Response of :
The European Trade Union Confederation
Boulevard du Roi Albert II, 5
1210 Brussels
Registered no.
06698681039-26
Public Consultation on
“Single Member Limited Liability Companies”
European Commission
DG INTERNAL MARKET
The European Trade Union Confederation (ETUC) is a trade union organization
which was established in 1973 to represent workers and their national affiliates at
the European level. Its role has increased as European integration has expanded EU
influence on economic, employment and social policy throughout the 27 Member
States.
At present, the ETUC membership comprises 83 National Trade Union
Confederations from a total of 36 European countries and 12 European industry
federations, covering some 60 million individual trade unionists1. Other trade union
structures operate under the auspices of the ETUC: EUROCADRES (the Council of
European Professional and Managerial Staff) and EFREP/FERPA (European
Federation of Retired and Elderly Persons).
I. Information
1. Please indicate if you are responding as or on behalf of:*
a) Public authority (including government)
b) Private Sector Company
c) Public Sector Company
d) University/Research Institute/Think Tank or similar
e) Lawyer/notary
f) Business Federation/ Business Organisation/Chamber of Commerce, other federation,
association or
organisation
g) Trade Union/Employee Body or similar
h) Individual
i) Consumers' association
j) Other
Your country: Belgium
Address: ETUC etc.
2. Information about your Company (will be skipped over)
II. Need for harmonization
1. Do you agree with the finding that the overall participation of SME's in cross-border
trade/activities in the EU is low in relation to their potential?*
a) Yes
b) No
c) I do not know
Comments: The ETUC would like to note that cross-border trade/activities by SMEs is not
always in the interests of stakeholders and society. It appears that an increasing amount of
1
The list of countries represented is available on this link: http://www.etuc.org/a/109
company cross-border activity is designed to minimize taxation and avoid national
regulations designed to protect stakeholders such as employees. The discussion on SME
policy should focus more on meeting genuine business needs while at the same time
protecting the interests of stakeholders in the internal market.
2. Is it difficult for SMEs to expand their commercial activities/trade by setting-up a
branch or subsidiary abroad (within the EU)?*
a) Yes
b) No
c) I do not know
Comments: The freedom of establishment in the EU, as reinforced by a number of ECJ
decisions on the issue, has enabled SMEs to establish new branches or subsidiaries abroad
in the EU with relatively little effort. Convincing evidence to the contrary has not been
presented.
3. Is it difficult for SMEs to move their registered office, headquarters or principle place of
business abroad (within the EU)?*
a) Yes
b) No
c) I do not know
Comment: An extensive consulting industry has developed which helps SMEs move their
registered office, headquarters or principle place of business abroad within the EU at a
relatively low cost. It is not clear that this type of freedom of movement is in the interests
of stakeholders and society, as such moves are frequently not motivated by genuine
business needs.
4. Why is it difficult to move or expand a commercial activity/trade, by setting-up a
branch or subsidiary, abroad
(within the EU)?*
a) Compliance costs with foreign legislation on company law issues (translations,
registration
requirements/fees, capital requirements, reporting, operational/running costs including
legal advice related to it,
etc.)
b) Difficulty of financing due to cross-border dimension
c) Legal advice costs related to the set-up of the company in the foreign legal system
d) Lack of knowledge/trust of foreign company law forms
e) Other
f) I do not know
This question will be skipped over if we answer 3 with a „no“
5. Within compliance costs, which do you consider as being the biggest obstacle to moving
or expanding the commercial activity/trade, by setting-up a branch or subsidiary, abroad
(within the EU) ?*
a) Registration fees (including notary fees)
b) Initial capital
c) Annual running/operational costs including reporting, accounting, auditing, legal
advice
d) Translations
e) Other (e.g. labour law, health and safety issues etc.)
This question will be skipped over if we do not answer 4 a) above.
6. Would the legislative harmonisation of requirements concerning single-member private
limited liability companies at the EU level encourage/facilitate an increase in cross-border
activity of SMEs within the EU? (harmonization could include, inter alia, registration,
methods of formation, initial capital, protection of creditors, transfer of registered office,
registration of branches)*
a)Yes
b) No
c) I do not know
What would otherwise increase such activity of SME's ?
*
a) Information campaign b) Use of points of single contact c) Other
Comment: The effect of legislative harmonization of requirements depends which
direction the harmonization is in. Downward harmonization undermines the reliability
and reputation of companies with regard to their stakeholders. Depending on the
measure, upward harmonization can help improve the protection of stakeholders. Here
the ETUC supports European minimum standards for worker involvement as well as for a
requirement for companies to have the registered office and real seat in the same country.
III. Quantifiable data
We just don’t have data on most of the points addressed here, e.g. cost of registration, etc.
IV. Substance – A potential initiative on single-member limited liability companies
1. Should the potential initiative include simple rules for company registration on-line
with one common standard registration form throughout the EU?
