Opinion of the Economic and Social Committee on a "European Company Statute for SMEs"
Date: 2002-03-21
Institutions: European Economic and Social Committee
Subjects: EU law, European legal status, small and medium-sized enterprises

C 125/100

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Official Journal of the European Communities

27.5.2002

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

(2002/C 125/19)

On 26 April 2001, the European Economic and Social Committee, acting under Rule 23(3) of its Rules
of Procedure, decided to draw up an own-initiative opinion on a ‘European Company Statute for SMEs’.

The Section for the Single Market, Production and Consumption, which was responsible for preparing
the Committee’s work on the subject, adopted its opinion on 4 February 2002. The rapporteur was
Mr Malosse.

At its 389th plenary session of 20 and 21 March 2002 (meeting of 21 March) the European Economic
and Social Committee adopted the following opinion by 81 votes to 0, with 2 abstentions.

1. The needs of SMEs

1.2. The need to set up a suitable tool for SMEs

1.1. An observation

For decades,

lawyers and of

1.1.1.
the
the interest of
European authorities has been concerned almost exclusively
with large companies, which appeared to be the essential
actors of EU integration. Nowadays, everyone recognises that
small and medium-sized enterprises (SMEs) play a fundamental
role in the European economy, where they account for more
than 90 % of all firms and 2/3 of the jobs. It is therefore illogical
that, at a time when a European company statute has been
adopted, only the form most suitable for large companies has
been retained: the company which can call upon the savings
of the general public. Neither would it be justified, at the very
moment that the European Commission is planning to end
double taxation by means of a single basis for the assessment
of corporation tax, to have a situation where, once again, it
should be large and medium-sized firms that benefit from such
arrangements through the European Company Statute (SE).

From now on it is important to encourage co-
1.1.2.
operation between SMEs in Europe, as the Feira European
Council requested in adopting a ‘European Small Business
Charter’. A study published in October 1997 by the EU
Commission and covering the period 1989-1995 (Business
Law Research Centre of the Chamber of Commerce and
Industry of Paris — CREDA —: ‘Propositions pour une société
fermée européenne’, under the direction of J. Boucourechliev,
Office for Official Publications of the European Communities,
1997. See in particular in this work, S. Urban, U. Mayrhofer
and P. Nanopoulos ‘Analyse des rapprochements d’entreprises
en Europe’, p. 11 et seq.) notes that
joint ventures are
proportionally more common between SMEs than between
large firms. However, this movement is hampered by the
existence of numerous barriers and long and expensive
procedures, which mainly penalise SMEs.

The only supranational European legal structure
1.2.1.
which existed up until now was the European Economic
Interest Grouping (EEIG); this can provide specific services to
some SMEs, but it is only a partial solution.

1.2.2.
The European Company, the statutes of which have
finally just been adopted (1), is strongly influenced by the rules
on public limited companies and was designed for big
companies. Although it is undoubtedly a step forward the SE,
which goes back more than thirty years, is based on an old
concept, and its foundations clearly show the symptoms of
this: it is cumbersome and complex, unsuited to SMEs’ needs,
and has difficulty in incorporating social advances. In its report
on the last Draft Council Regulation on the SE, the European
Parliament stresses that
take enough
the draft
account of SMEs, when the European SME is the engine of a
major part of the European economy’ (H.P. Mayer report).

‘does not

1.2.3. Moreover, harmonisation efforts mainly concern
public limited companies. The legislation applying to private
limited companies or one-man businesses is still very marked
by national law.

1.2.4.
The European Commission itself is aware of this
situation, since on 4 September 2001 it instructed a working
party of experts in company law to look into ‘the pan-
European rules on take-overs initially, then the key priorities
for modernising company law’, including ‘the possible need
for new legal forms (for example, a European private company,
which would be of particular interest to small and medium-
sized enterprises)’.

(1) OJ L 294, 10.11.2001.

