of 6,000). After two years, the Commission will review the effect of permitting Member States to set different minimum capital requirements within the limit of 8,000 euros. Split: For a transitional period of two years from the date of application of the Regulation, SPEs would be obliged to have their registered office and their central administration and/or principal place of business in the same Member State. Thereafter, national law would apply. WP: General provision: Employees’ rights of participation governed by the legislation of the Member State in which the SPE has its registered office. Under certain conditions, there shall be negotiations on arrangements for employee participation between the representatives of employees and the management body of the SPE (on the same model as the SE Directive). For negotiations to start, some conditions must be met:
In case negotiations fail, the standard rules are those of the Member State providing for the highest level of participation rights. ‘Before-and-after’ principle: if a transnational employee participation system applies in the SPE at the time of the transfer, it shall continue to apply after the transfer if nothing else is agreed upon between the management and the special negotiating body. ‘Member States may, where the standard rules for employee participation apply and notwithstanding these rules, limit the proportion of employee representatives in the administrative or supervisory board of the SPE to one-third’. Preservation of Paragraph 4 of Article 34: ‘Member States shall take appropriate measures in conformity with Community law with a view to preventing the misuse of an SPE for the purpose of depriving employees of their right to employee participation or withholding such a right.’ Additionally, Recital (16c): ‘This Regulation does not impose any obligation on Member States to introduce rules on employee participation for the private limited-liability companies listed in Annex II’. | Interinstitutional File 2008/0130 (CNS) |
| April 2009 | Council: Compromise proposal of the Czech Presidency After the failure of the French Presidency to find a compromise, the Czech Presidency continued working on this topic with a new compromise proposal. CB: No. MCR: 1 euro. Split: Recital (4): ‘the seat of an SPE should be governed by national law, in accordance with Community law’, no reference in the articles. WP: General provision: employees’ rights of participation governed by the legislation of the Member State in which the SPE has its registered office. Under certain conditions, there shall be negotiations for arrangements for employee participation between the representatives of employees and the management body of the SPE (on the same model as the Directive of the SE). If the Member State where the SPE has its registered office does not provide for at least the same level of participation rights for employees as the other Member State or Member States where the other employees work, the conditions under which negotiations start are:
In case negotiations fail, the standard rules shall be those of the Member State where most of the employees are situated. ‘Member States may, if following prior negotiations the standard rules for employee participation apply and notwithstanding these rules, limit the proportion of employee representatives in the administrative board of the SPE’. | Interinstitutional File 2008/0130 (CNS) |
| March 2009 | European Parliament: Resolution on the proposal of the European Commission According to the consultation procedure, the European Parliament adopted in March 2009 a Resolution with some amendments on the proposal by the European Commission for a European Private Company statute. CB: Yes (a cross-border business intention or corporate object, the objective of being significantly active in more than one Member State, establishments in different Member States or a parent company registered in another Member State). MCR:1 euro, but 8,000 euros if the articles of association do not contain the requirement that the executive management body sign a solvency certificate. Split: Allowed. WP: General provision: Employees’ rights of participation governed by the legislation of the Member State in which the SPE has its registered office. Application of the Directive of the European Company (2001/86/EC) and the Directive on the cross-border merger of limited liability companies (2005/56/EC) with some conditions:
| P6_TA(2009)0094 |
| March 2009 | European Parliament: Call for a consultation with the social partners The European Parliament adopted a Resolution on employee participation in companies with a European statute and other accompanying measures. The MEPs call on ‘the European Commission, on the basis of Article 138 of the EC Treaty, to initiate a consultation with the social partners, with a view to evaluating and where necessary streamlining, creating or reinforcing the provisions for employees' participation in the internal market’, all especially in the context of the discussion on the SPE. In the same way, they ask the European Commission ‘to assess the impact of the existing European company statutes and relevant rulings of the European Court of Justice (for example, ‘Daily Mail and General Trust’, ‘Sevic Systems’, ‘Inspire Art’, ‘Überseering’ and ‘Cartesio’) as regards employee participation in boards of companies and possible avoidance or circumvention of the relevant national provisions’. The European Commission answered that Article 308 of the EC Treaty prevents the SPE from being considered a social policy initiative, so there is no reason to initiate a specific consultation with the social partners. | Follow-up to the European Parliament resolution on employee participation in companies with a European statute and other accompanying measures |
