Council Directive 2001/86/EC of 8 October 2001 supplementing the Statute for a European company with regard to the involvement of employees
Date: 2001-10-08
Institutions: Council of the European Union
Subjects: European company, exchange of information, labour law, worker consultation, worker participation

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COUNCIL DIRECTIVE 2001/86/EC

of 8 October 2001

supplementing the Statute for a European company with regard to the involvement of employees

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Com-
munity, and in particular Article 308 thereof,

Having regard to the amended proposal
mission (1),

from the Com-

Having regard to the opinion of the European Parliament (2),

Having regard to the opinion of the Economic and Social
Committee (3),

Whereas:

(1)

(2)

(3)

(4)

In order to attain the objectives of the Treaty, Council
Regulation (EC) No 2157/2001 (4) establishes a Statute
for a European company (SE).

That Regulation aims at creating a uniform legal frame-
work within which companies from different Member
States should be able to plan and carry out the re-
organisation of their business on a Community scale.

In order to promote the social objectives of the Com-
munity, special provisions have to be set, notably in the
field of employee involvement, aimed at ensuring that
the establishment of an SE does not entail the disappear-
ance or reduction of practices of employee involvement
existing within the companies participating in the estab-
lishment of an SE. This objective should be pursued
through the establishment of a set of rules in this field,
supplementing the provisions of the Regulation.

Since the objectives of the proposed action, as outlined
above, cannot be sufficiently achieved by the Member
States, in that the object is to establish a set of rules on
employee involvement applicable to the SE, and can
therefore, by reason of the scale and impact of the
proposed action, be better achieved at Community level,
in accordance
the Community may adopt measures,

(1) OJ C 138, 29.5.1991, p. 8.
(2) OJ C 342, 20.12.1993, p. 15.
(3) OJ C 124, 21.5.1990, p. 34.
(4) See page 1 of this Official Journal.

the Treaty.

with the principle of subsidiarity as set out in Article 5
of
In accordance with the principle of
proportionality, as set out in that Article, this Directive
does not go beyond what is necessary to achieve these
objectives.

The great diversity of rules and practices existing in
the Member States as regards the manner in which
employees’ representatives are involved in decision-
making within companies makes it inadvisable to set up
a single European model of employee involvement
applicable to the SE.

Information and consultation procedures at
trans-
national level should nevertheless be ensured in all cases
of creation of an SE.

If and when participation rights exist within one or
more companies establishing an SE, they should be
preserved through their transfer to the SE, once estab-
lished, unless the parties decide otherwise.

The concrete procedures of employee transnational
information and consultation, as well as, if applicable,
participation, to apply to each SE should be defined
primarily by means of an agreement between the parties
concerned or,
through the
in the absence thereof,
application of a set of subsidiary rules.

(5)

(6)

(7)

(8)

(9) Member States should still have the option of not
applying the standard rules relating to participation in
the case of a merger, given the diversity of national
systems for employee involvement. Existing systems and
practices of participation where appropriate at
the
level of participating companies must in that case be
maintained by adapting registration rules.

(10) The voting rules within the special body representing
the employees for negotiation purposes, in particular
when concluding agreements providing for a level of
participation lower than the one existing within one
or more of the participating companies, should be
proportionate to the risk of disappearance or reduction
of existing systems and practices of participation. That

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risk is greater in the case of an SE established by way of
transformation or merger than by way of creating a
holding company or a common subsidiary.

representation structures, provided for by Community
and national laws and practices.

(11)

(12)

In the absence of an agreement subsequent to the
negotiation between employees’ representatives and the
competent organs of the participating companies, pro-
vision should be made for certain standard requirements
to apply to the SE, once it is established. These standard
requirements should ensure effective practices of trans-
national information and consultation of employees, as
well as their participation in the relevant organs of the
SE if and when such participation existed before its
establishment within the participating companies.

