No C 23/36 Official Journal of the European Communities 30. 1. 89 
Opinion on the memorandum from the Commission entitled 'Internal market and industrial 
cooperation—statute for the European company—internal market white paper, point 137' 
(89/C 23/13) 
On 20 July 1988 the Commission of the European Communities decided to consult the 
Economic and Social Committee, under Article 198 of the Treaty establishing the European 
Economic Community, on the Memorandum from the Commission entitled 'Internal market 
and industrial cooperation—statute for the European company—internal market white paper, 
point 137'. 
The Section for Industry, Commerce, Crafts and Services, which was primarily responsible 
for preparing the Committee's work on the subject, adopted its Opinion on 9 November 
1988. The Rapporteur was Mr Petersen. 
The Section for Social, Family, Educational and Cultural Affairs was asked to draw up a 
Supplementary Opinion for which the Rapporteur was Mr Beretta. The proposals made in 
the Supplementary Opinion have been largely incorporated in this Opinion. 
At its 260th plenary session (meeting of 24 November 1988) the Committee adopted the 
following Opinion by 96 votes to 25 with 21 abstentions (vote recorded). 
1. Introduction 
1.1. The Single European Act, which entered into 
force on 1 July 1987, has given a decisive impetus to 
the process of European integration. Rarely before have 
the prospects for ending the long-standing political 
stagnation and the gradual erosion of the European 
idea been so favourable. The Committee considers that 
this opportunity must be consistently exploited at the 
political level if the ambitious objective of creating, by 
the end of 1992, an internal European market with free 
movement of goods, services, capital and persons, is to 
be achieved. 
1.2. This objective also means European firms being 
able to operate unhindered throughout the Community, 
with legally comparable conditions obtaining in the 
Member States. There is no doubt that this will require 
a whole package of measures in the coming years—not 
least in the field of company law. 
Although views may differ as to the necessary extent 
of company law harmonization, there is agreement that 
the approximation of national company law at a certain 
level is essential for the common internal market. In 
addition, supranational legal institutions—such as the 
European Economic Interest Grouping (EEIG)—based 
on independent Community law should also be made 
available. 
1.3. In its Opinion on the amended proposal for a 
Council regulation (EEC) on the control of concen­
trations between undertakings (x), the Economic and 
Social Committee urged the Council and the Com­
mission 'to step up and properly organize their overdue 
action on the company law front'. 
(!) OJ No C 208, 8. 8. 1988, p. 11. 1.4. In the light of the foregoing, the Committee 
welcomes the Commission's new attempt to revive the 
deliberations on a statute for the European company 
(Societas Europaea-SE) wich have been suspended for 
many years. 
1.5. The Commission started considering a Eu­
ropean company statute about twenty years ago. In 
1970, after intensive preparatory work it submitted a 
proposal for a Regulation, which was commented on 
by the Economic and Social Committee in 1972 and by 
the European Parliament in 1974. In 1975 the Com­
mission, basing itself on the European Parliament's far-
reaching proposals on worker participation, presented 
an amended proposal for a Regulation. The working 
party of government experts set up by the Council 
started its deliberations in 1976; these were suspended 
in 1982 on account of irreconcilable differences of 
opinion and have not been reopened since. 
1.6. The Economic and Social Committee generally 
welcomed the European company statute in its Opinion 
of 25 October 1972—despite differing views on points 
of detail. The Committee saw the Commission's draft 
as one way of abolishing frontiers within the Com­
munity in the economic and social fields. Firms needed 
more room for manoeuvre and more freedom of move­
ment in order to deal with the unavoidable restructuring 
at Community level as smoothly as possible. This was 
the only way to strengthen the competitiveness of Euro­
pean firms, counter the growing pressures from multi­
nationals in the rest of the world with success and 
safeguard jobs on a permanent basis. 
1.7. One point which should be emphasized is that 
the Committee gave its basic approval (2) to the Com-
(2) Committee Opinion on the Green Paper on employee partici­
pation (OJ No C 94, 10. 4. 1979). 
30. 1. 89 Official Journal of the European Communities No C 23/37 
mission's objective of making it possible in all Member 
States for workers' interests to be represented within 
companies and workers to be involved in certain cor­
porate decisions without this undermining manage­
ment's responsibilities and effectiveness. However, 
there were conflicting views on the practical form this 
should take. 
The Committee also voiced the expectation that a Eu­
ropean company statute based on Community law and 
embodying own ideas would also be able to place a 
decisive stamp on the further development of national 
laws. 
