European Company Statute finally established

The long-awaited EU legislation on the European Company Statute was finally agreed by the Council on 8 October. The Commission considers that this legislation could lead to savings of 30 billion euro for European business.

The European Company Statute (ECS) is one of the key elements in completing the internal market. It will make it possible for a company to be set up within the territory of the EU in the form of a public limited-liability company, with the Latin name “Societas Europaea” (SE).

Under the European Company Statute, a European Company can be set up by the creation of a holding company or a joint subsidiary or by the merger of companies located in at least two Member States or by the conversion of an existing company set up under national law.

To come to their compromise, Member States gave up plans for a common taxation for companies as part of the statute. Decisions on company taxation therefore remain at the Member State level.

 

Internal Market Commissioner Frits Bolkesteinsaid: "The European Company will enable companies to expand and restructure their cross-border operations without the costly and time-consuming red tape of having to set up a network of subsidiaries. This is a practical step to encourage more companies to exploit cross-border opportunities."

Commissioner for Employment and Social Affairs, Anna Diamantopoulou, added: "This tool ensures that employees do not suffer any slippage in their existing rights to consultation and participation. We must concede that the European company statute is not yet perfect: much work remains to be done on taxation matters. But, in the Commission's view, the glass is half full, not half empty".

Union of Industrial and Employers' Confederations of Europe (UNICE)welcomes the adoption of the European Company Statute. However, it sees several weaknesses:

  • there is no agreement on a suitable tax regime;
  • it creates fifteen different statutes instead of providing companies with a genuine Community law instrument;

Spokesperson Willy Buschak of theEuropean Trade Union Confederation (ETUC)told EURACTIV ETUC also welcomes the adoption as it recognises union involvement and necessary negotiations on workers involvement in the European company. He said ETUC is satisfied the European Company Statute also includes a fall back position should negotiations not work out.

 

Since 1970, the EU has been trying to reach a compromise on two proposals for a regulation and directive concerning the creation of a European Company Statute. In December 2000, the Council reached a political agreement on two proposals to create the European Company (SE or "Societas Europaea").

 

The legislation will enter into force in 2004.

 

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