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History of the European Company statute (ECS)

The table provides an overview of the more than 40-year-long history of the European Company. This delay was caused by a deadlock in the Council of Ministers where unanimity was required. Resistance arose also on the question of board-level representation of employees. Objections were raised by "both sides": While countries with strong systems of board-level representation (like Germany or Austria) feared a weakening of their national systems, countries with rather weak - or even non-existent - board-level representation (like the UK and Spain) were afraid of importing something that is unknown to their industrial relations systems.

Year

History of the European Company statute

Document

1960s

The debate on the European Company dates back to the beginning of the sixties. The topic was e.g. discussed at an International Congress of Notaries in Paris in 1960. In 1965, the French government issued a memorandum proposing to introduce legislation on a European Company by means of a treaty among the EC member states. This proposal was taken up by the Commission which, in 1966, published a memorandum in support of this idea.

 

1970

Commission proposal to the Council of Ministers for an SE

On the basis of a draft proposal issued in 1966, in 1970 the Commission published a first proposal on the Statute for a European Company. This provided for:

  • obligatory two-tier structure of SE (management board and supervisory board)
  • European Works Council (information, consultation and some co-determination rights)
  • board-level representation of employees (1/3 of board members elected by employees, 2/3 by shareholders)
  • possibility of concluding (European) collective agreements between the SE and the represented trade unions on working conditions in the SE

OJ C 124, 10.10.1970

1975

(Revised) Commission proposal

With regard to the involvement of employees, the most significant change was the proposal for a 1/3 parity:

  • 1/3 of the board members to be appointed by the employees,
  • 1/3 by the shareholders
  • and the last 1/3 to be elected jointly by the employees and the shareholders.

COM (75) 150 final

1988

Memorandum of the Commission on the SE Statute

This memorandum followed the initiative to complete the internal market. In order to revive the deadlocked SE debate, the Commission dropped the idea of having one obligatory participation system for all SEs. Instead companies were to be given the choice between different participation systems.

EC-Bulletin 3/88

1989

Commission proposal

In this new proposal, the SE legislation was for the first time split into a Regulation and a Directive supplementing it and dealing with employee involvement. Companies now had the choice between a single-tier and a two-tier structure. The Directive allowed a choice between four different systems of board-level representation (a “German”, a “Scandinavian”, a “French” and a “Dutch” model). If negotiations between the employees and the management failed, the final decision would lie with the management. It was left up to member states to choose which (some or all) of the four models they were prepared to accept for SEs registered in their country.

OJ C 263, 16.10.1989

1991

(Revised) Commission proposal

Member states could now prescribe for the SEs in their territory the choice of a particular company structure (single-tier or two-tier). The system of workers' involvement was slightly modified. If negotiations between management and employees on compulsory employee participation failed, a decision would be taken by the Shareholders' meeting on the basis of reports from the two negotiating partners.

 

1994

Directive on European Works Councils (EWC)

Like the ECS, the EWC Directive remained in a state of deadlock for 25 years. The compromise finally found in 1994 was based on the principle of free negotiations on information and consultation between the management and employee representatives from the different countries in which the company has employees (the so-called special negotiating body). In the event of failure of these negotiations, obligatory standard rules (subsidiary requirements) would apply. This new procedure used for the EWC was very important for the ongoing discussion on workers' involvement in the SE.

Council Directive 94/45/EG, OJ L 254, 30.09.1994

1997

Davignon report on worker involvement in Europe

In order to overcome the blockade in the Council of Ministers with regard to the ECS, the Commission convened a “High-level expert group on workers’ involvement”, the so-called Davignon group which, in its final report (published in May 1997), concluded that the national systems of workers’ involvement were too diverse, making general harmonisation impossible. The report therefore proposed that priority should be given “to a negotiated solution tailored to cultural differences and taking account of the diversity of situations”. Should negotiations fail, standard rules would apply.

2000

Adoption of the European Company Statute at the Council in Nice

The Davignon report had a positive impact on the drafting of a solution acceptable to all 15 member states. Even so, it was another three years until the more than 40-year-long debate on the SE came to an end. At the EU Council in Nice (Dec. 2000) the Regulation on the ECS and the Directive on workers' involvement in the SE were finally adopted. The latter prescribes free negotiations on information, consultation and (board level) participation between the competent organs of the participating companies and a special negotiating body (composed of employee representatives from the different countries involved). In the event of failure of these negotiations, obligatory standard rules apply. Member states must transpose the Regulation and the Directive by October 2004.

Council Regulation 2157/2001, OJ L 294

Council Directive 2001/86/EC, OJ L 294/22, 10.11.2001

2004

Entry into force of SE legislation

The SE legislation entered into force on 8 October 2004 thereby enabling companies to opt for this new corporate form. However, only 9 countries managed to meet the 8 October deadline for the transposition of the SE Directive, thereby preventing employees from their country from participating in negotiations in upcoming SEs. In the overwhelming majority of countries the considerable delay was not caused by substantial national debates on the substance of the Directive but rather by an apparent lack of interest in the issue.

 

2005

Adoption of the Cross-Border Mergers Directive

On 26 October 2005 the Council of Ministers formally adopted the so-called 10th Directive on cross-border mergers of limited liability companies. The aim of this Directive, which enters into force in December 2007, is to make mergers across European borders substantially easier. At present such mergers are a very expensive, lengthy and, in some countries, practically impossible undertaking. With regard to the safeguarding of existing participation rights in the situation of a merger across borders a solution was ultimately decided on which in most cases refers to the mechanisms of the SE Directive and by and large upholds its participation standard.

Directive 2005/56/EC of the European Parliament and of the Council of 26 October 2005 on cross-border mergers of limited liability companies OJ L 310/1, 25.11.2005

2007

Transposition process finished, more than 70 SEs registered

By January 2007 all countries - with the exception of the new EU member states Romania and Bulgaria - had transposed the Directive on worker involvement in the SE into national law. In April 2007 around 70 SEs had been registered in different European countries. The most prominent examples are the electronic manufacturing services company Elcoteq SE, the construction company Strabag SE and the large insurance and financial services company Allianz SE. Several other big companies have meanwhile announced their intention to turn their structure into that of an SE.

More information:

2010

More than 500 active SEs

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.

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2010

The European Commission has started the review of the European Company Statute as foreseen in Art. 69 SE of the SE Regulation. The Commission shall forward to the Council and the European Parliament a report on the application of the Regulation and proposals for amendments, where appropriate.

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