Provision should be made for the employees’ representa-
tives acting within the framework of the Directive to
enjoy, when exercising their functions, protection and
guarantees which are similar to those provided to
employees’ representatives by the legislation and/or
practice of the country of employment. They should not
be subject to any discrimination as a result of the lawful
exercise of their activities and should enjoy adequate
protection as regards dismissal and other sanctions.

(13) The confidentiality of sensitive information should be
preserved even after the expiry of
the employees’
representatives terms of office and provision should be
made to allow the competent organ of
the SE to
withhold information which would seriously harm, if
subject to public disclosure, the functioning of the SE.

(14) Where an SE and its subsidiaries and establishments are
subject to Council Directive 94/45/EC of 22 September
1994 on the establishment of a European Works Council
or a procedure in Community-scale undertakings and
Community-scale groups of undertakings for the pur-
poses of informing and consulting employees (1), the
provisions of that Directive and the provision trans-
posing it into national legislation should not apply to it
nor to its subsidiaries and establishments, unless the
special negotiating body decides not to open nego-
tiations or to terminate negotiations already opened.

(15) This Directive should not affect other existing rights
regarding involvement and need not affect other existing

(16) Member States should take appropriate measures in the
event of failure to comply with the obligations laid
down in this Directive.

(17) The Treaty has not provided the necessary powers for
the Community to adopt the proposed Directive, other
than those provided for in Article 308.

(18)

It is a fundamental principle and stated aim of this
Directive to secure employees’ acquired rights as regards
involvement in company decisions. Employee rights in
force before the establishment of SEs should provide the
basis for employee rights of involvement in the SE (the
‘before and after’ principle). Consequently, that approach
should apply not only to the initial establishment of an
SE but also to structural changes in an existing SE and
to the companies affected by structural change processes.

(19) Member States should be able to provide that representa-
tives of trade unions may be members of a special
negotiating body regardless of whether
they are
employees of a company participating in the establish-
ment of an SE. Member States should in this context in
particular be able to introduce this right in cases where
trade union representatives have the right to be members
of, and to vote in, supervisory or administrative com-
pany organs in accordance with national legislation.

(20)

In several Member States, employee involvement and
other areas of industrial relations are based on both
national legislation and practice which in this context is
understood also to cover collective agreements at various
national, sectoral and/or company levels,

HAS ADOPTED THIS DIRECTIVE:

SECTION I

GENERAL

Article 1

Objective

(1) OJ L 254, 30.9.1994, p. 64. Directive as last amended by Directive

97/74/EC (OJ L 10, 16.1.1998, p. 22).

1.
This Directive governs the involvement of employees in
the affairs of European public limited-liability companies
(Societas Europaea, hereinafter referred to as ‘SE’), as referred to
in Regulation (EC) No 2157/2001.

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2.
To this end, arrangements for the involvement of
employees shall be established in every SE in accordance with
the negotiating procedure referred to in Articles 3 to 6 or,
under the circumstances specified in Article 7, in accordance
with the Annex.

single Member State at a time, in a manner and with a
content which allows the employees’ representatives to
undertake an in-depth assessment of the possible impact
and, where appropriate, prepare consultations with the
competent organ of the SE;

Article 2

Definitions

For the purposes of this Directive:

‘SE’ means any company established in accordance with
Regulation (EC) No 2157/2001;

‘participating companies’ means the companies directly
participating in the establishing of an SE;

‘subsidiary’ of a company means an undertaking over
which that company exercises a dominant influence
defined in accordance with Article 3(2) to (7) of Direc-
tive 94/45/EC;

‘concerned subsidiary or establishment’ means a subsidi-
ary or establishment of a participating company which is
proposed to become a subsidiary or establishment of the
SE upon its formation;

(j)

‘consultation’ means the establishment of dialogue and
exchange of views between the body representative of the
employees and/or the employees’ representatives and the
competent organ of the SE, at a time, in a manner and
with a content which allows the employees’ representa-
tives, on the basis of information provided, to express an
opinion on measures envisaged by the competent organ
which may be taken into account in the decision-making
process within the SE;

(k)

‘participation’ means the influence of the body representa-
tive of the employees and/or the employees’ representa-
tives in the affairs of a company by way of:

— the right to elect or appoint some of the members
the company’s supervisory or administrative

of
organ, or

— the right to recommend and/or oppose the appoint-
ment of some or all of the members of the company’s
supervisory or administrative organ.