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1.2.5.
In recent opinions, the European Economic and
Social Committee has also emphasised the need for a European
legal form for SMEs. In its own-initiative opinion ‘The social
economy and the single market’ of 2 March 2000 (1), the
Committee noted: ‘It should also be possible for individuals
and small businesses to establish such European legal forms,
should they wish to be involved in cross-border co-operation
in order to strengthen their competitiveness.’ Similarly, the
additional own-initiative opinion on the European charter for
small enterprises (2), adopted on 28 November 2001, calls for
a ‘study on a European Private Company Statute’.

1.2.6.
Finally, this idea has already been advocated by
several European employers’ associations, and a working party
made up of
lawyers of various nationalities, experts and
academics has drafted a very detailed draft paper on the
European private company. (See the CREDA study referred to
above and published by the Office for Official Publications of
the European Communities. This study has been extended by
the work of the Paris Chamber of Commerce and Industry and
the French Enterprise Movement, MEDEF, within a group of
experts and representatives of business heads of different
‘La société privée européenne: une société de
nationalities:
partenaires’, September 1998).

1.2.7.
It has therefore become necessary to think about a
European company statute that is accessible to SMEs, with a
view to facilitating their trading within the single market,
enabling firms from different countries to pool their resources
and giving a European scale from the outset to the creation of
a new company or changes in company statutes. Such a single
statute appears all the more necessary since enlargement will
further increase the differences between national laws.

1.2.8. With this in mind, the European Economic and
Social Committee held a public hearing on 22 October 2001,
in which more than 20 European organisations concerned
with the subject as well as experts and lawyers took part. The
feeling emerged from this hearing that there was a real need
for a statute for SMEs, in particular to encourage cross-border
co-operation, but also to avoid any new discrimination against
SMEs, which could not benefit from a European statute
designed more for big companies. Participants expressed ideas
about the methods of such a project, particularly urging
simplicity and stressing the need to make the statute attractive
by providing access to real facilities and opening it up to all
forms of businesses. They emphasised the advantages of this
as follows:

1.2.8.1.
political advantage: the development of transna-
tional and cross-border economic co-operation would encour-
age European integration;

1.2.8.2.
advantage, through simplification: among other
things, the very existence of a single European statute, easier
administrative formalities, option of a single tax return;

1.2.8.3.
economic advantage: SMEs who opted for the
statute would be more competitive and better known, by
having a European ‘label’. Moreover such a statute could attract
foreign investment to Europe.

2.

For a European SME statute

2.1.
SMEs are discriminated against today because — unlike
large companies — they will generally be unable to benefit
from a European statute. Moreover, it would be unrealistic to
hope for a rapid harmonisation of national laws, particularly
in view of the very great differences between them and the
impending enlargement of the EU. The setting-up of a single
simplified instrument as a complement to the SE therefore
seems to be the most effective way of removing the obstacles
to the development of transnational activity by SMEs.

2.2.
It seems appropriate that the European Economic and
Social Committee (EESC), as the spokesman of the economic
and social players concerned, should open the debate at
institutional level. This own-initiative opinion proposes some
ideas on the development of a European statute adapted to
SMEs, and indicates guidelines which the EESC feels should
govern the detailed work that will have to be undertaken at a
later date.

3. Basic aims

3.1.
A European statute for SMEs should promote entre-
preneurship and the creation of new activities, and be an
incentive to cross-border partnership within the single market.
The system that should be set up to achieve this must satisfy
the following basic aims:

3.1.1.
natural and legal persons.

It should be open and easily accessible to both

(1) OJ C 117, 26.4.2000.
(2) OJ C 48, 21.2.2002.

3.1.2.
to the various wishes of the partners.

It should be simple, flexible and able to be tailored

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3.1.3.
in the company’s structure and in its environment.

It should be capable of evolving to adapt to changes

3.1.4.
It should be a really European business structure, i.e.
it should not be linked to national company law. However, it
should not claim any privileges or preferential treatment.

The European small business project would represent

3.2.
a complementary approach to the SE.

