Opinion of the Economic and Social Committee on the 'European Company Statute'
Date: 1997-12-11
Institutions: European Economic and Social Committee
Subjects: European company, economic and social cohesion, economic cooperation, social status, wage earner

27.4.98

EN

Official Journal of the European Communities

C 129/1

II

(Preparatory Acts)

ECONOMIC AND SOCIAL COMMITTEE

Opinion of the Economic and Social Committee on the ‘European Company Statute’

(98/C 129/01)

On July 8 1997 the Economic and Social Committee, acting under Rule 23(2) of its rules of
procedure, decided to draw up an opinion on the ‘European Company Statute’.

The Section for Industry, Commerce, Crafts and Services, which was responsible for preparing
the Committee’s work on the subject, adopted its opinion on 5 November 1997. The rapporteur
was Mr Boussat and the co-rapporteur Mr Schmitz.

At its 350th plenary session of 10 and 11 December 1997 (meeting of 11 December) the
Economic and Social Committee adopted the following opinion by a majority with 116 votes
in favour, 3 against and 11 abstentions.

1. Background

1.1.
The European company statute has been the
subject of successive proposals over a period of more than
two decades. The statute should facilitate cooperation
between firms in the Member States with a view to the
development of the EU market. It must therefore be
attractive to the business world whilst taking account
of the significant differences which may exist between
Member States.

2. Structure of instruments

The draft European company statute is based on

2.1.
a regulation and a directive.

Three dimensions are dealt with: the statute’s
2.2.
place in company law, the tax provisions and worker
participation.

Certain provisions of the regulation regarding
2.3.1.
the powers of the European company’s decision-making
bodies need to be examined.

The same is true of actions requiring the
2.3.2.
authorization of the supervisory board or discussion by
the board of management [Article 72 of the proposal of
16 May 1991 (1)]. The list of these actions will affect the
level of worker participation in the European company.

2.4.
The tax provisions need to be clarified, particu-
larly with regard to double taxation and tax consoli-
dation. At all events the Committee will be asked to
issue an additional opinion on the whole of the European
company statute (regulation and directive). The opinion
will look, inter alia, at competition problems.

2.5.

To sum up:

2.5.1.
The provisions currently envisaged or to be
spelt out in detail in the regulation render some of the

This constitutes a coherent whole. The basic link

2.3.
between the two instruments is very clear.

(1) OJ C 176, 8.7.1991, p. 40.

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provisions destined to appear in the other instrument,
the directive, rather uncertain. The provisions currently
envisaged or to be spelt out in detail in the regulation
render some of the provisions destined to appear in the
other instrument, the directive, rather uncertain. The
text of the Luxembourg Presidency’s proposed compro-
mise for the proposal for a directive, which is based on
the Davignon report, thus has to be approached with
some caution in view of the uncertainties inherent in the
draft regulation.

2.6.
In more general terms, the European company
statute’s social dimension is inseparable from the econ-
omic and legal dimensions dealt with in the regulation.
This would be contrary to the spirit of the Treaty’s
provisions on economic and social cohesion.

2.7.
It is with these reservations in mind that we
embark on discussion of the proposed Luxembourg
compromise.

3. General comments

3.1.
The proposed compromise based on the Davi-
gnon report is a good basis for relaunching the stalled
discussions on the worker participation provisions of
the European company statute.

3.2.
There is thus some merit in the view of the
Davignon group and the Luxembourg Presidency that
the establishment of a European company should be
authorized only for trans-frontier reasons, (establish-
ment of a European company via restructuring must be
banned. There is a danger that a European company
which was the product of a merger might be able to
evade its participation obligations).

3.3.
The aim is not to transpose the particular
participation model of only one or a few Member States
to the rest of the Community. At the same time it must
not be possible to circumvent worker participation in
the event of merger with the aid of a Community
legal instrument. Workers in a Member State with a
participation system should not suffer a loss of rights
deriving from Europe’s inability to provide for involve-
ment at a level beyond that of mere information and
consultation (1).

An approach based on consensus emphasizing
3.4.
negotiation is to be welcomed, providing that it respects
the autonomy of the social partners.

3.5.
It is important that there be free agreement on
the solutions best suited to the needs of firms and their
employees in the light of their socio-economic culture.
A significant harmonization process is incompatible
with very diverse national practices based on different
decision-making systems.

3.6.
The Committee welcomes the proposal of the
Davignon group that the arrangements for worker

participation should be arrived at by negotiation. The
Committee also feels that there should be a reference
provision in the event that negotiations fail. One
problem, however, is that it is very difficult to take
account of all the diverse practices existing in the
majority of Member States.

3.7.
Imposing excessively demanding reference pro-
visions on companies which in many Member States do
not practise worker participation runs the risk of
deterring companies from opting for the European
company statute. Consequently they would not benefit
from the statute’s legal and fiscal provisions, and at the
same time workers would be deprived of the opportunity
possibly to obtain by negotiation the development of
social relations with regard to their involvement in
companies’ strategic decisions. Companies would be
receiving unequal treatment compared with other com-
panies from those countries where worker participation
is an established part of the local culture.

The reference in the Presidency’s draft to Direc-

3.8.
tive 94/95 is generally welcomed.

3.8.1.
The Committee points out however that this
directive deals with worker information and consul-
tation, whilst the European company compromise deals
with information, consultation and participation. More-
over the directive on the European works council covers
large companies with more than 1000 employees, whilst
the compromise concerns all companies regardless of
their size.

that

The fact

3.8.2.
the Presidency’s proposed
compromise sets out to regulate both participation
and information and consultation questions appears
problematic. The Committee would like to see a clear
separation between these two areas. For this reason
thought needs to be given to the possibility of treating
the questions of information and consultation of the
European company works council separately, in the
reference provisions.