‘employees’ representatives’ means the employees’ rep-
resentatives provided for by national law and/or practice;

SECTION II

‘representative body’ means the body representative of
the employees set up by the agreements referred to in
Article 4 or in accordance with the provisions of the
Annex, with the purpose of informing and consulting the
employees of an SE and its subsidiaries and establishments
situated in the Community and, where applicable, of
exercising participation rights in relation to the SE;

‘special negotiating body’ means the body established in
accordance with Article 3 to negotiate with the competent
body of the participating companies regarding the estab-
lishment of arrangements
the involvement of
employees within the SE;

for

‘involvement of employees’ means any mechanism,
including information, consultation and participation,
through which employees’ representatives may exercise
an influence on decisions to be taken within the company;

‘information’ means the informing of the body representa-
tive of the employees and/or employees’ representatives
by the competent organ of the SE on questions which
its subsidiaries or
concern the SE itself and any of
establishments situated in another Member State or which
exceed the powers of the decision-making organs in a

NEGOTIATING PROCEDURE

Article 3

Creation of a special negotiating body

1. Where the management or administrative organs of the
participating companies draw up a plan for the establishment
of an SE, they shall as soon as possible after publishing the
draft terms of merger or creating a holding company or after
agreeing a plan to form a subsidiary or to transform into an
SE, take the necessary steps, including providing information
about the identity of the participating companies, concerned
subsidiaries or establishments, and the number of
their
employees, to start negotiations with the representatives of the
companies’ employees on arrangements for the involvement
of employees in the SE.

2.
For this purpose, a special negotiating body representa-
tive of the employees of the participating companies and
concerned subsidiaries or establishments shall be created in
accordance with the following provisions:

(a)

(b)

(c)

(d)

(e)

(f)

(g)

(h)

(i)

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(a)

in electing or appointing members of the special negotiat-
ing body, it must be ensured:

(i)

(ii)

that these members are elected or appointed in
proportion to the number of employees employed
in each Member State by the participating companies
and concerned subsidiaries or establishments, by
allocating in respect of a Member State one seat per
portion of employees employed in that Member
State which equals 10 %, or a fraction thereof, of the
number of employees employed by the participating
companies and concerned subsidiaries or establish-
ments in all the Member States taken together;

that in the case of an SE formed by way of merger,
there are such further additional members from each
Member State as may be necessary in order to ensure
that the special negotiating body includes at least one
member representing each participating company
which is registered and has employees in that
Member State and which it is proposed will cease
to exist as a separate legal entity following the
registration of the SE, in so far as:

— the number of such additional members does
not exceed 20 % of the number of members
designated by virtue of point (i), and

— the composition of

the special negotiating
body does not entail a double representation
of the employees concerned.

If the number of such companies is higher than the
number of additional seats available pursuant to the first
subparagraph, these additional seats shall be allocated to
companies in different Member States by decreasing order
of the number of employees they employ;

(b) Member States shall determine the method to be used for
the election or appointment of the members of the special
negotiating body who are to be elected or appointed in
their territories. They shall take the necessary measures
to ensure that, as far as possible, such members shall
include at least one member representing each participat-
ing company which has employees in the Member State
concerned. Such measures must not increase the overall
number of members.

Member States may provide that such members may
include representatives of trade unions whether or not
they are employees of a participating company or con-
cerned subsidiary or establishment.

Without prejudice to national legislation and/or practice
laying down thresholds for the establishing of a represen-

tative body, Member States shall provide that employees
in undertakings or establishments in which there are no
employees’ representatives through no fault of their own
have the right to elect or appoint members of the special
negotiating body.

