Business calls for EU Private Company Statute for SMEs

Business representatives are urging the Commission to create a European Private Company (EPC) statute in order to help Europe’s small- and medium-sized enterprises to do business across borders.

The EU must provide SMEs with a more efficient vehicle to operate across the internal market, said Eurochambres and EU employers’ lobby BusinessEurope at a conference on 15 May. 

Current EU company law is holding SMEs back because it was designed mainly for larger or public companies and is ill-suited to SMEs’ needs, said the two organisations. 

Today, creating a European Company requires the participation of national companies from at least two member states and a minimum capital of €120,000. 

But many small companies simply want to operate across a border, without merging with a foreign company, and do not have such large sums of money. They are therefore forced to comply with up to 27 different national company-statutes if they wish to operate in the entire internal market. 

Creating a single ‘European Private Company Statute’, open to all private companies on a voluntary basis, would simplify the legal framework for SMEs and facilitate their access to cross-border markets, thus boosting economic integration and growth, said the two organisations. 

In February 2007, the Parliament adopted an own-initiative resolution calling on the Commission to come forward with a legislative proposal on a European Private Company Statute but so far the calls have gone unanswered. 

Pierre Simon, President of Eurochambres said that the time was right to move this dossier forward: "SMEs are at the heart of the Lisbon strategy and pursuing a project aimed at enhancing their competitiveness is the right thing to do," he said, calling on the Commission to put a proposal on the table by the end of 2007. 

He stressed that the EPC would not replace national statutes but that "it would be a 28th statute, which is optional but which, thanks to its flexibility, should attract a large number of enterprises wishing to develop cross-border activities". 

Philippe Lambrecht, chairman of BusinessEurope’s Legal Affairs Committee, said: "SMEs represent 90% of economic activity in the EU and yet we don’t offer them an efficient vehicle for doing business. So let’s do it. We must forget national laws and create one European legislation that will help SMEs to create employment – in accordance with the Lisbon Agenda and the principles of Better Regulation – rather than constrict them." 

Jérôme Chauvin, director of BusinessEurope’s Legal Affairs Committee added that the EPC would also be important in terms of image. "Some SMEs want to detach themselves from their national image in favour of a truly European label," he said. 

Internal Market Commissioner Charlie McCreevy has said that he is in favour of initiatives that will give European firms, and in particular small and medium companies, a flexible regulatory framework and that the European private company statute could be a useful option. However, he noted that the experience with the European company statute showed that creating a new European corporate form can be a very long and complex process and that the Commission would only propose a European private company statute if impact assessments clearly show that this is the most appropriate instrument to tackle the problems SMEs face today. 

Klaus-Heiner Lehne (PPE-DE), who drafted Parliament's Resolution on the EPC, stressed that there is "absolutely no question of additional bureaucracy" because companies can decide for themselves whether they want this legal form or not. "It is simply something of which they can avail themselves, something that plugs a real hole in the law left over after we created the European Limited Company for bigger firms," he said. 

Henri Malosse, president of the employers' group in the European Economic and Social Committee, said that the EPC was a priority for the EESC, because it would help move forward European integration. He added: "The project would make small entrepreneurs’ lives easier and give a real meaning to the European project." 

Currently, businesses wishing to operate on a European-wide basis can either set up a network of subsidiary companies governed by different national laws or, since 2004, form a European Company – a 'Societas Europaea' (SE) – governed by a single set of Community rules. 

The aim of the European Company Statute, which was finally adopted in 2001 after 30 years' haggling, was to reduce administrative and legal costs and to give businesses more flexibility to restructure and take advantage of the trading opportunities offered by the internal market. 

However, so far, just 64 companies have established an SE. 

The business community is concerned that this statute is ill-adapted to the needs of SMEs, even though these now represent more than 90% of EU GDP and two thirds of jobs. 

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