The problem of SMEs thus needs further study.
3.9.
Bearing in mind the specific characteristics and the size
of SMEs, the procedures will have to be simplified in
their case. Another subject requiring thought is the
application of the statute to other forms of European
enterprise, such as associations, cooperatives and mutual
societies. Committee opinion 698/96 (2) advocated a
separate decision for these enterprises. The Committee
draws the Council’s attention to the need to draw up a
special statute for these firms rapidly; examination of
this special statute should proceed in parallel with that
of the proposed European company statute.

(1) ESC opinion: OJ C 212, 22.7.1996, p. 36.

(2) OJ C 212, 22.7.1996, p. 40.

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4. Negotiation

5. Reference provisions

4.1.
In the light of the above, thought needs to be
given to the negotiation arrangements. The principle of
negotiation needs to be reinforced.

5.1.
The Luxembourg Presidency’s draft compromise
proposes that in the event of a breakdown of negotiations
reference provisions be applied concerning the establish-
ment within the firm of a system of participation.

4.2.
The Luxembourg presidency’s proposals on the
negotiating arrangements are inadequate. The Com-
mittee doubts whether the negotiating rules proposed
by the Luxembourg Presidency will be sufficient to
ensure that real negotiations take place. There is a
danger that one or other of the parties to the negotiation
might from the outset have no interest in any other
solution than that proposed by the reference provisions.

4.2.1.
The reference to the directive on works
councils, which, with regard to both the timetable
and the negotiating procedure could compromise the
progress of the negotiations is inappropriate.

4.3.
Social conditions, which are particularly complex
in some Member States, make it necessary to consider
other approaches taking greater account of local social
customs. This, applies both to firms with a strong
tradition of participation and to countries without any
tradition of this kind. The Committee stresses in this
context that the participation arrangements must not
be limited to representation on the management or
supervisory board.

In order to reinforce the negotiation procedure

4.4.
the Committee proposes that:

4.4.1.
In accordance with national practices not
only worker representatives from firms, but also the
representative trade unions from the firm in question
and the relevant European trade union associations
should have the right to negotiate on behalf of workers.
For the purposes of implementing the directive the
procedure for appointing the members of this specific
negotiating body would be established under national
law whilst respecting the autonomy of the social part-
ners.

If negotiations threaten to break down an
4.4.2.
arbitration procedure may be brought into play. The
purpose of arbitration would be to propose a solution
based as far as possible on rules applying in the firms in
question. An arrangement of this kind has the virtue
of flexibility and the advantage of facilitating more
appropriate solutions in individual cases than would be
achieved by simply applying the reference provisions.
The autonomy of the negotiating partners would be
unaffected by the arbitration procedure. The arbitrator
would be chosen by companies’ social partners.

5.2.
Doubts have been expressed in the Committee
as to the reference provisions and two schools of thought
are discernible, as follows:

— Those coming from countries where participation
or similar systems (bipolar decision-making in firms,
Scandinavian board model with legal representation
of workers) are the rule feel that the proposed
optional European company statute system could
offer companies a way of circumventing the rule.
They are thus in favour of the reference provisions
put forward in the proposed compromise. Some even
favour a stronger participation system than that
proposed.

— Those coming from countries where worker involve-
ment is based to a greater or lesser extent on the
provision of information to, and consultation of,
workers (unitary decision-making in firms) feel that
the draft European company statute must as far as
possible respect the pluralism of national social
practices.

5.3.
The Committee feels that maximum account can
be taken of these two schools of thought by ensuring as
far as possible, via introduction of the additional
guarantees proposed in point 4.4, that the reference
provisions are not resorted to too hastily.

6. Conclusion

6.1. Worker participation is a sensitive subject. Every
effort must therefore be made to ensure that solutions
are not imposed on the parties concerned against their
will. The Economic and Social Committee feels that,
with the help of the proposals contained in this opinion,
the Luxembourg compromise proposal’s emphasis on
negotiated solutions can be reinforced.

6.2.
The information and consultation procedure
is a communications process. Participation is more
delicate. It requires the involvement of all partners. This
cannot be done by decree. This will require examination
of the detailed arrangements for the negotiation and
reference provisions contained in the appendix.

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6.3. However, the ESC assumes that the bipolar
and unitary systems are not by definition immutable.
the
The ESC considers

the introduction of

that

Brussels, 11 December 1997.

European company statute could be an opportunity to
develop new synergies by negotiation.

The President

of the Economic and Social Committee

Tom JENKINS

APPENDIX

to the opinion of the Economic and Social Committee

The following amendment, which received at least a quarter of the votes cast, was defeated in the course
of the debates.

Point 5.2

Replace the first line with:

‘The reference provisions have been approached by the Committee from different starting points:’

Then start the first and second indent with the words:

‘— Some members coming from’
and delete the text between brackets in the first indent ‘(bipolar ... workers)’; and in the second indent
‘(unitary decision-making in firms)’; and in the first indent change the words ‘participation or similar
systems’ into ‘participation via workers’ seats in the management or supervisory board’.

Reason

The present text seems too strong in suggesting ‘block’ positions of the members based on their national
background; it seems more prudent to speak about ‘some’ members.

The text between brackets is confusing: the differences lay not so much in the monistic or dualistic
board systems existing in different Member States, and present as an option in the proposed European
Company Statute, but in the difference whether the system of participation makes use of workers’ seats
in the respective management or supervisory bodies or not. This is better formulated by the text proposed
for the first indent, and by deleting the text between brackets.

Result of the vote

For: 34, against: 67, abstentions: 16.