3.
The special negotiating body and the competent organs
of the participating companies shall determine, by written
agreement, arrangements for the involvement of employees
within the SE.

the competent organs of

To this end,
the participating
companies shall inform the special negotiating body of the
plan and the actual process of establishing the SE, up to its
registration.

Subject to paragraph 6, the special negotiating body shall
4.
take decisions by an absolute majority of
its members,
provided that such a majority also represents an absolute
majority of the employees. Each member shall have one vote.
However, should the result of the negotiations lead to a
reduction of participation rights, the majority required for a
decision to approve such an agreement shall be the votes of
two thirds of the members of the special negotiating body
representing at least two thirds of the employees, including
the votes of members representing employees employed in at
least two Member States,

— in the case of an SE to be established by way of merger, if
participation covers at least 25 % of the overall number
of employees of the participating companies, or

— in the case of an SE to be established by way of
creating a holding company or forming a subsidiary, if
participation covers at least 50 % of the overall number
of employees of the participating companies.

Reduction of participation rights means a proportion of
members of the organs of the SE within the meaning of
Article 2(k), which is lower than the highest proportion
existing within the participating companies.

5.
For the purpose of the negotiations, the special negotiat-
ing body may request experts of its choice, for example
representatives of appropriate Community level trade union
organisations, to assist it with its work. Such experts may be
present at negotiation meetings in an advisory capacity at the
request of the special negotiating body, where appropriate to
promote coherence and consistency at Community level.
The special negotiating body may decide to inform the
representatives of appropriate external organisations, including
trade unions, of the start of the negotiations.

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6.
The special negotiating body may decide by the majority
set out below not to open negotiations or to terminate
negotiations already opened, and to rely on the rules on
information and consultation of employees in force in the
Member States where the SE has employees. Such a decision
shall stop the procedure to conclude the agreement referred to
in Article 4. Where such a decision has been taken, none of
the provisions of the Annex shall apply.

2. Without prejudice to the autonomy of the parties, and
subject to paragraph 4, the agreement referred to in paragraph
1 between the competent organs of the participating compan-
ies and the special negotiating body shall specify:

(a)

the scope of the agreement;

The majority required to decide not to open or to terminate
negotiations shall be the votes of two thirds of the members
representing at least two thirds of the employees, including
the votes of members representing employees employed in at
least two Member States.

(b)

the composition, number of members and allocation of
seats on the representative body which will be the
discussion partner of the competent organ of the SE in
connection with arrangements for the information and
consultation of the employees of the SE and its subsidi-
aries and establishments;

In the case of an SE established by way of transformation, this
paragraph shall not apply if there is participation in the
company to be transformed.

The special negotiating body shall be reconvened on the
written request of at least 10 % of the employees of the SE, its
subsidiaries and establishments, or their representatives, at the
earliest two years after the abovementioned decision, unless
the parties agree to negotiations being reopened sooner. If the
special negotiating body decides to reopen negotiations with
the management but no agreement is reached as a result of
those negotiations, none of the provisions of the Annex shall
apply.

7.
Any expenses relating to the functioning of the special
negotiating body and, in general, to negotiations shall be borne
by the participating companies so as to enable the special
negotiating body to carry out its task in an appropriate
manner.

In compliance with this principle, Member States may lay
down budgetary rules regarding the operation of the special
negotiating body. They may in particular limit the funding to
cover one expert only.

(c)

the functions and the procedure for the information and
consultation of the representative body;

(d)

the frequency of meetings of the representative body;

(e)

the financial and material resources to be allocated to the
representative body;

(f)

(g)

if, during negotiations, the parties decide to establish one
or more information and consultation procedures instead
of
for
implementing those procedures;

representative body,

arrangements

the

a

if, during negotiations, the parties decide to establish
arrangements for participation, the substance of those
arrangements including (if applicable) the number of
members in the SE’s administrative or supervisory body
which the employees will be entitled to elect, appoint,
recommend or oppose, the procedures as to how these
members may be elected, appointed, recommended or
opposed by the employees, and their rights;

(h)

the date of entry into force of the agreement and its
duration, cases where the agreement should be re-
negotiated and the procedure for its renegotiation.

