Verbatim report of proceedings

Thursday, 1 February 2007 - Brussels

3. The European private company statute (debate)

  President. The first item is the report by Klaus-Heiner Lehne, on behalf of the Committee on Legal Affairs, with recommendations to the Commission on the European private company statute (2006/2013(INI)) (A6-0434/2006).

  Klaus-Heiner Lehne (PPE-DE), rapporteur. – (DE) Madam President, Commissioner, ladies and gentlemen, I feel particularly honoured to be able to see this topic discussed today, when you, Madam President, are chairing a sitting of this House for the first time.

The action plan on company law already envisaged examination of which additional forms of company might be considered as subjects for legislation within the European Union. As a result of the studies carried out at that time, these questions were, in essence, left open. Now, the Commission, a number of years ago, invited discussion of the company law action plan and subjected it to a wholesale revision. This House made a full contribution to this debate, and, following on from it, decided to produce and discuss an own-initiative report on the European private company.

Such is the background to this item on today’s agenda. We have considered this question carefully and organised in this House a hearing on the subject, which drove home the fact that there is a real need for that sort of European private company and for the Commission to initiate legislation to create it. Smaller industrial companies in particular – export-driven businesses that are at present obliged to set up subsidiaries and companies in other Member States and in accordance with those states’ laws on companies – would welcome with great enthusiasm the creation of a European legal form whereby they could organise their subsidiaries throughout the European Union. At present, they are in serious need of advice, which may well be good for the lawyers, but it does cost a lot of money, since there has to be, again and again, examination of individual cases to ascertain what rights and duties their directors and members of their supervisory boards actually have and what they have to do in order not to end up at odds with the law.

I think they will be able to avoid that if they can be offered a single European legal form that regulates a number of core matters, in particular directors’ powers and questions of liability, in one way at the European level and thus offers something to businesses. There is, then, absolutely no question of additional bureaucracy, for 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.

Let me also say, by way of an aside, that the insufficient progress made in the past in the development of European company law is one explanation for the European Court of Justice’s rulings in such cases as Inspire Art, and this is where we can help to provide and create an exemplary structure in the European Union.

I believe that the Committee on Legal Affairs – which adopted this report by a large majority, or, indeed unanimously – has succeeded in finding a suitable compromise between the different approaches to the structure of such companies found in continental Europe on the one hand and in British legal thinking on the other, especially on the issue of equity, where we achieved a good compromise on the basis that equity ought, as a matter of principle, to exist, but without the obligation to make cash payments, which, as a means whereby registration may be made easier, is, in my view, a step in the right direction and also shows how it is possible for the Commission to submit a proposal with the Council then being able to find a rational compromise between the various legal traditions.

What we in the Committee on Legal Affairs – and I think, after today’s vote, this House too – expect of the Commission is that it should, in accordance with the provisions of the Treaty, with our Rules of Procedure, and with the interinstitutional agreement, stir itself into action and, within the foreseeable future, take definite steps to put a definite proposal for legislation before this House and the Council.

As I draw to a close, I would like to mention another consideration that has had some input into the amendments, that being the debate on workers’ participation in decision-making. Let me make perfectly plain something that was not a bone of contention in our deliberations, namely that nobody is seeking to restrict workers’ rights in any way whatever. In so far as they are guaranteed at the national level, they are also to be guaranteed and maintained when this legislative project is put into effect. This is something on which there have been a number of amendments, which I do not regard as crucial, for they all have the same end in mind, that of protecting workers’ rights.

One final comment – and yes, I do mean final, for I will then have used up my five minutes: I note with pleasure that the German Presidency of the Council has declared the European Private Company to be one of its priorities, and so I assume that the Council, too, will be as supportive of this as – I hope – an overwhelming majority in this House is about to be.

  Charlie McCreevy, Member of the Commission. Madam President, firstly I would like to thank the Committee on Legal Affairs, and in particular the rapporteur, Mr Lehne, for the excellent work done in the preparation of the report on the European private company statute on which you will vote today. My departments are already studying in detail the suggestions and recommendations proposed in this report.