2. The Commission's Memorandum 
2.1. The Commission's Memorandum has been pro­
duced in response to a call made at the Brussels Eu­
ropean Council of June 1987 and is in line with the 
conclusions of the Hanover Summit. In this Memor­
andum the Commission sets out the conditions which, 
according to its experience, will have to be met in order 
to make 'swift progress' towards the creation of a 
European company. 
2.2. The Committee thinks the Commission is right 
to clarify first of all the politically most significant 
difficulties which have so far impeded the adoption 
of a European company statute. It agrees that the 
discussions on points of detail should not be resumed 
until a sound basis has been established for solving the 
most important underlying issues. 
2.3. This applies in particular to the involvement 
of workers in firms' decision-making. Because of the 
problem of worker participation the political fate of 
various Commission proposals which have been on the 
table for many years is still as uncertain as ever. Take, 
for example, the Fifth Company Law Directive, the 
Ninth Company Law Directive, the Tenth Company 
Law Directive and—not least— the European company 
statute. The failure to solve the worker participation 
problem is thus a major obstacle to the harmonization 
of company law. Unless a viable compromise can be 
found in this difficult area, discussion of the European 
company statute is not likely to be easy. 
2.4. The Committee considers the European 
company statute to be a suitable instument for improv­
ing cross-frontier cooperation between firms and 
promoting economic integration in the Community. In 
this connection the Committee welcomes the fact that 
only firms established in accordance with the laws of 
the Member State may set up a European company. 
Therefore, European firms will be the ones to benefit 
from the statute. The Committee trusts in this context 
that small and medium-sized enterprises, too, will be 
able to make use of the statute. 2.5. So that a number of special types of companies 
such as cooperatives, mutual benefit associations and 
companies run by their workforces can adapt to the 
requirements of the single European market, the Com­
mittee would ask to consider new proposals which 
would serve that end. A special statute should be pro­
vided for such firms since they have very distinctive 
features which must be safeguarded and which would 
not be provided with an adequate legal framework by 
the present proposal. 
The Committee wonders whether consideration might 
also be given to a special European statute applicable, 
on the basis of formal authorization, to bodies whose 
creation is recognized as being of key importance for the 
attainment of specific Community aims. This formula 
should not be viewed as an alternative to the proposed 
generally-applicable European company statute but as 
an auxiliary solution reserved for particular ventures 
and possibly governed by separate rules. 
2.6. However, expectations placed in the statute 
should not be too high. The Committee points in its 
Opinion to the limits and conditions which will have 
to be taken into account when the proposal is revised. 
2.7. The Committee points out that it is not possible 
at the moment to make a comprehensive assessment of 
all the problems associated with the Memorandum. 
Nonetheless, it can say already that the statute can 
make a real contribution to the completion of the single 
European market provided that it is given a practicable 
form. 
A final assessment of the statute will not be possible 
until the complete revised version of the proposal is 
available. The Committee therefore trusts that it will 
be consulted on the formal proposal due out at the 
beginning of 1989. 
There is also no reference in the Memorandum to 
the Regulation's legal basis. In view of the project's 
importance in terms of business, social and taxation 
policy and having regard to Article 100a(2) of the EEC 
Treaty (introduced by the Single European Act), the 
Committee would point out that adoption of the Regu­
lation must be by a unanimous vote. This makes it all 
the more important that consideration also be given to 
the views of industry in the Member States. This is the 
only way to ensure that sufficient allowance is made 
for different attitudes and traditions. 
Subject to these reservations the Committee would 
make the following comments on the Memorandum's 
three key issues; it also takes this opportunity to express 
its views on a few other important problems. 
No C 23/38 Official Journal of the European Communities 30. 1. 89 
2.8. Principle of an optional statute 
2.8.1. This principle means that the European 
company statute is to be an additional legal structure 
which will exist alongside the other forms of company 
governed by Member States' national laws. 
2.8.2. The Committee considers this principle to be 
right and necessary. Firms must be left to decide 
whether to go for the option provided by the statute or 
continue to avail themselves of the possibilities afforded 
by national company law. 
2.8.3. The growing complexity of economic and pol­
itical processes at national and international level inevi­
tably makes it more difficult for companies to fulfil their 
functions. A high degree of flexibility and readiness to 
take risks is required. In this context European firms 
should have as many different structures as possible to 
choose from. Firms' freedom to choose the form best 
suited to the economic circumstances must not be 
restricted. 
2.9. The statute's independence from national law 
2.9.1. The Commission's aim here is to indicate that 
the European company statute is a self-contained Com­
munity legal system which is independent of Member 
States' company laws. 
2.9.2. The Committee endorses the Memorandum's 
objective of creating a system of company law which is 
as uniform and independent of national law as possible. 