Article 4

Content of the agreement

The agreement shall not, unless provision is made
3.
otherwise therein, be subject to the standard rules referred to
in the Annex.

1.
The competent organs of the participating companies
and the special negotiating body shall negotiate in a spirit
of cooperation with a view to reaching an agreement on
arrangements for the involvement of the employees within the
SE.

4. Without prejudice to Article 13(3)(a), in the case of an
SE established by means of transformation, the agreement
shall provide for at least the same level of all elements of
employee involvement as the ones existing within the company
to be transformed into an SE.

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Article 5

(b)

in the case of an SE established by merger:

Duration of negotiations

1.
Negotiations shall commence as soon as the special
negotiating body is established and may continue for six
months thereafter.

2.
The parties may decide, by joint agreement, to extend
negotiations beyond the period referred to in paragraph 1, up
to a total of one year from the establishment of the special
negotiating body.

— if, before registration of the SE, one or more forms
of participation applied in one or more of the
participating companies covering at least 25 % of
the total number of employees in all the participating
companies, or

— if, before registration of the SE, one or more forms
of participation applied in one or more of the
participating companies covering less than 25 % of
the total number of employees in all the participating
companies and if the special negotiating body so
decides,

Article 6

(c)

in the case of an SE established by setting up a holding
company or establishing a subsidiary:

Legislation applicable to the negotiation procedure

Except where otherwise provided in this Directive, the legis-
lation applicable to the negotiation procedure provided for in
Articles 3 to 5 shall be the legislation of the Member State in
which the registered office of the SE is to be situated.

Article 7

Standard rules

1.
In order to achieve the objective described in Article 1,
Member States shall, without prejudice to paragraph 3 below,
lay down standard rules on employee involvement which must
satisfy the provisions set out in the Annex.

The standard rules as laid down by the legislation of the
Member State in which the registered office of the SE is to be
situated shall apply from the date of the registration of the SE
where either:

(a)

the parties so agree; or

(b) by the deadline laid down in Article 5, no agreement has

been concluded, and:

— the competent organ of each of the participating
companies decides to accept the application of the
standard rules in relation to the SE and so to
continue with its registration of the SE, and

— the special negotiating body has not taken the

decision provided in Article 3(6).

2. Moreover,
the standard rules fixed by the national
legislation of the Member State of registration in accordance
with part 3 of the Annex shall apply only:

— if, before registration of the SE, one or more forms
of participation applied in one or more of the
participating companies covering at least 50 % of
the total number of employees in all the participating
companies; or

— if, before registration of the SE, one or more forms
of participation applied in one or more of the
participating companies covering less than 50 % of
the total number of employees in all the participating
companies and if the special negotiating body so
decides.

If
there was more than one form of participation
within the various participating companies, the special
negotiating body shall decide which of those forms must
be established in the SE. Member States may fix the rules
which are applicable in the absence of any decision on
the matter for an SE registered in their territory. The
special negotiating body shall
inform the competent
organs of the participating companies of any decisions
taken pursuant to this paragraph.

3. Member States may provide that the reference provisions
in part 3 of the Annex shall not apply in the case provided for
in point (b) of paragraph 2.

SECTION III

MISCELLANEOUS PROVISIONS

Article 8

Reservation and confidentiality

(a)

in the case of an SE established by transformation, if the
rules of a Member State relating to employee participation
in the administrative or supervisory body applied to a
company transformed into an SE;

1. Member States shall provide that members of the special
negotiating body or the representative body, and experts who
assist them, are not authorised to reveal any information
which has been given to them in confidence.

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The same shall apply to employees’ representatives in the
context of an information and consultation procedure.

Article 10

This obligation shall continue to apply, wherever the persons
referred to may be, even after the expiry of their terms of
office.