We need to make it easier and cheaper for small and medium-sized companies to conduct cross-border business. It is important to take action that will help small and medium firms to reap fully the benefits of the single market.

The growth of small businesses is crucial for the competitiveness of the European economy. One means of facilitating the expansion of small businesses is to simplify the current legal framework and reduce unnecessary administrative burdens. These burdens are particularly onerous for SMEs that do not have big legal departments at their disposal. That is why I have decided to present a communication on the simplification of EU company law in the spring of this year. This fits in with the broader programme of the Commission on simplification of the acquis communautaire which provides for a 25% reduction in administrative burdens by 2012.

I am all for initiatives that will give European firms, and in particular small and medium companies, a flexible regulatory framework. The European private company statute could be a useful option for them in this respect. The idea was supported by industry in the recent public consultation on future priorities for the action plan on company law and corporate governance. Many respondents stressed that such an option would create more choice for companies and reduce compliance costs for firms which wish to operate in several Member States. However, a number of our respondents also questioned the usefulness of such a measure and, as you know, in accordance with better regulation principles the Commission must carry out an impact assessment before any initiative is proposed. Accordingly, my departments are now examining the costs and benefits of such a statute, as well as alternative measures to address the problems at stake. I would only propose a European private company statute if the impact assessment clearly shows that this is the most appropriate instrument to tackle the problems SMEs face today and that the European private company form would be useful to them in expanding their activities and developing their businesses across borders.

Experience with the European company statute has shown that creating a new European corporate form can be a very long and complex process. The end result may be legal instruments that are not always easy to use. If a European private company statute is to be worthwhile, then agreement would need to be found swiftly. The end result would have to be simple for SMEs to use, thereby bringing real added value.

I note that your report and associated resolution are based on Article 192 of the Treaty calling on the Commission to submit a legislative proposal. Under the framework agreement, the Commission undertook to take account of any such request made pursuant to Article 192 of the Treaty. I intend to live up to these commitments. We will assess the practical suggestions set out in the report in detail. I want my departments to take the time necessary to consider carefully all possible options in order to provide the best balanced solution for SMEs. Upon conclusion of the impact assessment, I will report back to you on its results and the policy conclusions we draw from it.

  Andreas Schwab, on behalf of the PPE-DE Group. – (DE) Madam President, I, too, as a former fellow-member of the Committee on the Internal Market and Consumer Protection, wish you every success in the exercise of your functions. If every President were to keep the Chamber as quiet as you have done this morning, our deliberations would indeed be much more constructive, and so I can only ask you to carry on the way you have begun.

I can tell the Commissioner that small and medium-sized enterprises are the driving force behind the European internal market. That may well be reiterated time and time again, but the progress towards the achievement of this goal is often too slow. I, too, therefore, am among those who believe that the creation of a European legal framework with the interests of the self-employed and smaller businesses particularly in mind is an extremely important matter, not least for the Committee on the Internal Market.

Mr Lehne’s own-initiative report is much to be welcomed, not least on the grounds that it sends an important signal to the Commission – and, let me add, to the Presidency of the Council too – and I would like to thank him for the splendid work he has done in this regard.

It is cause for thanksgiving that many small and medium-sized businesses already work across borders, and you, Commissioner, were able to see that for yourself when you visited Offenburg, my own electoral district. In many instances, though, their dedication and growth are hampered by bureaucratic restrictions and the lack of experience of the local legal situation, and small and medium-sized enterprises from the new Member States have hitherto been put at a considerable competitive disadvantage by this.

Offering in future a European legal form in parallel with the legal forms of the nation states therefore not only serves to further the completion of the European internal market, but also makes it easier for small and medium-sized enterprises to set up subsidiaries in European countries other than their own, and hence to develop their activities beyond their own country’s borders.

What is of the essence in this is that the consultancy and administrative costs involved in setting up and running a company can be reduced to a considerable degree and that cross-border business activity no longer involves the laws of more than one Member State being applicable.

