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European Company Law

This section provides an overview of the European company law directives which have been passed to date. It also provides a more detailed discussion of those directives with provisions for worker information, consultation and participation, as well as current proposals for directives which would have particular significance for worker involvement. It also contains information on other issues in European company law, such as the European Cooperative Society or the European Private Company (SPE). Both have significant implications for employees’ rights.


Directive on cross-border mergers of limited liability companies (2005/56/EC)

The cross-border merger (or CBM) directive was adopted by the Council of Ministers on 26 October 2005. The main objective of the directive is to make it easier to merge companies across European borders. It should be noted that the worker involvement provisions in the directive are weaker than those provided by the European Company (SE) legislation.

Directive on Takeover Bids (2004/25/EC)

The 13th Company Law Directive (2004/25/EC, adopted 21.04.2004) regulates bids to take over companies listed on a stock markets. The main goal of the directive is to encourage takeovers in Europe by creating a legal framework for takeover bids, while at the same time providing minimum standards of protection for minority shareholders, and in theory other parties, such as employees.

Cross-border Transfer of the Registered Offices of Limited Liability Companies (proposed 14th Company Law Directive)

The goal of the proposed 14th Company Law Directive is to create a mechanism for companies to transfer their place of registration to another EU Member State. Until now such an action was either not possible or required the company to be liquidated in its country of origin before it could be re-founded with a registered office in the new country. The Directive would make it possible, for example, for a German GmbH to transfer its registered office to the UK, and at the same time transform itself into a UK Ltd. That means that after the transfer of the registered office the company is organised by UK company law and no longer by German company law.

European Private Company (SPE)

Since the adoption of the SE legislation in 2001 the idea of creating a European company form targeted at small and medium-sized enterprises (SMEs) has been on the political agenda. In 2002 a High Level Group of Company Law Experts organized by the European Commission proposed the creation of the European Private Company, or Societas Privata Europaea (“SPE”). The Commission adopted an SPE proposal in 2003, followed up by a proposal for a Council Regulation on the Statute for a European private company (SPE). The proposal however quickly ran into trouble as it was criticized heavily from many sides. Among the strongest critics have been the ETUC and its member trade unions which fear that this legal form could be used by companies to avoid national rules on worker involvement. Also the issues of separation of home and host country, minimum capital requirements and taxation issues remain controversial between member states.

Société européenne (Societas Europaea, SE)

The European Company (SE) has added additional facets on obligatory worker involvement at European level particularly by including – for the first time – participation rights at company board level. As of 8 October 2004 it became possible to establish a European Company (SE). The main purpose of the SE statute (EC 2157/2001) is to enable companies to operate their businesses on a cross-border basis in Europe under the same corporate regime. An important feature of this new company form is that – by means of the associated SE Directive (2001/86/EC) – obligatory negotiations on worker involvement in SEs were introduced which include the question of representation of the workforce at board level.

European Cooperative Society (Directive 2003/72/EC)

The European Cooperative Society (SCE) aims to reduce existing cross-border obstacles for cooperatives and to make it easier for them to operate across European borders. The SCE thereby complements the legislation on European Companies (SE) which has enabled companies to set up as a European public limited company. As in the case of the SE, the SCE legislation consists of a Regulation on the Statute for an SCE (1435/2003) and an accompanying Directive on worker involvement (2003/72/EC). The Regulation came into force from 18 August 2006, by which date the member states also had to transpose the Directive into national law.