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Commission Report on the application of the Statute for a European Company (SE)

19.11.2010

“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 (SE). This Report is part of the review process of the SE Regulation. The Report 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.”

Available here.

Worker participation: a ‘burden’ on the European Company (SE)? – A critical assessment of an EU consultation process

October 2010

In March 2010, the EU Commission finally made available the so-called ‘Ernst and Young study’ on the operation and the impacts of the Statute for a European Company. Shortly afterwards the Commission launched an online consultation on the results of the study. In July 2010, the European Commission produced a summary report on the replies to the online consultation.This ETUI paper brings together a critical analysis of the consultation procedure, the Commission consultation summary and the ETUI’s reply to the consultation on the Ernst&Young study.

 In fact, the elaborated recommendations went far beyond the scope of the study (which was the evaluation of the SE Regulation, not the SE Directive), whereas no in-depth research on employee involvement was undertaken. In fact, the emphasis put on the supposed negative role of employee involvement rather contributes to conserve the ‘myths about participation in the SE’.

10 Worker participation EC WEB-final.pdf 396.28 kB

 

The EU Commission documents are available here.

New: “The SE remains an ambitious European project“, a comment on the conference by Dr Norbert Kluge.

Public Consultation

The European Commission has launched a public consultation on the results of the Study on the operation and the impacts of the Statute for a European Company (SE). The deadline for responses was 23 May 2010. In the meantime, the European Commission has published a synthesis of the comments on the consultation on the results of the so-called ‘Ernst and Young study’ on the operation and impacts of the European Company statute (SE). Altogether, the EU Commission received 69 responses from 18 different countries and a range of backgrounds. The synthesis document and the individual responses can be found on the EU COM website.

See ETUI reply to consultation.

More than 500 companies

As in previous months, the number of UFO companies increased the most, largely due to the establishment and activation of shelf companies in the Czech Republic and, to a lesser extent, in Germany. The number of SE companies in the Czech Republic is currently 384 (40 more than two months ago).

To summarise the current numbers (January 2011 figures in brackets), there are:

  • 751 (700) established SEs, of which:
  • 178 (169) normal;
  • 87 (84) empty;
  • 413 (378) UFO;
  • 73 (69) shelf.

……………

Since introduction of the European Company Statute or Societas Europaea (SE) in October 2004, the number of European Companies has increased steadily, year by year, at almost exponential rates of growth. In February 2010, the ETUI’s “SE database“ exceeded, for the first time, the total of 500 active SEs. This rather impressive total should, however, not blind observers to the fact that many SEs do not conform to the standard definition, for they are, in their overwhelming majority, SEs without any employees (‘empty SEs’) and/or without even a specific business purpose (‘shelf SEs’). Only roughly one quarter of the total number of SEs are today considered “normal SEs” in the sense that they have both employees and business activities.

SEs can today be found in 22 countries of the “EU-27+3“ (Norway, Liechtenstein, Iceland). Whereas Germany is home to almost half of the normal SEs, the Czech Republic shows the “highest score“ with regard to the overall number of SEs. Little being unfortunately known about the employee figures of most Czech SEs, a large proportion of them are classified as so-called “UFO SEs” (Unidentified Flying Objects). Besides these two member states, significant SE home countries are the UK, the Netherlands, France, Slovakia, Luxembourg, Austria, Cyprus and Sweden. The “TOP-10“ SE countries together host approximately 90% of all SEs.

The SE legislation represents a milestone not only in the field of EU company law but also in that of European industrial relations. The SE Directive contains provision for a legally binding procedure of company-level negotiations on employee information, consultation and participation (at board level). By February 2009 an agreement on worker involvement had been concluded in only 54 of the 131 known “normal SEs”. In 25 SEs the rights enshrined in the agreement include board-level participation, thereby adding an important dimension for workers’ voice in company decision-making.

Today, more than 80 employee board members represent the interests of the workforce on SE supervisory or administrative boards. A fundamental innovation introduced by the SE legislation is the transnational component of participation at board level. In a number of SEs (e.g. Allianz SE, BASF SE, and MAN Diesel SE) employee representatives from several countries sit on the board and represent the interests of the whole workforce in Europe. SE employee board-level representatives come today from 10 different countries (AU, BE, DK, FR, DE, IT, NL, NO, PL, UK).

From an employee and trade union perspective, experiences with the SE are mixed. A crucial problem remains the high number of “activated shelf SEs”, for this is a development representing a potential threat to rights of worker involvement. It has to be borne in mind, in this respect, that, since mechanisms for securing employee rights to information, consultation and participation are guaranteed at the moment of founding an SE only, it is difficult to negotiate workers’ rights at a later point in time, when the company has recruited its employees. Several cases have indeed already arisen of employees being deprived of their involvement rights through the activation of a former shelf SE company. A similar danger basically exists for all normal SEs in the situation of structural change after the founding of an SE. Another negative development is that, in Germany, the SE has in several cases been used to “freeze” the current level of board-level participation and/or reduce the size of the supervisory board.

However, it is also important to mention that, in many SEs, employees and their trade unions have succeeded in negotiating substantial agreements on worker involvement. The agreements of many larger SEs, in particular, are generally in line with good ‘European Works Council practice’ and on certain points they even go beyond the provisions of the SE Directive.

For the future, it will be important to use the forthcoming revision of the SE Directive to remedy the flaws that have been described above and to ensure that workers are not deprived of their involvement rights. Moreover, it needs to be ensured that the involvement standard set by the SE Directive is not lowered in upcoming EU legislation in the field of company law. The current debate on a possible European Private Company bodes ill in this respect.  

Communication from the Commission on the Review of the SE Directive

In September 2008 the Commission presented a Communication on the review of Council Directive 2001/86/EC of 8 October 2001 supplementing the Statute for a European company with regard to the involvement of employees (COM(2008)591 final).

Generally, the Commission agrees with the view taken by the European trade unions that, in fact, there is no reason to revise the SE directive because too little practical experience has been accumulated so far. However, the Commission has recognised a problem in the high number of SEs established without employees and, consequently, without any negotiations on employee involvement. Against this background, the Commission has stated its concern that many member states have not adopted measures to avoid misuse of the provision when transposing the Directive into national law. Furthermore, the Commission recalls that adoption of the Directive was the result of a delicate compromise that took more than 30 years of negotiations to achieve. The Commission will decide in light of a review of the SE Regulation, whether the SE directive should be reviewed.

In this context the Commission called for tenders for a ‘study of the operation and impacts of the Statute for a European Company” in 2008 (MARKT/2008/19/F). The contract for the study (for which also a consortium of three organisations applied, among them SEEurope network experts) was awarded to Ernst & Young.

Link to Download of Communication (all EU languages).

Study on the implementation of Directive 2001/86/EC – Synthesis report

Report prepared for the use of the European Commission, Directorate-General for Employment Social Affairs and Equal Opportunities.

Download report here (pdf).  

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