| December 2008 | Council: compromise proposal of the French Presidency The French Presidency was the first to concern itself with the SPE project. CB: No. MCR: 1 euro. Split: Seat of the SPE governed by national law in accordance with Community law. WP: National rules of Member States of the place of incorporation of an SPE, combined with specific rules in the case of cross-border mergers (Directive on cross-border mergers) and seat transfers in the SPE Statute inspired by the SE Directive if the employees of the SPE in the home Member State account for at least one-third of the total number of employees of the SPE, including subsidiaries or branches of the SPE in any Member State. | Interinstitutional File 2008/0130 (CNS) |
| June 2008 | European Commission: Proposal for a European Private Company statute The European Commission presented a proposal for a Regulation on the Statute for a European Private Company statute to ‘enhance the competitiveness of SMEs by facilitating their establishment and operation in the Single Market’. In order to be adapted to the specific needs of the SMEs that operate across the Member States, the European Commission aimed to establish a statute following uniform, simple, flexible company law provisions within the Single Market. CB: No. MCR: 1 euro. Split: Allowed. WP: National rules of Member States of the place of incorporation of an SPE, combined with specific rules in the case of cross-border mergers (Directive on cross-border mergers) and seat transfers in the SPE Statute inspired by the SE Directive if the employees of the SPE in the home Member State account for at least one-third of the total number of employees of the SPE, including subsidiaries or branches of the SPE in any Member State. | COM(2008) 396/3 |
| February 2007 | European Parliament: Resolution for the adoption of a European Private Company statute The European Parliament called on the European Commission to submit a legislative proposal in 2007 on the Statute for a European Private Company. Moreover, the European Parliament made some recommendations for the features of such a Statute. CB: – MCR: 10,000 euros. Split: Not allowed. WP: Necessity of using the relevant acquis communautaire and safeguarding pre-existing employee participation rights. | P6_TA(2007)0023 |
| July 2003 | Adoption of the Statute for a European Cooperative Society Similar to the case of the European Company, the framework for the European Cooperative Society was created by a Regulation and a Directive. CB: Yes. MCR: 30,000 euros. Split: Not allowed. WP: Involvement of employees fixed by a Directive: setting up of a special negotiating body as a general rule, presence of standard rules in case negotiations fail. | |
| May 2003 | European Commission: the SPE as a new instrument for common European company law mechanisms Following the recommendations of the Winter group, the Commission decided in its programme ‘Modernising Company Law and Enhancing Corporate Governance in the European Union – A Plan to Move Forward’ to launch a feasibility study including ‘an in-depth analysis of the legal, tax and social policy regimes relevant to SMEs’ within the Single Market, with a view to presenting a proposal for an EPC statute. | COM (2003) 284 final |
| November 2002 | The SPE in the Report of the High Level Group of company law experts (the so-called Winter group) on a Modern Regulatory Framework for Company Law in Europe The group noted that ‘the desire to have an EPC statute to serve the needs of SMEs in Europe has been clearly and repeatedly expressed’. Without going into detail, the Report highlighted ‘one issue that inevitably will have to be addressed in any proposal regulating the EPC’: information, consultation and, where applicable, participation of employees. | Report of the High Level Group of Company Law Experts on a Modern Regulatory Framework for Company Law in Europe |
| March 2002 | The Economic and Social Committee (EESC) initiative for a ‘European Company statute for SMEs’ At its own initiative, the European Economic and Social Committee pushed for a suitable tool for SMEs, namely a European Statute for Private Companies. CB: A European dimension is necessary, even when economic activity is planned for the European level only in the future. MCR: 15,000 euros. Split: Not allowed. WP: For cross-border participation, a ‘realistic and pragmatic approach’ is necessary along with ‘the rules drawn up in this area for the European Company’ (‘maintaining acquired rights while avoiding an excessively cumbersome system’) | Opinion 2002/C 125/19 |
| October 2001 | Adoption of the European Company statute (SE) A Regulation and a Directive were necessary in order to implement a framework for public limited companies. CB: Yes. MCR:120,000 euros. Split: Not allowed. WP: Involvement of employees fixed by a Directive: setting up of a special negotiating body as a general rule, presence of standard rules in case negotiations fail. | Council Regulation 2157/2001 |