By its European dimension: the statute would be
3.2.1.
intended for activities which had a European aspect in the
broad sense, i.e. either involving two partners from at least
two Member States or simply an existing or planned economic
activity at European level, i.e. involving more than just one
Member State. In both cases, and unlike mergers between large
companies, co-operation between SMEs is almost always in
response to a project for some sort of extension or develop-
ment, or even creation of new activities.

3.2.2.
that could not make public calls for funds.

By its very nature: it would not be a quoted company

3.2.3.
By its conception: the new company would be based
on contractual freedom; it would be a company with a strong
affectio societatis. The partners would be allowed maximum
flexibility in organising their relations and, more generally, the
running of the company. Model statutes could be usefully
proposed by way of an example and guide.

3.2.6.1.
As regards informing and consulting across bor-
ders, the statute should be based on the European directive
currently being adopted (1) and so provide for an arrangement
above the threshold of 50 employees.

3.2.6.2.
As regards cross-border participation in the man-
agement of the company, the EESC suggests adopting a
realistic and pragmatic approach which, while taking into
consideration the rules drawn up in this area for the European
Company, aims at maintaining acquired rights while avoiding
an excessively cumbersome system.

3.2.6.3.
Such a step will come under continuing the
dynamics generated by the Green Paper entitled Promoting
a European framework for Corporate Social Responsibility
adopted on 18 July 2001 (2). Moreover, the arrangements for
involving employees will be perceived as a positive result of
European integration, which can only enhance the European
label provided by the new statute.

3.2.7.
By its tax status: no permanent advantages can be
envisaged a priori. On the other hand, under the strategy
proposed by the European Commission in its communication
Towards an Internal Market without tax obstacles (3), compani-
es opting for the European statute could be the first benefici-
aries of the machinery for a single consolidated basis for tax
assessment, which would be a simplification tool for avoiding
multiple taxation. In fact the European Commission is envisag-
ing a pilot phase for the benefit of SMEs and/or firms that have
opted for European Company status. The EESC will shortly be
issuing an opinion on this communication.

4. Possible procedures for a European statute for SMEs

3.2.4.
By its legal status: this would be a genuine company
under European law and references to national laws would be
limited and specific.

The project could operate along the following lines, which will
have to be the subject of a detailed examination in co-
operation with the circles concerned:

By its users: in the interests of flexibility, it seems
3.2.5.
inadvisable to fix a maximum number of employees for firms
wishing to benefit from a European SME statute. Obviously
the companies targeted would be small and medium-sized
businesses, within the meaning of the Commission recommen-
dation of 1996, which is currently being revised. The statute
would be adapted to very small companies or one-man
companies.

4.1. Applicable law

The project would clearly delimit the terms of reference of the
various sources of law: the regulation, statutes and national
law.

3.2.6.
By the social dimension: the regulation would in
general refer to the principles of the law of the place where
employees carried out their work. In addition, in order to
involve employees, the following guidelines would have to be
established:

(1) Proposal for a Directive establishing a general framework for
informing and consulting employees in the European Community
(common position adopted by the Council on 23 July 2001, OJ
C 307, 31.10.2001)
(2) COM(2001) 366 final.
(3) COM(2001) 582 final.

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4.1.1.
In the areas that it would regulate (such as methods
of formation, capital, registered office, registration, directors’
responsibility), the regulation should be complete and remain
independent of national laws, which could not be invoked
even on a subsidiary basis. This is very important in order to
ensure the unitary — and therefore European — character of
the text, clarity and the security that the company model
should provide for partners and third parties.

4.1.2.
The regulation should also preserve the contractual
freedom of the partners, and explicitly define its scope (in
particular, organisation and operation of the company and the
rules governing securities). Certain matters should really be
covered by the statutes. To avoid the risks of omissions, the
authority in charge of registration would check that all the
specifications that should be in the statutes appear in them.