A survey conducted by the German International Chamber of Commerce – I can refer only to German businesses – showed that enterprises were very keen that there should be a European legal form that met the needs of small and medium-sized businesses, and the businesses that responded said that they saw this as being a ‘little sister’ to the European Limited Company and believed that it needed to be slimline, practicable and – above all else – European.

I can therefore tell the Commissioner that what this House is saying by means of this report is that it wants to see the Commission presenting a legislative proposal on the basis of Article 308 before this year is out. We are of course pleased to hear you advocating the impact assessment, but we have also seen, from the example of other directives relating to the internal market and consumer protection, that, where the political will is present, an impact assessment can either be carried out briskly or limited to specific individual questions, and so I would ask you to move the impact assessment forward with some speed in order to arrive at a legislative proposal as soon as possible. I would also ask the German Presidency of the Council to process this dossier as soon as possible and with vigour.

  Manuel Medina Ortega, on behalf of the PSE Group. – (ES) Madam President, I believe that this is the first time that I have had the opportunity to speak while you are presiding over the sitting and I would like to congratulate you on your appointment. I am sure that you will do your duties in your characteristically independent manner.

Secondly, I would like to thank Mr Lehne for his report. I believe that he has done a good job, but I would like to point out a couple of problems that we have.

Firstly, I do not believe the Committee on Legal Affairs' current approach of presenting reports on an issue of legislative initiative with an annex which has not been sufficiently discussed to be the appropriate legislative technique.

We are talking about an initial phase of legislative proposals. What we are doing is asking the Commission to look into the possibility of presenting a report, and I believe that at this stage we should restrict ourselves to the first part of the resolution.

I do not believe that the annex to the motion for a resolution has been sufficiently debated. We cannot therefore take the view that these conclusions of the annex genuinely reflect the will of the Committee on Legal Affairs.

Secondly, I believe that Mr McCreevy was absolutely right to point out that we should not be legislating for the sake of legislating — our failure in relation to the European Company should give us cause for concern in this regard — and the impact study is therefore clearly necessary.

Furthermore, it is clear that we in this House believe that it is necessary to draw up a statute to enable small businesses to operate and that we should work towards achieving that.

In doing so, we are faced with certain difficulties: for example, the problem of worker participation. We have held discussions on the text of recital H. In my political group, there have been certain reservations about the way Mr Lehne had worded it.

I believe that the final formula proposed by Mr Lehne is satisfactory and I hope that we in my group can approve it.

In short, I believe that Mr Lehne's proposal is a good one. We are not demanding that the Commission accept it, but we are asking it to look into this possibility.

I hope that Mr McCreevy will do everything he can to ensure that this Parliament's will in this regard is implemented.

  Sharon Bowles, on behalf of the ALDE Group. – Madam President, first let me also extend my congratulations to you on your appointment and the conduct of your first debate.

I must also start with an apology to the rapporteur because, although I attended the hearing on this subject, I was unable to participate in the debate in committee and I know it is a bit irritating when somebody then pops up in Plenary.

I broadly welcome the underlying idea in the proposal, but I have some concerns that I hope the Commission will investigate further during future work on this matter. Mr Lehne, you have said in your explanatory note to the report – and indeed the Commissioner has also said just now, and I agree – that the statute will need to focus on the needs of SMEs. But that of course covers just about all companies except multinationals. To me it is clear that if we follow all of the recommendations in the annex, those that are likely to benefit or choose this option are towards the medium rather than the small end of the spectrum of companies. They certainly would not be start-up companies. The suggested capital requirements ensure that is the case. I do not want people to say ‘here you are standing there as a Brit not wanting any capital requirement’. I recognise that the capital does not necessarily have to be paid in and I welcome attempts to find a compromise on that, but it will still have an impact, especially on small businesses.

Smaller businesses, whether at the start-up or whether trying to expand, have enough cost and difficulty trying to give belt-and-braces guarantees to banks without there being an added tier of financial expectation. And, make no mistake, the fact that shareholders could potentially lose EUR 10 000, even if not paid in at the start, does add an extra tier of financial expectation.