2.
Each Member State shall provide, in specific cases and
under the conditions and limits laid down by national
legislation, that the supervisory or administrative organ of an
SE or of a participating company established in its territory is
not obliged to transmit information where its nature is such
that, according to objective criteria, to do so would seriously
harm the functioning of the SE (or, as the case may be, the
participating company) or its subsidiaries and establishments
or would be prejudicial to them.

A Member State may make such dispensation subject to prior
administrative or judicial authorisation.

3.
Each Member State may lay down particular provisions
for SEs in its territory which pursue directly and essentially the
aim of ideological guidance with respect to information and
the expression of opinions, on condition that, on the date of
adoption of this Directive, such provisions already exist in the
national legislation.

4.
In applying paragraphs 1, 2 and 3, Member States
shall make provision for administrative or judicial appeal
procedures which the employees’ representatives may initiate
when the supervisory or administrative organ of an SE or
participating company demands confidentiality or does not
give information.

Such procedures may include arrangements designed to pro-
tect the confidentiality of the information in question.

Protection of employees’ representatives

The members of the special negotiating body, the members
of the representative body, any employees’ representatives
exercising functions under the information and consultation
procedure and any employees’ representatives in the supervis-
ory or administrative organ of an SE who are employees of the
its subsidiaries or establishments or of a participating
SE,
company shall, in the exercise of their functions, enjoy the
same protection and guarantees provided for employees’
representatives by the national legislation and/or practice in
force in their country of employment.

This shall apply in particular to attendance at meetings of the
special negotiating body or representative body, any other
meeting under the agreement referred to in Article 4(2)(f) or
any meeting of
the administrative or supervisory organ,
and to the payment of wages for members employed by
a participating company or the SE or its subsidiaries or
establishments during a period of absence necessary for the
performance of their duties.

Article 11

Misuse of procedures

Member States shall take appropriate measures in conformity
with Community law with a view to preventing the misuse of
an SE for the purpose of depriving employees of rights to
employee involvement or withholding such rights.

Article 12

Compliance with this Directive

Article 9

Operation of the representative body and procedure for
the information and consultation of employees

The competent organ of the SE and the representative body
shall work together in a spirit of cooperation with due regard
for their reciprocal rights and obligations.

1.
Each Member State shall ensure that the management of
establishments of an SE and the supervisory or administrative
organs of subsidiaries and of participating companies which
are situated within its territory and the employees’ representa-
tives or, as the case may be, the employees themselves abide
by the obligations laid down by this Directive, regardless of
whether or not the SE has its registered office within its
territory.

The same shall apply to cooperation between the supervisory
or administrative organ of the SE and the employees’ represen-
tatives in conjunction with a procedure for the information
and consultation of employees.

2. Member States shall provide for appropriate measures in
the event of failure to comply with this Directive; in particular
they shall ensure that administrative or legal procedures are
available to enable the obligations deriving from this Directive
to be enforced.

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Article 13

Link between this Directive and other provisions

Article 14

Final provisions

1. Where an SE is a Community-scale undertaking or
a controlling undertaking of a Community-scale group of
undertakings within the meaning of Directive 94/45/EC or of
Directive 97/74/EC (1) extending the said Directive to the
United Kingdom, the provisions of these Directives and the
provisions transposing them into national legislation shall not
apply to them or to their subsidiaries.

However, where the special negotiating body decides in
accordance with Article 3(6) not to open negotiations or to
terminate negotiations already opened, Directive 94/45/EC or
Directive 97/74/EC and the provisions transposing them into
national legislation shall apply.

2.
Provisions on the participation of employees in company
bodies provided for by national legislation and/or practice,
other than those implementing this Directive, shall not apply
to companies established in accordance with Regulation (EC)
No 2157/2001 and covered by this Directive.

3.

This Directive shall not prejudice:

(a)

the existing rights to involvement of employees provided
for by national legislation and/or practice in the Member
States as enjoyed by employees of
the SE and its
subsidiaries and establishments, other than participation
in the bodies of the SE;

(b)

the provisions on participation in the bodies laid down
by national legislation and/or practice applicable to the
subsidiaries of the SE.

