After a series of delays, the European Commission is expected on Wednesday 25 April finally to unveil its legislative package that seeks to modernise the legislative framework for European businesses.
The company law package is likely to contain a mobility chapter relating to cross-border operations with a number of provisions on cross-border divisions and transfers in a directive and a targeted revision of the directive on cross-border mergers.
Also expected to be tabled is a draft directive aiming to facilitate the use of digital tools to register companies in order to make up the EU’s lost ground in this area. At present, it is possible in only half of the member states to carry out such operations online.
According to our information, the Commission has, however, withdrawn its draft regulation on conflict of national company law rules from the package. The minutes of a meeting between the Commission and a number of stakeholders, dated September 2017, indicate that the United Kingdom, Ireland, the Netherlands, Sweden, Estonia and also BusinessEurope were not convinced that there was sufficient evidence of difficulties to justify EU action at this stage.
The cause of the first delay was the need to take account of the Polbut ruling delivered by the European Court of Justice (ECJ) on 25 October 2017 on relocations of headquarters, the implications of which were detailed in this newsletter (see EUROPE 11915) – a position that the deemed very “liberal” by the Notaries of Europe (CNUE). The Court ruling delayed presentation of the package and led to intense discussions within the Commission’s legal services.
In the view of Pedro Oliveira, BusinessEurope legal adviser, the ruling provides a little more clarification of the fundamental right of establishment. He believes that the mobility section of the package will remove the current legal uncertainty and will help everyone involved in companies, whether they be employees, creditors or shareholders.
Headquarter relocation is a particularly sensitive issue. When contacted by EUROPE, Séverine Picard of the European Trade Union Confederation (ETUC) acknowledged the need to legislate on the matter but stressed, too, that rules and monitoring of headquarter relocations are needed to prevent “letterbox companies” springing up with the sole aim of avoiding or infringing the legal requirements of the place where companies were established.
ETUC wants it to be stipulated in European law that companies are not allowed to locate their headquarters in or transfer them to a member state in which they do not have any real economic activity (that is, where they have no employees, no buildings, no profits, etc.), particularly if any such transfer has a negative effect on existing arrangements for worker participation.
In its public consultation, the Commission canvassed views on the possible need to authorise headquarter transfers only in situations where companies were able to demonstrate a genuine economic link with the country to which they wanted to move. France is believed to have called for safeguards to be included in the proposal on company law to prevent improper relocations (see EUROPE 11997).
According to our information, the proposal will, indeed, contain guidance to help member states determine whether there is genuine economic activity or not. The texts are also likely to contain provisions on informing and consulting workers. (Original version in French by Marion Fontana)