Now, that may not matter at all since it is optional, and if you do not like the statute, you do not have to use it, but I would prefer that if you propose something, it would be liked and used and accessible to all companies.

While I have said that there may be little incentive in some quarters to choose this, that does not mean it is because small companies do not conduct cross-border business or do not aspire to do so. Many quite small companies do engage in significant cross-border business and European Court of Justice decisions make it clear that they can do so. But, as it is optional, maybe that is no matter. Or is that really the case? I would not like to see the situation where the new statute introduced a factor of discrimination where consumers were concerned that if you were not big enough to consider it worth being a European private company, you are not big enough to do business in Europe. That would run completely counter to the notion of a single market and the mutual importance of fostering and nurturing small businesses within that market. In a single market, size must not matter.

  Marek Aleksander Czarnecki, on behalf of the UEN Group. – (PL) Madam President, I fully support the view that the European Private Company Statute should be based on Community legislation and dispense with references to national law. The aim is to create a new legal form for small and medium-sized enterprises, which are the driving force behind all European economies. A new legal form will help to foster cross-border activity too.

We must also keep in mind joint activities when it comes to promoting the development of the internal market, and consequently economic growth. If a single European legal form is created, consultancy costs will be cut. In the many countries involved, the law will no longer apply to cross-border activities. Instead, we shall have a single, uniform statute. For this type of company to be competitive on the market, it must be flexible and able to adjust to market requirements. This could be achieved by endowing such a company with a wide range of possibilities for transforming itself.

In this context, the issue of legal harmonisation arises, for instance, with regard to the cross-border transfer of registered offices. For an undertaking of this nature to be able to operate with maximum efficiency on the market, however, it must focus primarily on the security of business transactions and on protecting the company’s creditors. We still need to give further consideration to these issues.

  Godfrey Bloom, on behalf of the IND/DEM Group. – Madam President, I find this absolutely fascinating! Every time I come here I have to smile. What this place knows about running small businesses is absolutely unbelievable. When I look up the CVs of Members of this Parliament, I find that nobody has ever had any serious responsibility for a small company in their lives. It is amazing what we all know about these things!

In 1992 I started a small business. I thought about it and I bought some old-fashioned, second-hand furniture. I sucked my pencil and thought, ‘My goodness me, what have I done? I have left a big corporation, where do I go from here?’. That business now has branches in Hong Kong, Jersey, the Channel Islands and South Africa, as well as London and York, which is my constituency.

I really do not think I could do that again. There are so many regulations, it is unbelievable. If you really want to fire up small business in the European Union, and particularly the United Kingdom, I would suggest that these people here and the Commission get their blasted noses out of everybody else’s business and stop trying to tell us how we should run our businesses! Just let us get on with it, because if you do not, more and more businesses are going to go to Dubai, Bermuda and the Channel Islands – I am moving half my business to the Channel Islands as it is.

I would counsel you and the Commission to please keep your ill-informed noses out of small businesses!

  Ashley Mote, on behalf of the ITS Group. – Madam President, this report is a contradiction in terms. Governments cannot micro-manage enterprise. Since when has the European Union initiated anything that improves trade, minimises costs, cuts red tape, generates new wealth, creates new jobs, frees up enterprise? When ever? Most governments can hope to contribute to economic growth only by clearing the decks of obstacles and creating an enterprise-free environment. Government ought to be about enabling people and their initiative to thrive. After that it should stand well back.

The UK has a huge, permanent and growing deficit with the EU. Does anyone here seriously imagine that by seizing control over company law relating to SMEs, the European Union will change or improve that situation? Do you really imagine that possible, especially as these proposals are based on German and French ideas of a social market?

I endorse what Mr Bloom has just said. How many of you here have ever started a new business at your own risk? Created jobs? Funded it for yourselves and successfully run it for, let us say, 20 years? How many of you have done that? How many people on that committee have done that? How many of you know what it takes to start a new business in the UK? Well, I will tell you. Less than a hundred pounds, ten minutes on the phone and you can do business anywhere. Compare that with these proposals. We have centuries of company law in the UK, thank you very much. And it works just fine. We also have SMEs trading all over the world and they do just fine. Most of their nightmares come from past misguided attempts by the EU to ‘help’ with trade on the Continent. Most of that ‘help’ merely interferes with their activities, and the idea of yet more ‘help’ will be greeted with horror.