There is no point in fact in creating a European 
company unless the legal conditions governing this 
company are, as far as possible, the same everywhere, 
irrespective of where the company's head-office is 
located. 
2.9.3. The Committee recognizes the difficulties 
which would arise in trying to achieve this ideal. Uni­
formity is basically desirable but it cannot be achieved 
at this stage because the differences between the social 
and legal conditions in Member States are still too 
great. 
2.9.4. The Committee therefore understands why the 
Commission initially proposes excluding some areas of 
law completely from the statute and not dealing with 
others uniformly. This will considerably simplify the 
laying-down of rules. However, the principle of uni­
formity must be taken into account, as soon as political 
and social developments in the Member States allow. 
2.9.5. However, the Committee would also point 
at the same time to the limitations of this objective. 
Wherever the European company is economically 
active, it must fit in with the country's legal and social 
systems. The principle of independence from national law applies only to the legal form and only insofar as 
the statute contains explicite provisions. The Com­
mittee does not rule out the possibility of the statute's 
use posing difficulties in individual cases because the 
relationship between each country's national legislation 
and the planned Regulation has not been sufficiently 
clarified so far. 
2.10. Inclusion of three schemes for worker partici­
pation 
2.10.1. Basically the Committee agrees with the 
Commission that worker participation should be regu­
lated in the European company statute. Such a legal 
institution would be best served by a uniform system 
of worker representation at company level, as the Com­
mittee pointed out in its 1972 Opinion. 
2.10.2. As the present provisions on worker partici­
pation vary considerably within the Community, it 
would seem unrealistic to expect the European company 
statute to contain a worker participation system accept­
able to all the Member States. This applies particularly 
to the scheme provided for in the 1975 amended pro­
posal for a statute. This was regarded as highly contro­
versial even in those countries with far-reaching worker 
participation legislation. In this respect, the more flex­
ible approach adopted by the Commission in proposing 
various systems may increase the chances of acceptance 
and hence political feasibility. 
2.10.3. Approaches which enhance political feasi­
bility are of course important. What is crucial, however, 
is that the practicable legal structure aimed at should 
be achieved. In the Committee's view there is a likeli­
hood that the proposed worker participation options 
will result in European companies in the individual 
Member States operating with considerably different 
levels of worker participation, thus jeopardizing the 
objective of a uniform legal institution. 
2.10.4. Mindful of the differences between the vari­
ous systems and experiences, and of the pressing need 
for Community-level provisions, the Committee never­
theless agrees with the Commission that the worker 
participation arrangements laid down in the European 
company statute need not necessarily be uniform. 
The Committee feels it important to avoid rigid, bind­
ing structures which could hamper the extension of 
participation and deny companies the potential benefits 
of the European company statute. 
2.10.5. However, the Committee considers that the 
decision on which of the various possible participation 
systems to adopt must be the subject of consultations 
30. 1. 89 Official Journal of the European Communities No C 23/39 
between the trade unions represented in the companies 
or their in-company representatives (works councils, 
in-house committees, etc.) and the management of the 
company concerned, in order to reach an agreement. 
2.10.6. Irrespective of the system adopted, the Com­
mittee feels it vital to define its content, inter alia with 
a view to ensuring equivalent minimum arrangements 
for participation. Clarification is needed as to (a) which 
aspects of management are to come under the approval 
procedure and (b) what rights to information and obli­
gations to report are to apply. Provision should be 
made for information and prior consultation of workers 
on company decisions regarding closures, transfers, 
mergers or take-overs, production changes, and major 
work re-organization, in accordance with national laws 
and collective agreements, with due regard being paid 
to the obligations to observe secrecy. 
2.10.7. As regards collectively agreed systems of par­
ticipation, the Committee thinks it should be specified 
that this option must be on a similar footing to the 
other solutions proposed in the Commission memor­
andum (model 1 or model 2). The Committee would 
point to the problems which might arise in Member 
States in which worker participation at company level 
is governed exclusively by legislation, if it where poss­
ible for worker participation in the European company 
to be regulated by collective agreement. It reserves the 
right to comment in detail on this matter once the 
concrete proposal for a statute has been submitted. 
2.10.8. In connection with the general reference to 
the 'German system' in the Commission's Memor­
andum, it should be made clear that under this system 
there are various participation arrangements depending 
on a number of criteria (size of workforce, legal struc­
ture, etc.). A blanket reference to the 'German system' 
can therefore lead to legal uncertainty. The Committee 
notes that the Commission has not commented on the 
question of a final say for shareholders. It trusts that 
the forthcoming proposal will include a clarification 
which makes allowance for companies' need to be able 
to take decisions and the rights of shareholders. 
