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Transposition of the SE legislation in Slovenia (Final Report: June 2006)

The process of implementing the SE statute in Slovenia began in November 2004, when the Slovenian government confirmed amendments to the Companies Act (amendment ZGD-H). However, in December 2004 the amending law was passed without provisions on the European Company. The reasons for this delay were the change of government and the strong influence of the SE regulation and the SE directive on Slovenian company and industrial relations law. Hence, Slovenia was one of the Member States furthest behind regarding implementation of the SE statute and was warned by the European Commission to speed up the implementation process, receiving an official letter in December 2005.

I. Implementation of European Company Statute in Slovenian Law

The process of the SE-Statute implementation in Slovenia began in November 2004, when the Slovenian government confirmed amendments to the Companies Act (amendment ZGD-H). However, in December 2004 the amending law was passed without provisions on European Company.[1] The reasons for this delay lied in the change of government and in strong influence that the SE-Regulation and SE-Directive had on the Slovene national company and industrial relations law. Hence, Slovenia was one of the most delaying Member States regarding the implementation of the SE-Statute and has in this regard been warned by the European Commission to speed-up the implementation process and even got an official letter in this respect in December 2005.

Despite Slovenia’s delay in implementing the SE-Statute, there has for some time existed and agreement among commentators that the SE-Regulation and the SE-Directive should have been implemented separately. The SE-Regulation has consequently been implemented by amendments to the Slovenian Companies Act in April 2006 and the SE-Directive was implemented in February 2006 in a separate act, not incorporated in the existing general Act on Participation of Workers in Management.

Transposition of the SE-Regulation

With the aim of maintaining the integrity of Slovenian company law and regulating a number of open issues of the Regulation on the European Company, implementation of SE legislation has been achieved by means of an amendment to the Companies’ Act (it is in fact a renovated version of the Act now in force, Zakon o gospodarskih druzbah, ZGD-1), the Slovenian company law code.

The SE-Regulation is transposed in the new Slovenian Companies Act in the fifth chapter – in Articles 430 - 463, divided into five main sections: General Provisions, Transfer of an SE’s Registered Office, Formation, Management and Winding Up.

The Companies Act regulates those matters that are mandatory for the harmonisation of Slovenian law with the SE-Regulation and optional matters related to corporate affairs, capital structure of minority shareholders and SE management. The Act does not regulate employee involvement, but merely refers to the need to reach agreement on employee involvement before an SE can be registered and to the future act implementing the SE Directive.

The SE-Regulation only regulates some of the company law aspects of the future SE. In some areas, however, member states have a choice and can refer to national company law. The Companies Act refers, where possible, to existing provisions on corporations.

Slovenian jurisprudence regards the choice between a one-tier and a two-tier structure as one of the most important novelties of the SE-Regulation. The Slovenian Companies Act has hitherto not regulated one-tier management: this is now dealt with in the new chapter on SEs. As mentioned above, the Act also provides the management system option for national companies, reflecting the wishes of the business sector in Slovenia.

One of the most important issues of the SE-Regulation is the possibility to transfer the SE’s registered office. In this regard rules governing conflicts between laws and rules on the home state of the company in question are important. Approaches to this issue include the theory of incorporation and the “real seat” theory. The Slovenian Companies Act applies the real seat theory in relation to companies, while for other legal entities the general rules are slightly different.

As far as other rules are concerned, special emphasis must be put on minority shareholders’ rights in SE companies which were harmonised with Slovenian law to the extent permitted by the SE-Regulation. Shareholders’ and creditors’ protection must not differ in similar legal situations.

Transposition of the SE-Directive

The Slovenian Companies Act prima facie does not address employee involvement in European Company. However, Article 431 of the Companies Act provides that registration of a European Company shall be carried out in line with the rules on the registration of national companies, whereas an application for SE registration must be accompanied by:

  • an agreement on employee involvement in SE management, concluded under the terms of the act regulating employee involvement in SE management; or
  • a decision on termination of negotiations, concluded under the terms of the act regulating employee involvement in SE management; or
  • a statement from all management-board members confirming that an agreement on employee involvement was not reached in the specified period of time.

The full transposition of the SE-Directive has been achieved by a specific law – Act on participation of workers at management of European Company (SE), which has been adopted in February 2006 and published in the Slovenian Official Gazette on 17th March 2006. The Act on the participation of workers in management of 1993 therefore remains the fundamental law in the field of workers’ involvement, with primarily nation-wide provisions, while particular fields with supranational application are regulated in specific laws – EWC Act and in the SE-Act. Each of the three acts is a “stand-alone” measure with its own principles, objectives and legal logic.