4.
In order to preserve the rights referred to in paragraph 3,
Member States may take the necessary measures to guarantee
that the structures of employee representation in participating
companies which will cease to exist as separate legal entities
are maintained after the registration of the SE.

the latest

1. Member States shall adopt the laws, regulations and
administrative provisions necessary to comply with this Direc-
tive no later than 8 October 2004, or shall ensure by that date
that management and labour introduce the
at
required provisions by way of agreement, the Member States
being obliged to take all necessary steps enabling them at all
times to guarantee the results imposed by this Directive. They
shall forthwith inform the Commission thereof.

2. When Member States adopt these measures, they shall
contain a reference to this Directive or shall be accompanied
by such reference on the occasion of their official publication.
The methods of making such reference shall be laid down by
the Member States.

Article 15

Review by the Commission

No later than 8 October 2007, the Commission shall,
in
consultation with the Member States and with management
and labour at Community level, review the procedures for
applying this Directive, with a view to proposing suitable
amendments to the Council where necessary.

Article 16

Entry into force

This Directive shall enter into force on the day of its publication
in the Official Journal of the European Communities.

Article 17

Addressees

This Directive is addressed to the Member States.

Done at Luxembourg, 8 October 2001.

For the Council

The President

L. ONKELINX

(1) OJ L 10, 16.1.1998, p. 22.

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ANNEX

STANDARD RULES

(referred to in Article 7)

Part 1: Composition of the body representative of the employees

In order to achieve the objective described in Article 1, and in the cases referred to in Article 7, a representative body
shall be set up in accordance with the following rules.

(a)

The representative body shall be composed of employees of the SE and its subsidiaries and establishments
elected or appointed from their number by the employees’ representatives or, in the absence thereof, by the
entire body of employees.

(b)

The election or appointment of members of the representative body shall be carried out in accordance with
national legislation and/or practice.

Member States shall lay down rules to ensure that the number of members of, and allocation of seats on, the
representative body shall be adapted to take account of changes occurring within the SE and its subsidiaries
and establishments.

(c) Where its size so warrants, the representative body shall elect a select committee from among its members,

comprising at most three members.

(d)

The representative body shall adopt its rules of procedure.

(e)

The members of the representative body are elected or appointed in proportion to the number of employees
employed in each Member State by the participating companies and concerned subsidiaries or establishments,
by allocating in respect of a Member State one seat per portion of employees employed in that Member State
which equals 10 %, or a fraction thereof, of the number of employees employed by the participating companies
and concerned subsidiaries or establishments in all the Member States taken together.

(f)

The competent organ of the SE shall be informed of the composition of the representative body.

(g)

Four years after the representative body is established, it shall examine whether to open negotiations for the
conclusion of the agreement referred to in Articles 4 and 7 or to continue to apply the standard rules adopted
in accordance with this Annex.

Articles 3(4) to (7) and 4 to 6 shall apply, mutatis mutandis, if a decision has been taken to negotiate an
agreement according to Article 4, in which case the term ‘special negotiating body’ shall be replaced by
‘representative body’. Where, by the deadline by which the negotiations come to an end, no agreement has
been concluded, the arrangements initially adopted in accordance with the standard rules shall continue to
apply.

Part 2: Standard rules for information and consultation

The competence and powers of the representative body set up in an SE shall be governed by the following rules.

(a)

The competence of the representative body shall be limited to questions which concern the SE itself and any of
its subsidiaries or establishments situated in another Member State or which exceed the powers of the decision-
making organs in a single Member State.

(b) Without prejudice to meetings held pursuant to point (c), the representative body shall have the right to be
informed and consulted and, for that purpose, to meet with the competent organ of the SE at least once a year,
on the basis of regular reports drawn up by the competent organ, on the progress of the business of the SE and
its prospects. The local managements shall be informed accordingly.

