Should we choose European society? (Fr)

After more than thirty years of preparation, the project of a European Company (SE) has finally seen the light of day thanks to two texts, namely Regulation (EC) n ° 2157/2001 relating to the statute of the European Company (ci¬ after the "Regulation") as well as Directive 2001/86 / EC supplementing the statute of the European Company with regard to the involvement of workers (hereinafter the "Directive"), both dating from October 8, 2001.

The Regulation entered into force on October 8, 2004, and the Member States of the European Union should have adopted on that date the laws, regulations and administrative provisions necessary to comply with the Directive, these two inseparable texts being called upon to apply concomitantly.

The very ambitious project at the outset, aimed at harmonizing national laws and creating standards for a new uniform type of society, was successively abandoned because of too great differences between the legal systems of the member states.
What is it really ? What is the point of this new legal form? How will it be implemented?

I. Main characteristics of EM

The Regulation establishing the statute of the SE comes down to a new and optional legal formula which is closely, but with a certain flexibility, based on the rules already applicable, in each Member State, to public limited companies.
As a result, the SE provides a framework that can be adapted conventionally and on which the standards of the twenty-five legal systems of the member states can play.
Consequently, if the SE is of Community law, it is the law of the State where its head office is located and its central administration (corresponding to the effective and actual seat of the management) which will apply in all areas not governed by the Regulation, the Directive or its statutes.

This local law will in particular be decisive for all the terms of the constitution. At present, the vast majority of legal literature seems to rule out the possibility of constituting an “ex nihilo” SE by investors subscribing directly to its capital. There remain therefore the following four modes of constitution:
(a) incorporation by merger, reserved for public limited companies from different Member States,
(b) the creation by creation of a holding company, open to public limited companies and limited liability companies having a community presence through its subsidiaries or branches,
(c) incorporation in the form of a joint subsidiary, reserved for public or private law entities if two of them are governed by the law of different Member States or have had, for at least two years, a subsidiary or a simple establishment falling under the law of another member state,
(d) by conversion of a public limited company into an SE, provided that the latter has a subsidiary in another Member State.
Any constitution requires the drafting of the statutes, including the necessary mentions in any public limited company of the Member State in which the SE will have its statutory seat and its central administration, and a share capital of a minimum amount of 120,000 euros.

Thus, it would be possible to have an SE registered in France using public savings with a share capital of only € 120,000, while the minimum provided for in the Commercial Code for public limited companies in this case is € 225,000 . The statutes freely decide whether the SE will have a board or dualist system, the State not being able to impose its system. It is likely that when employee representatives are called upon to sit on management or executive bodies, it will be easier to opt for a dualist system, letting them enter the Supervisory Board rather than the Board of Directors.

In addition, the freedom of freedom of the editors is the same as that for the establishment of the statutes of an ordinary limited company having its seat in the Member State concerned. It should be noted that considerable differences exist in this respect between the various member states (the United Kingdom and Ireland, for example, leaving a great deal of contractual freedom, while there are other states, such as Germany leaving. the principle that "anything that is not expressly authorized is prohibited").

II. Employee involvement

Except in the case of the establishment of a subsidiary in the form of an SE, registration according to the legislation of the Member State where the statutory seat is located, which marks the starting point of the legal personality of the SE, must be be preceded by negotiations with the employee representatives of the companies concerned regarding their involvement, namely their information, their consultation, or even their participation in the management or executive bodies of the company, the aim being to preserve the rights acquired before the Constitution.

In this regard, as soon as possible after publication of the draft constitution, negotiations must be initiated within a "Special Negotiation Group" (GSN), specially formed for this purpose according to the rules provided for in the Directive, ensuring it proportional representation of the number of employees concerned in each member state. Many details regarding the methods of appointment of its members, their status will be regulated by national law, in other words the laws transposing the Directive.

Three possibilities open up, depending on the outcome of these negotiations:
• either the GSN reaches an agreement,
• or it has decided (with a qualified majority of 2/3 of its members, representing at least 2/3 of the workers, this figure including the votes of members representing workers employed in at least two member states) not to begin negotiations on this point or to close open negotiations and to apply the information and consultation regulations applicable in each Member State where the SE employs employees,
• or finally at the end of the six-month negotiation period provided for by the Directive, extendable for an equivalent period, no agreement could be concluded.
In the latter case only, the reference provisions provided for by the Directive will imperatively apply as soon as the registration of the SE is implemented.
On the other hand, if the SE is incorporated by transformation, these provisions only apply if the rules of a member state relating to the participation of workers in the administrative or supervisory body were already in force in the transformed company. in SE.

In the other three hypotheses of incorporation, these rules only play if, before the registration of the SE, one or more forms of participation applied in one or more companies having directly participated in the operation by covering at least 25 % the total number of employees for all of these (50 % in the case of a SE holding company or subsidiary); if the total number of staff remains below these thresholds, a decision by the SNB is required to make the reference provisions of the Directive applicable.

a) Consultative body

At a minimum, these reference provisions provide for the creation of a single "consultation" body in the Member State where the future SE is registered and in which the employee representatives are expected to sit alone. Its members are elected or appointed (according to the rules laid down in the transposition law of the Member State where the SE is registered) in proportion to the number of workers employed by the participating companies, their subsidiaries or establishments concerned. Each state is allocated one seat per tranche of workers employed there representing 10 % of the number of workers employed in all the States of the Union or a fraction of the said tranche.

The consultative body has the right to meet the competent SE body (board of directors, executive board) at least once a year, on the basis of regular reports drawn up by the latter, in order to be informed and consulted about the development of the SE's activities and its prospects.