Of course, the European company for SMEs — like
4.1.3.
national companies — would remain subject to the general
rules of the Member States: accountancy law, tax law, penal
law and the procedures governing insolvency and suspension
of payments.

4.2.4.
The registered office would be located inside the
European Union and would be in the same place as the central
administration of the company. It could be transferred to
another Member State without the need for winding-up or the
creation of a new legal entity.

Forced divestiture and the removal of a partner
4.2.5.
would be possible and should be regulated by the statutes, as
should the repurchase or transfer price of securities. The
statutes could also lay down that partners’ cash and non-cash
entitlements need not be proportional to the amount of capital
subscribed, or that securities should be temporarily inalienable.
The social pact could, in these areas, be modified only by a
unanimous vote.

5.

Flanking arrangements to be provided for

While it is inconceivable to envisage privileges in relation to
national statutes, because of the risk of distorting competition,
it could be interesting to make provision for the following, in
order to make the formula more attractive:

4.2. General provisions

setting-up formalities that were simplified, standard-

5.1.
ised, fast and cheap (perhaps even free registration);

Simplicity and great operational flexibility would be the two
watchwords of the draft.

4.2.1.
The company could be formed by one or more
natural or legal persons, who may or may not be nationals of
a Member State. The minimum capital could be set at
15 000 EUR. and be divided into shares,
though other
possibilities would not be excluded. Each partner would be
committed only up to the amount of his or her capital
contribution.

4.2.2.
The area covered by contractual freedom would be
large, although the rights of minority stakeholders and third
parties would be protected in the regulation. The statutes
would lay down partners’ rights, the organisation and oper-
ation of the company, the powers of its internal bodies and
the conditions for transferring securities. However,
there
would be some minimum obligations laid down by the
regulation, such as the list of matters subject to a collective
decision of the partners.

5.2.
special information and technical and financial support
arrangements (e.g. with the help of Euro Info Centres, European
venture capital networks, ‘business angels’…);

access,

5.3.
in the event of new jobs being created, to
various European or national support machinery (such as the
JEV procedure, which can grant aid for a feasibility study and
for investment, or the European Social Fund).

6.

Looking at other business set-ups

It is worth looking at other business set-ups, particu-

6.1.
larly co-operatives and associations.

The rules on representation of the company in
4.2.3.
dealings with third parties would be based on those in the First
European Company Law Directive.

6.2.
The EESC is in favour of the quickest possible adoption
of the European co-operative society (SCE) project, which was
the subject in 1993 of an amended proposal for a Regulation
of the Council and European Parliament and which to a large
extent addresses the concerns of the various sectors concerned.

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6.3.
However, like the European Company (SE), the draft
statute for a European co-operative society (SCE) may prove
less attractive for small firms, especially as regards the mini-
mum capital required, or for new forms of socially-oriented
businesses wishing to develop their activities at EU level.

So,

6.4.
in parallel with the advisability of having a
European statute for SMEs, the EESC also supports the idea of
thinking about European legal instruments likely to fulfil the
needs associated with the emergence of
these forms of
‘entrepreneurship’.

7. Conclusions

which are more concerned by the European Company statute
— and to offer them a European label to facilitate their
activities in the internal market.

7.2.
To make it attractive, the new statute will have to
remove the risk of multiple taxation and provide considerable
legal flexibility, as well as facilities regarding setting-up for-
malities, advice and support for enterprise partnerships.

7.3.
The EESC would set this project in the context of the
conclusions of the European Council in Lisbon, i.e. improving
European competitiveness and entrepreneurship and creating
new activities and jobs.
It must also promote employee
participation at European level, a factor on which the success
of integration depends.

An analysis of needs confirms the necessity for a
7.1.
European company project for SMEs, above all so that they
can be treated on an equal footing with bigger companies —

The EESC therefore calls for the rapid setting-up of a
7.4.
simplified European statute for SMEs, as a complement to the
European Company Statute.

Brussels, 21 March 2002.

The President

of the Economic and Social Committee

Göke FRERICHS