Over the years we have seen masterpieces of unintended consequences from this place. There is the Working Time Directive, which finally proved to a business friend of mine that the EU was clinically insane. There is the drive for a level playing field, the very antithesis of wealth and job creation, which totally depends on finding differences. And now we have got the licensing of authorised economic operators, which hugely benefits those who qualify and undermines everyone else with extra costs and bureaucracy. Even the Socialist British Government has figured out that this proposal is expensive and dangerous nonsense and it belongs in the bin.

  Małgorzata Handzlik (PPE-DE). – (PL) Madam President, I should like to thank the rapporteur for a very sound and detailed report. In my view, it sends out an important message to small and medium-sized enterprises, indicating that their development and activity on the common European market will soon become much more straightforward. It also sends out a further message to SMEs, namely that European legislators recognise the role of SMEs on the Union’s market and are making an effort to improve their situation.

The main aim of our activities relating to the common market should be to create an optimum situation whereby European enterprises are not hindered by unnecessary red tape or commercial and technical obstacles when they move from one country to another, or set up branches in various Union countries. It should be just as easy as if they were moving from one part of their own country to another. All companies should be able to operate on the same principles across the length and breadth of the Union. Only then will it really be possible to speak of a common European market with benefits for all.

Mr Lehne’s report is a further step in developing legislation designed to enhance the efficiency of the SME sector’s activities on the common market. Its implications will certainly significantly contribute to increasing the economic activity of European companies, and consequently to improving all our lives and meeting one of the aims of the Lisbon Agenda. I was actually a businesswoman myself in the past. I ran my own business for 15 years, and employed some 100 people. I am well aware of the problems entrepreneurs face and am convinced that the proposal to develop a European Private Company Statute represents an excellent and much-needed solution for undertakings conducting cross-border business.

It is important, however, to proceed with caution and learn from the mistakes made when developing the European Company Statute. Companies of that type do not fully fulfil their role as European Companies because of the large number of references to national law. That is why the European Private Company Statute must be based mainly on Community law, with minimum reference to national law. Such an approach will result in a more uniform text and legal provisions. In addition, it will provide legal certainty, which is crucial to entrepreneurs. We must make every effort to ensure that the Statute is as uniform as possible, and that it makes minimal reference to individual legal systems whilst referring to Community law as much as possible.

  Andrzej Jan Szejna (PSE). – (PL) Madam President, I should like to begin by thanking Mr Lehne, the rapporteur, for all the work he has undertaken on a matter which is of such vital importance to the future of European integration and the development of economic cooperation within the framework of the internal market. The current situation regarding the internal market is that we already have a European Company. It is intended for large capital-based companies. A legal form which will also make it easier for small and medium-sized enterprises to conduct cross-border business is therefore essential.

It is important to bear in mind that SMEs are the main driving force behind the European economy and the main source of employment for Union citizens. That is why further efforts should be made to enhance the economic activities undertaken by these companies. However, the new legal solutions we are proposing to our entrepreneurs do call for detailed consideration. We should learn from the experience gained when introducing the legal form for the European Company on to the common market. That statute took a long time to draw up and was the result of a compromise. In fact, the final compromise has not proved entirely satisfactory. We should therefore learn from our mistakes, as Mrs Handzlik suggested earlier.

As far as is possible, the European Private Company Statute should be a uniform European legal form. It must provide for the simplification of the principles of establishment and organisation. It will be important to retain a balance between protecting creditors, a flexible company structure, and ensuring the security of business transactions. In the interests of protecting the flexibility of such undertakings, provision must be made for ensuring ease of transformations such as mergers or changing the registered office. Therefore, there is every justification for the European Parliament’s initiative containing recommendations to the Commission on the European Private Company Statute.