*
a) Yes
b) No
c) I do not know
Comment: National registration rules and procedures should not be simplified solely in
the interests of EU harmonization. However, transparency in registration procedures as
well as transparency in business registers (including up-to-date company data on finances,
employment, etc.) should be increased.
2. Should the potential initiative include rules on on-line creation of branches abroad
(within the EU) via the central platform of interconnection of national business registers ?
*
a) Yes
b) No
c) I do not know
Comment: Similar to the answer on the last question, the ETUC would welcome an
increase in the transparency and up-to-date nature of company data in business registers.
However, rules on creation of branches abroad should not be simplified at the cost of
stakeholders in the interests of encouraging cross-border company activity.
3. Should the potential initiative harmonise the amount of minimum legal capital required
for the setting-up of a single-member private limited liability company?
*
a) Yes
b) No
c) I do not know
Comment: The ETUC has expressed its concern with the downward spiral of minimum
capital requirements for companies. A harmonization of minimum legal capital can only
be considered if it would lead to a strengthening rather than weakening of stakeholder
protection in the EU. Furthermore, any form of harmonization cannot be envisaged if it
threatens higher requirements applicable under national law. EU harmonization should be
about setting a minimum level of capital requirement and not to cap it.
3.1. What should be the harmonised amount of minimum legal capital?*
a) 1 euro
b) 1-999 euros
c) 1.000-4.999 euros
d) 5.000 euros or more
e) I do not know
Comment: A harmonization of minimum legal capital can be considered only if it results
in a substantial strengthening of stakeholder protection. Alternatives such as equity ratios
should also be considered to an absolute minimum figure in euros, as the same figure
could be high for small businesses but relatively low for a company at the upper limit of
the medium size category. As highlighted above, any harmonized legal capital should be
without prejudice to higher requirements under national law.
4. Should the potential initiative include rules on distributions/dividends if a company
would be unable to continue paying its due debts after the distribution/paying the
dividends?
*
a) Yes
b) No
c) I do not know
Comments: Companies should not be allowed to pay dividends/make distributions if such
dividends/distributions impair their ability to meet obligations to debtors, as well as to
other stakeholders such as employees.
5. In case of minimum capital being more than 1 euro, should the potential initiative
include rules on the opposition of creditors to a significant reduction of capital?
a) Yes
b) No
c) I do not know
Comment: Creditors should be allowed to protect themselves against unilateral reductions
in capital by shareholders.
6. Should the potential initiative include rules on the transfer of registered office?
*
a) Yes
b) No
c) I do not know
Comment: The ETUC has called for clear rules for the transfer of registered office, which
include protection of worker involvement rights, require the registered office and
headquarters to be in the same country, and which allow transfer only for genuine
business needs. However, this needs to take place within the context of an initiative to
support European minimum standards for worker involvement and a Directive on the
cross-border transfer of registered office, rather than in the context of an SME initiative.
7. If the number of members in a single-member private limited liability company
increases to more than one, should the potential initiative provide for recourse to national
laws to convert the single-member private company into another national company law
form?
*
a) Yes
b) No
c) I do not know
Comment: It should be possible for single-member private limited liability companies to
be converted to other national company forms, provided that stakeholder interests are
protected. However, it should be kept in mind that a European Statute for single-member
private limited liability companies should not enter into competition with existing
national legal forms. This means that in order to benefit from an EU Statute, the company
would need to demonstrate a cross-border dimension.
8. Should the potential initiative provide for limits as to how many single-member private
limited liability companies one natural or legal person can create?
*
a) Yes
b) No
c) I do not know
Comment: In order to help prevent abuse of stakeholder interests through this company
form, natural or legal persons should be allowed to set up only a small number of singlemember private limited liability companies.
9. Should the potential initiative include special rules for SMEs which would make the
setting-up of single-member private limited liability companies easier and cheaper for
them than for bigger companies?
*
a) Yes
b) No
c) I do not know
Comment: Special rules for SMEs which could undermine the protection of stakeholder
interests should not be created in the name of making things easier and cheaper for
smaller companies. Incentives should also not be created for large companies to split up
into SMEs in order to circumvent regulations such as those applying to worker
involvement. With regard to workers’ rights, the potential EU initiative must be consistent
with the EU acquis, in particular with the SE Directive.
10. Should the potential initiative provide for a new common abbreviation (like SEUP –
Societas Europea UniPersonam ) for all single-member private limited liability companies
in the EU in order to increase the trust in “foreign” company law forms?
*
a) Yes
b) No
c) Other abbreviation
d) I do not know
Comment: A common abbreviation should not be produced to create the illusion of a
unified company form where a diversity of national company forms exist. An alternative
might be to create a European label for companies. This label should however require
companies to meet certain minimum standards designed to protect stakeholders,
including minimum standards for worker involvement and minimum capital
requirements. .
Additional comments:
ETUC has on numerous occasions expressed strong concerns about the proposed
European Private Company Statute (see Resolution attached). Clearly, the same concerns
also apply to an initiative on Single-Member Company.