Europe: the European Private Company Statute - trade ministers supportive

As noted in this earlier post, on 25 June the European Commission published a proposal for a European Private Company Statute. The European Private Company - or SPE, after its latin name Societas Privata Europaea - will be a new European legal form designed for small and medium sized enterprises. The SPE proposal has recently passed an important hurdle: on 18 July, as reported here, the European industry ministers provided their support. This said, the UK's Financial Times newspaper has reported:

Some EU countries are known to be unhappy with particular aspects of the SPE proposals. The very low minimum capital requirement, for example, has not been greeted warmly by Germany or Austria, where critics claim that this could make it too easy for fly-by-night businesses to incorporate. So there is a possibility that more referrals to national laws could get added in as the statute makes its way through the legislative process. And that leaves many observers guarded about the SPE’s usefulness at this stage".

Europe: Commission publishes European Private Company (SPE) proposals

The European Commission has published its proposals for the European Private Company Statute. The European Private Company - or SPE, after its latin name Societas Privata Europaea - will be a new European legal form designed for small and medium sized enterprises. The Statute, which will take the form of a Regulation, will contain a set of uniform company law rules applicable to SPEs across the Member States, including such matters as shareholder rights and creditor protection. 

With regard to capital protection, the proposal departs from the view that a high minimum level of capital is required to protect creditors. The minimum capital requirement is €1. This reflects the position that it should be easy to from a SPE.

The proposal, in Article 18, provides shareholders with an exit right where the SPE's activities cause them serious harm as a result of several actions including a substantial change in the activities of the SPE or the non payment of a dividend for at least 3 years in circumstances where the SPE's financial position would have permitted such a distribution. 

The proposal makes clear that directors' duties are owed to the SPE and Article 31 provides that "[a] director shall have a duty to act in the best interests of the SPE. He shall act with

the care and skill that can reasonably be required in the conduct of the business".

The proposed SPE Regulation will only come into force after unanimous adoption by the Council of Ministers and the approval of the European Parliament. If this happens, the Commission intends that the Regulation will come into force on 1 July 2010.  

Choose a link for further information: 

Commission press release | Citizens' summary | Frequently asked questions | Regulation proposal | Impact assessment | Earlier publications |

European Business Organization Law Review

The March 2008 issue of the European Business Organization Law Review is currently available to view free of charge on the publisher's website.  The majority of the articles concern corporate law and governance topics, including one on the European Private Company by Robert Drury and another by Ulrich Noack and Michael Beurskens considering the modernisation of the German GmBH.

Europe: update on company and financial services law reform

The Joint Brussels Office of the Law Societies of England and Wales, Scotland and Northern Ireland has published the December 2009 edition of its very useful EU financial services and company law reform update. Previous updates are available here. With regard to the proposal for a European Private Company statute, the December update notes:

Despite a revised Presidency compromise agreement, the Competitiveness Council failed to reach agreement on the proposed regulation on a statute for a European Private Company at its meeting of 3 and 4 December. Member States still have concerns regarding the seat of the European Private Company and employee participation in management".

Europe: European Private Company Statute

In a speech delivered in Athens on 16 May, European Internal Market Commissioner McCreevy provided further information about the proposed European Private Company Statute. Commissioner McCreevy observed:

In the field of company law, we are working on the upcoming proposal for a European Private Company Statute (or SPE). It should provide small enterprises that could not benefit from the European (Public) Company Statute with a legal form specifically designed for them and allow them to carry out their business using a single company form across the EU. As you know, business has been calling for this for many years, and I now intend to present a proposal on 25 June ... As with any important proposal in the field of company law, there are many important features to this upcoming initiative, but I would particularly highlight the following elements of it to you:

• I believe the European Private Company should be accessible to single and multiple shareholders, that is, to natural and legal persons alike, without any cross-border requirement;
  
• It should be capable of being set up from scratch, by the merger of existing companies or by transformation of an existing company;
  
• In accordance with the case law of the Court of Justice, a European Private Company should be free to have its headquarters in any EU Member State, regardless of its place of registration. In other words, the company could be registered in one Member State while conducting the entirety of its activity in another; it should also be able to merge and transfer its registered office cross-border;
  
• Its shareholders should have the freedom to determine the internal organisation of the company; and finally,
  
• Rules on employee participation in companies set up using the SPE Statute should draw as much as possible from existing solutions.

I think you will agree that this is an ambitious, and business-friendly, piece of legislation that we are about to come forward with..."

For background information, see here.

Postscript (25 June 2008): Proposals have now been published - see this post. 

Europe: The European Private Company

In December 2007, the European Commission published a summary of responses to its consultation on proposals for a statute for the "European Private Company" (Societas
Privata Europaea). The summary is available here and background information is available here.

Postscript (25 June 2008): Proposals were published today: see this post.