  Zbigniew Krzysztof Kuźmiuk (UEN). – (PL) Madam President, there are several reasons why the development of a European Private Company Statute is such a crucial project for accelerating the economic growth of the European Union.

Firstly, measured in terms of GDP growth, the rate of economic growth of the United States is more than twice that of the European Union. This has been the case for many years. In addition, the rate of economic growth of the countries of South-East Asia is several times higher than that of the Union. Secondly, many internal barriers still persist within the common market created by the free movement of capital, goods and services. Thirdly, the draft European Private Company Statute is aimed at small and medium-sized enterprises, which are the cornerstone of the economies of all the Member States of the European Union. Fourthly, a European Private Company would be a very useful instrument for the implementation of the Lisbon Strategy, which places great emphasis on eliminating obstacles to the development of European entrepreneurship.

These reasons alone justify supporting the development of a European Private Company Statute. It is important, however, not to repeat the mistakes made when drawing up the European Company Statute. The market has refused to accept the European Company as a company form, despite the long and difficult process involved in developing this statute. An effort must therefore be made to ensure that the European Private Company Statute contains the minimum number of references to the national legislation of individual Member States, so that it is relatively flexible in nature and provides security for both owners and contractors.

  Achille Occhetto (PSE). – (IT) Madam President, ladies and gentlemen, this legislative proposal on the European private company statute is very important. It is, in fact, crucial not only to remove barriers to trade but also to develop the factor of production at Community level. To that end, there is undoubtedly a need to create unitary legal entities in order to overcome the current legal uncertainty.

It should not be forgotten, however, that, as well as trying to make markets transparent and to protect savers, the company law reform will also directly affect the future of the European social model. Therefore, if allowing companies to move wherever they like in order to take advantage of the single market is a legitimate aim, it must be fulfilled by giving our workers the same transnational rights.

That was the thinking behind some of my amendments, certain of which were accepted, which were aimed at safeguarding the rights to codetermination, information and consultation that exist at the time of a company’s turning into a European private company. We are talking here about an important adjustment that will mean more careful attention being paid to aspects relating to the strengthening of social Europe, one of the fundamental elements of which must be worker participation.

We therefore endorse this important proposal and we thank Mr Lehne for his work. We would point out to the Commission that, if allowing companies to move wherever they like in order to take advantage of the single market is a legitimate aim, it must be fulfilled without the demands of the market prejudicing those of social equality.

  Charlie McCreevy, Member of the Commission. Madam President, I should like to thank the Members very much for their comments on this important topic. The growth of small and medium-sized enterprises is crucial for the competitiveness of the European economy. It is, therefore, necessary to facilitate the expansion of these small businesses. Looking at the legal form of companies that operate across borders can make an important contribution to this.

I will take Mr Lehne’s report into account. As it is under Article 192 of the Treaty, we are bound to do it in a prompt manner. But even if it was not under that article, I will still deal with it in as prompt a manner as possible. I give you that commitment.

  President. Commissioner, I should like to thank you for your participation in the debate.

The debate is closed.

The vote will take place at 11.30 today.

Written statements (Rule 142)

  Dominique Vlasto (PPE-DE). – (FR) The creation of the European private company statute has the support of both the Member States and industry, and I congratulate the rapporteur on his excellent report and his pragmatic recommendations.

I am very much in favour of the creation of this statute for at least two reasons. Firstly, because the adoption of this statute will help remove one of the obstacles to SMEs’ mobility. All too often, company founders are reluctant to do business because they do not understand the legal environment very well, particularly when they establish themselves in another Member State.

Next, this statute will enable us significantly to enhance legal transparency and thus to build confidence among the various economic players. The fact is that confidence is crucial in trade relations and forms the basis for a prosperous economy.

I am therefore in favour of Mr Lehne’s report, with one exception: its recommendation 7. Including legally reprehensible behaviour in the private company statute would mean amending Title VI of the Treaty and unnecessarily complicating the link between the statute and our national laws.

I therefore feel that this provision runs counter to the objectives of the European private company statute: to produce better legislation and to make European entrepreneurs’ lives easier.