EP approves European Company Statute proposals

The formal adoption of the proposal for the creation of a European Company moved a step closer following the approval on 4 September 2001 by the European Parliament of the draft Regulation on the European Company Statute and the accompanying Directive on worker involvement.

On 4 September 2001, the European Parliament (EP) voted to approve the proposals for a Regulation on a European Company Statute (ECS) - creating a new form of company based in European, rather than national law - and the accompanying Directive on worker involvement in the European Company. Consensus on the ECS, which has been discussed in one form or another for the past 30 years, was reached at the European Council meeting in Nice in December 2000 (EU0012288F). As a result, political agreement on compromise texts of the draft Regulation and Directive was reached at a special Employment and Social Policy Council held on 20 December 2000 (EU0101290N). The texts were then forwarded to the EP for its opinion. The legal base of the Directive and Regulation is now Article 308 of the European Community Treaty, requiring only a single consultation of the EP, and Parliament's approval is not necessary for final adoption of the proposals.

At itsplenary session on 4 September, the EP approved the ECS Regulation, though proposing a number of amendments (on taxation, for example). Most notably, Parliament called for a change in the legal basis from Article 308 to one which provides for co-decision between the Council and EP, rather than merely consultation of the latter. It reserved the right, if it so chooses after the legislative process has been concluded, to challenge the legal base before the European Court of Justice.

The EP also approved the draft Directive on worker involvement in the ECS, which would provide for negotiations between management and employee representatives in each European Company over the worker involvement arrangements to be applied, with statutory reference provisions applying where no agreement is reached. The EP suggested a number of amendments to the text, again calling for a change in the legal base - in this case to Article 137(3) of the Treaty, which it considered to be more appropriate as the Directive concerns the representation and collective defence of the interests of workers. The EP again reserved the right to mount a legal challenge to the legal base of the Directive, once the legislative process has been concluded.

Further, the EP stated that following substantial structural changes, such as mergers of two European Companies or the transfer of a European Company, employees should be given an opportunity for new negotiations on involvement arrangements.

The Internal Market Commissioner, Frits Bolkestein, stated that although he recognised the concerns raised by the EP, the current texts represented a 'delicate compromise' reached in the Council and that, therefore, the only realistic option at this stage was to adopt the texts as they stood. Adoption of the Regulation and Directive by the Council is now expected in the near future.