These meetings relate in particular to the structure, the economic and financial situation, the probable development of activities, production and sales, the situation and probable development of employment, investments, substantial changes concerning the organization , the introduction of new working methods or new production processes, production transfers, mergers, capacity reductions or closings of companies, establishments or significant parts thereof and collective redundancies .

In addition, when exceptional circumstances occur which considerably affect the interests of the employees, in particular in the event of relocation, transfers, closure of companies or establishments or collective redundancies, the advisory body has the right to be informed and meet with the management body of the SE, without having a right of veto and having an obligation of confidentiality.

In summary, the functions and powers of this consultative body do not differ much from those which French law recognizes for works councils.

b) Employee participation in administrative or supervisory bodies

The situation is different for workers' participation, a true German "cultural exception", but which is therefore only essential if there is an involvement of a German company in which the rules of "Mitbestimmung" (co- management) were already applicable before the registration of the resulting SE (mainly public limited companies under German law with more than 500 employees).

If none of the participating companies was governed by participation rules before the SE was registered, it is not obliged to introduce provisions on employee participation.
Ultimately, it can be noted that in many cases, the SE can be set up without employee participation in the SE's administrative or supervisory bodies. In fact, the agreement to be reached does not necessarily have the objective of setting up employee participation, and the Community system leaves companies considerable room for maneuver in this regard, however at the cost of complex regulations.

III. The interest of SE

a) Cross-border mergers
The main assets lent to the SE are its mobility within the European Union. Its registered office can be transferred while maintaining the legal personality of the company. Its adoption could allow a simplification of the administrative structures of the companies and would contribute to a reduction in costs.
For France, the main interest is probably that the Regulation provides a mechanism for cross-border mergers, an operation which French law does not prohibit, but which it has so far ignored.
The Regulation provides a framework that would allow two entities to be merged quite easily even outside of a mother-daughter context. However, due to the numerus clausus of eligible legal forms (in particular the Simplified Joint Stock Company is not one of them!), The operation may require prior transformation.

b) "Forum shopping"
As it stands, the legal form of the SE looks more like a building site than a “finished product”. In order to finally allow its adoption, it was deliberately omitted to make specific provisions in the fields of taxation, competition, intellectual property or insolvency.
In the absence of Community harmonization, it is therefore the law of the Member State in which the SE has its seat which is intended to be applied and which may be more or less restrictive.
The choice of the state of establishment therefore deserves in-depth research in relation to the legal, social and fiscal environment of the countries likely to host the SE, in order to be able to take advantage of the opportunities offered by the significant differences remaining between the European Union member states in this regard.
This kind of “forum shopping” is regularly out of reach for companies that are not already real European players and used to handling different legal systems.
Others will quickly discover the attractions of the United Kingdom and Ireland for their great flexibility in terms of company law rules, the low cost of registration and their low corporate tax rate and Spain for its quasi - absence of rules imposing an implication of the employees in the business of the company. On the other hand, Germany, with its compulsory co-management, the main reason for the low strike rate in the country, risks appearing complex for foreign investors. Example: the Airbus group, which one might think is predestined to organize itself in the form of an SE and currently in the reorganization phase, declared that it was not interested in this legal form due to social constraints, given the large number of employees the group has in Germany.
Legal and tax competition between member states to attract investors is fully underway. There are sites on the Internet that offer Spanish or English "ready to use" shells. The reaction was immediate: at one of the last summits, the governments of France and Germany called for an acceleration of the harmonization of tax law at Community level to counter the dumping effects .
In this sense, the SE is a perfect example of the dynamics specific to most Community texts, also called the spill over effect: the gaps left by the Member States during the adoption will be satisfied, by other texts or the jurisprudence of the European Court of Justice interpreting the texts using the famous "useful effect".

IV. State and trends of transposition in France

France has not yet transposed the Directive.
Two draft laws have been drawn up so far: the Marini project, which confines itself to adjusting company law, in order to better integrate the new legal form of the SE and to increase the competitiveness of SEs registered in France, and the project presented by Senators Branger and Hyest, which includes the social aspect, in other words the transposition of the Directive.

a) The Marini project
An essential point of Senator Marini's project is to want to give SEs that do not make public savings flexibility in the arrangement of relations between shareholders comparable to that existing in France for SAS.

In addition, the project aims to abolish the provisions of the Commercial Code imposing a minimum number of shareholders in public limited companies and the need for directors or members of the supervisory board of a public limited company to have the status of shareholder , thus allowing the creation of a one-person SA.

b) The Branger / Hyest project
Senators Branger and Hyest also wish to make public limited companies more attractive by proposing the creation of a "simplified public company" with the aim of providing a "bridge" between the SA and the SAS, by a streamlined transformation procedure allowing SAS, when its statutes are compatible with French rules resulting from the transposition of Community directives applicable to public limited companies, to be considered, by means of a declaration of conformity, as a simplified form of SA. They will thus be able to take the name of simplified public limited company without questioning its statutes while avoiding the constraints linked to the transformation into public limited companies.

With regard to the transposition of the Directive, the project proposes to integrate a Title IX in Book IV of the Labor Code, entitled "On the involvement of employees in matters relating to European society". Its provisions transpose the Directive and exercise the options contained therein to comply with the employee involvement system in force.

Unfortunate tendency of the current legislation in France, the project leaves a good number of points to regulate by the government by way of decree, which makes illusory that in the next time, an SE could be registered in France.

The two projects not being very far apart from each other as regards the measures envisaged for the adjustment of company law, and the project for the transposition of the Directive remaining unsurprising, it is quite likely that the end result will be a combination of the two.