The new Slovenian Act on participation of workers at management of European Company (SE) consists of 40 Articles, divided into the following eight chapters:

I. General provisions (Arts 1-3: aims of the Act, validity and definitions);

II. Negotiations’ procedure (Arts 4-15);

III. Involvement of workers at SE management on the basis of an agreement (Arts 16-17);

IV. Involvement of workers at SE management on the basis of the Act (Arts 18-34);

V. Principles of co-operation and safe-guard clause (Arts 35-37: duty of mutual trust, confidentiality clause and protection of workers’ representatives);

VI. Dispute settlement (Art 38 – competence of Slovenian specialised labour is provided for any disputes under the Act);

VII. Penalty provision (Art 39 – penalty of app. 21.000 euros is determined for any misdemeanor in relation to proper information of workers in the process of establishing an SE – this penalty may be imposed upon any of the participating companies; in addition to this penalty of 2.100 euros may be imposed upon a responsible natural person);

VIII. Final provision (Art 40 – beginning of validity of the Act).

It is a rather technical Act, considering specific nature of the SE-Directive’s provisions, which do not foresee many options for national parliaments as regards workers’ involvement in the SE. As regards the few options left to the Member States to decide, the Slovenian Parliament adopted the following solutions:

Article 8 of the Act provides elections of SNB Members from Slovenia. It states that workers’ representatives from Slovenia are to be elected by the general meeting of employees using secret ballots. The right to propose candidates for the SNB have works’ councils, representative trade unions of the participating companies and at least 50 workers of a participating company. The same applies for formation of works’ council of the SE afterwards (Article 21 of the Act).

As regards experts Article 10 provides that the SNB may require expert assistance of its choice, including trade unions’ representatives at the EU level. These experts may on request of SNB be present at negotiations’ meetings as counsels. SNB may also decide to inform representatives of relevant external organisation on the commencement of the negotiations. Article 11 provides that all expenses regarding negotiations and activities of the SNB are to be recovered by the participating companies. However, the expenses for expert assistance are limited to one expert only. The same limitation applies for experts’ assistance to the SE works councils (Article 29).

Slovenian members of the SE works council are protected by the general Slovenian provisions on protection of workers’ representatives (Article 37). Accordingly, the Act on the Participation of Workers in Management (Art 67) states:

“A workers' council member who during the discharge of his duties behaves in accordance with the effective laws, collective agreements and the agreement provided by this Law may not without the consent of the workers' council:

- be assigned to another work post or another employer;

- be included among any redundancies.

If a workers' council member behaves as cited in the preceding paragraph it shall not be possible to lower his salary, institute disciplinary or indemnification proceedings against him or place him in any other way in a less favourable or subordinate position.

Another important protective provision is stated in Article 113 of the Employment Relationships Act:

(1) The employer may not terminate the employment contract:

to a member of a works council, a workers’ representative, a member of a supervisory board representing workers, a workers' representative in the council of an institution…(2) The protection against termination for the persons referred to in the previous paragraph shall be applied the entire period of their term of office and another year after its expiry.

Conclusions

Slovenia is one of few EU Member States regulating employee participation at board level. Process of EU Accession, formation of the European Company and general globalisation trends put Slovenian workers participation model on probation. Following the implementation of the SE-Regulation and SE-Directive the Slovenian Parliament adopted one-tier management system in addition to the two-tier system not only for European Companies but also for Slovenian national joint-stock companies. Comparative law and practice say that both systems can work effectively, providing that they are well exercised.[2] From the point of view of workers representatives, two-tier system has proved successful. On the other hand business wants more effective and faster decision-making, referring to the corporate governance trends, and hence requires a flexible system. However, in this regard it is very important to take an appropriate approach towards employee involvement, which is a constitutional category in Slovenia.

Research activities

The Law Faculty of the University of Maribor has been researching SE legislation within the framework of the research project “Corporation management structure”, chaired by Prof. Dr Marijan Kocbek. Janja Hojnik has researched the SE-Directive and published the results in legal journal Podjetje in delo (Nos 3–4/2004, pp. 646–72).

Footnotes:

[1] The proposal for implementation of the SE Regulation has foreseen a chapter added to the Companies Act (Chapter 4A) after Article 398. The chapter would consist of 63 articles (398a–398bl), divided into five main sections: General Provisions, Transfer of an SE’s Registered Office, Formation, Management and Winding Up. Back

The proposal provided for regulation of those matters that are mandatory for the harmonisation of Slovenian law with the SE-Regulation and optional matters related to corporate affairs, capital structure of minority shareholders and SE management. The proposal did not anticipate for the Companies Act to regulate employee involvement, but merely referred to the need to reach agreement on employee involvement before an SE can be registered and to the future act implementing the SE-Directive.

[2] Bratina B., ref. above. Back

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