The competent organ of the SE shall provide the representative body with the agenda for meetings of the
administrative, or, where appropriate, the management and supervisory organ, and with copies of all documents
submitted to the general meeting of its shareholders.

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The meeting shall relate in particular to the structure, economic and financial situation, the probable
development of the business and of production and sales, the situation and probable trend of employment,
investments, and substantial changes concerning organisation, introduction of new working methods or
production processes, transfers of production, mergers, cut-backs or closures of undertakings, establishments
or important parts thereof, and collective redundancies.

(c) Where there are exceptional circumstances affecting the employees’

interests to a considerable extent,
particularly in the event of relocations, transfers, the closure of establishments or undertakings or collective
redundancies, the representative body shall have the right to be informed. The representative body or, where it
so decides, in particular for reasons of urgency, the select committee, shall have the right to meet at its request
the competent organ of the SE or any more appropriate level of management within the SE having its own
powers of decision, so as to be informed and consulted on measures significantly affecting employees’ interests.

Where the competent organ decides not to act in accordance with the opinion expressed by the representative
body, this body shall have the right to a further meeting with the competent organ of the SE with a view to
seeking agreement.

In the case of a meeting organised with the select committee, those members of the representative body who
represent employees who are directly concerned by the measures in question shall also have the right to
participate.

The meetings referred to above shall not affect the prerogatives of the competent organ.

(d) Member States may lay down rules on the chairing of information and consultation meetings.

Before any meeting with the competent organ of the SE, the representative body or the select committee, where
necessary enlarged in accordance with the third subparagraph of paragraph (c), shall be entitled to meet without
the representatives of the competent organ being present.

(e) Without prejudice to Article 8, the members of the representative body shall inform the representatives of the
employees of the SE and of its subsidiaries and establishments of the content and outcome of the information
and consultation procedures.

(f)

The representative body or the select committee may be assisted by experts of its choice.

(g)

(h)

In so far as this is necessary for the fulfilment of their tasks, the members of the representative body shall be
entitled to time off for training without loss of wages.

The costs of the representative body shall be borne by the SE, which shall provide the body’s members with the
financial and material resources needed to enable them to perform their duties in an appropriate manner.

In particular, the SE shall, unless otherwise agreed, bear the cost of organising meetings and providing
interpretation facilities and the accommodation and travelling expenses of members of the representative body
and the select committee.

In compliance with these principles, the Member States may lay down budgetary rules regarding the operation
of the representative body. They may in particular limit funding to cover one expert only.

Part 3: Standard rules for participation

Employee participation in an SE shall be governed by the following provisions

(a)

(b)

In the case of an SE established by transformation, if the rules of a Member State relating to employee
participation in the administrative or supervisory body applied before registration, all aspects of employee
participation shall continue to apply to the SE. Point (b) shall apply mutatis mutandis to that end.

In other cases of the establishing of an SE, the employees of the SE, its subsidiaries and establishments and/or
their representative body shall have the right to elect, appoint, recommend or oppose the appointment of a
number of members of the administrative or supervisory body of the SE equal to the highest proportion in
force in the participating companies concerned before registration of the SE.

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If none of the participating companies was governed by participation rules before registration of the SE, the
latter shall not be required to establish provisions for employee participation.

The representative body shall decide on the allocation of seats within the administrative or supervisory body
among the members representing the employees from the various Member States or on the way in which the
SE’s employees may recommend or oppose the appointment of the members of these bodies according to the
proportion of the SE’s employees in each Member State. If the employees of one or more Member States are
not covered by this proportional criterion, the representative body shall appoint a member from one of those
Member States, in particular the Member State of the SE’s registered office where that is appropriate. Each
Member State may determine the allocation of the seats it is given within the administrative or supervisory
body.

Every member of the administrative body or, where appropriate, the supervisory body of the SE who has been
elected, appointed or recommended by the representative body or, depending on the circumstances, by the
employees shall be a full member with the same rights and obligations as the members representing the
shareholders, including the right to vote.