2.10.9. The Committee notes the Commission's 
intention to exclude from the statute any rules about 
participation at plant level. Otherwise the complex 
problems involved would make rapid adoption of the 
statute impossible. The Committee shares the Com­
mission's view that in a European company the workers 
should be given adequate information. 
2.10.10. When the time comes to issue an Opinion 
on the Commission's detailed proposals, the Committee reserves the right to give its views on specific aspects 
(which can be quite important) such as the thresholds 
from which participation rights will take effect, the 
criteria for setting these thresholds, and the procedures 
needed to ensure that all workers are fairly represented 
in the participation machinery. 
2.11. Rules on groups 
2.11.1. As regards the 'group problem', the Com­
mission doubts whether the statute is 'the proper place 
to create a body of rules governing groups'. This indi­
cates that it considers that special provisions covering 
groups can be dispensed with in the statute. 
2.11.2. The Committee agrees with the Commission 
that, at all events, the problem of groups operating 
within the Community makes it necessary to ensure 
that workers are consulted above all at the European 
company level where strategic decisions are taken. 
2.11.3. Like the Commission, the Committee is of 
the view that the position of groups should be dealt with 
separately, particularly with regard to the protection of 
minority shareholders, creditors and workers. 
The discussion on the planned coordination of the laws 
of the Member States on groups shows, however, that 
it is hardly possible to achieve a consensus at present 
on a viable European body of law for groups. The 
Member States have developed very different legal sys­
tems for ensuring that groups can operate efficiently. 
The Committee is therefore of the opinion that dis­
cussion of separate group provisions in the statute 
should be postponed fot the moment at least. 
2.11.4. Advancing international integration high­
lights the problem of worker information and consul­
tation in companies belonging to multinational groups 
whose decision-taking centre is outside the European 
Community. 'The Committee asks the Commission to 
give thought—not just in connection with the European 
company statute, of course—to the need to ensure that 
consultation takes place at the levels where decisions 
are made on the distribution of production and labour 
which could affect the position of workers employed 
in European subsidiaries. 
2.12. Taxation 
2.12.1. The Commission rightly draws attention to the 
difficulties that the differences in national tax law create 
for cross-frontier cooperation between European firms. 
Like the Commission, the Committee considers it essen­
tial that the individual proposals referred to by the 
Commission—concerning the tax treatment of mergers 
No C 23/40 Official Journal of the European Communities 30. 1. 89 
and similar operations, the tax treatment of parent 
companies and subsidiaries and an arbitration pro­
cedure to eliminate double taxation—be adopted as 
soon as possible. 
A satisfactory solution must be found to the tax prob­
lems since use will be made of the proposed legal 
structure only if there are no tax obstacles. 
2.12.2. Under the existing tax laws of the Member 
States it would for all practical purposes be impossible 
to found European companies since this would involve 
disclosure and taxation of hidden reserves. The double 
taxation of dividends paid by a subsidiary to a parent 
company would also place considerable obstacles in the 
way of cross-frontier cooperation. 
2.12.3. Solutions will also have to be found to the 
problem of transfer pricing in international groups of 
companies and of double taxation of profits as a result 
of the lack of coordination between finance authorities 
in the case of double taxation agreements. 
Done at Brussels, 24 November 1988. 2.12.4. The Committee endorses the Commission's 
proposal concerning the imputing of losses incurred 
by foreign subsidiaries and permanent establishments 
abroad, but would stress that the other tax obstacles 
must be eliminated too. 
2.12.5. It would, however, be wrong to make the tax 
benefits such that tax-based distortions of competition 
arise in relation to other firms which are not organized 
in the form of a European company. 
3. Final comments 
The Committee would once again express its under­
standing for the Commission's decision to make the 
European company statute flexible with a view to 
enhancing its political acceptability. It would, however, 
draw attention to the danger that the statute could 
diverge too much from the principle of uniformity. This 
would lead to an undesirable situation with different 
national arrangements and non-comparable forms of 
business organization coexisting alongside each other. 
The Chairman 
of the Economic and Social Committee 
Alberto MASPRONE 
30. 1. 89 Official Journal of the European Communities No C 23/41 
APPENDIX 1 
to the Opinion of the Economic and Social Committee 
The following members, present or represented, voted for the Opinion: 
Mr/Mrs/Miss: Amato, Arets, Aspinall, Beretta, Berger, Bleser, Boddy, Boisseree, Bos, Brigand, Broicher, 
Burnel, Lobo Brandao R. Cal, Calvet-Chambon, Carroll, Cavazzuti, Ceballo-Herrero, Christie, Cortois, van 
Dam, von der Decken, Delhomenie, Delia Croce, Dodd, Donck, Dos Santos, Drilleaud, Elstner, Etty, Eulen, 
Flum, Frandi, Fresi, Gayetot, Geuenich, Giacomelli, Glesener, Gomez-Martinez, Haas, Hilkens, Horsken, 
Houthuys, Hovgaard-Jakobsen, Jenkins, Kazazis, Kelly, Kirchfeld, Kitsios, Kroger, Landaburu, Larsen, 
Liverani, Lojewski, Low, Maddocks, Margot, Matteoli, Meyer-Horn, Morselli, Muhr, Miiller, Murphy, Neto 
Da Silva, Nielsen B., Nielsen P., Nierhaus, Nieuwenhuize, Orsi, Pardon, Petersen, Proenca, Pronk, Proumens, 
Ramaekers, Rangoni-Machiavelli, Rea, Rolao-Goncalves, Saiu, Salmon, Santillan-Cabeza, Schmitz, Schnie-
ders, Schopges, Silva, Smith A., Smith L., Spijkers, Stadelin, Telles, Tukker, Vallejo-Calderon, Vanden 
Broucke, Velasco-Mancebo, Vidal, Wick, Zufiaur-Narvaiza. 
The following members, present or represented, voted against the Opinion: 
Mr/Mrs/Miss: Aparicio-Bravo, Corell-Ayora, Coyle, Dunet, Gardner, Green, Hancock, Kaaris, Kenna, 
Moreland, de Normann, Panizo-Arcos, Pearson, Pelletier, Perrin-Pelletier, Poeton, Riera-Marsa, Robinson, 
Schade-Poulsen, Speirs, Storie-Pugh, Tamlin, Termes Carrero, Tixier, Whitworth. 
The following members present or represented abstained: 
Mr/Mrs/Miss: Bagliano, Beltrami, Berns, Bredima-Savopoulou, Campbell, Ceyrac, Collas, De Tavernier, 
Drago, Jaschick, Laur, Mainetti, Noordwal, Nugeyre, Petropoulos, Ribiere, Romoli, Solari, Wagner, Williams, 
Yverneau. 
APPENDIX 2 
to the Opinion of the Economic and Social Committee: 
Defeated amendments 
The following amendments, tabled in accordance with the Rules of Procedure, were defeated during the 
discussions: 
Page 3 - Point 2.5 
Replace the second sentence if point 2.5 with the following text: 
'It considers, however, that businesses will only opt for the European Company Statute if, in its conception, 
it takes account of their needs.' 
Reasons 
Account must be taken of the fact that the European Company is an optional statute for businesses. It is 
thus in competition with national company law. Businesses will only choose the European Company Statute 
in preference to national company law if it offers them more value added, in other words if it is going to 
help strengthen their competitiveness. 
This should be stated clearly in the ESC's Opinion so as to avoid wasting a lot of time and money working 
out and adopting a statute that is going to be nothing more than a white elephant. 
Voting 
For: 32, against: 77, abstentions: 11. 
Page 5 - Point 2.8.1 
Replace the first sentence of point 2.8.1 with the following text: 
'The Economic and Social Committee is of the opinion that the Statute for the European Company cannot 
avoid dealing with the issue of employee participation.' 
No C 23/42 Official Journal of the European Communities 30. 1. 89 
Reasons 
The three options for employee participation set out in the Commission's memorandum have not been fully 
developed, so that it is not yet possible to advance an informed opinion on them. For this reason, it is 
important not to rule out any formula not mentioned specifically by the European Commission. Thus, referral 
back to the law of the Member State in which the European Company is established should not be excluded 
at the outset. Moreover, in accordance with existing practice in Member States that have provisions on 
employee participation, small and medium-sized enterprises (SME) should be able to make use of the 
European Company Statute without having to concern themselves with employee participation. 
Voting 
For: 34, against: 75, abstentions:13. 
Page 5 - Point 2.8.1 
Replace this point by: 
'The Committee is of the opinion that while the European Company Statute cannot avoid dealing with the 
issue of employee participation this should allow for the issue to be dealt with in the context of the national 
laws of Member States.' 
Reasons 
The options for employee participation should not exclude the application of the law of Member States 
especially where participation at national level is not mandatory. 
Voting 
For: 35, against: 68, abstentiops: 14. 
Page 8 - Point 3 
Add at the end of the Opinion: 
'At all events, the Economic and Social Committe would point out that the adoption of a European Company 
Statute is not vital for the completion of the internal market.' 
Voting 
For: 40, against: 76, abstentions: 14.