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The European Private Company
(SPE)
and the Cartesio case
11 June 2009
Judit Fischer – European Commission, DG Internal
Market and Services
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What is the European Private
Company (SPE)?
• The SPE is
– a new European legal form,
– designed for SMEs,
– may be set up and run following the same
company law rules all over Europe.
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Context
• The proposal for an SPE Statute was adopted on 25
June 2008
• The idea of a European company for SMEs comes
primarily from business and continues to be strongly
supported – public consultations
• Embraced by the EP – Resolution with
recommendations on the SPE in 2007
• It is a part of the Small Business Act for Europe
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What is the problem?
• More than 99% of EU companies are SMEs but only
– 8% engage in cross-border trade
– 5% have subsidiaries or joint ventures abroad
• Reasons are related to
– language barriers and cultural differences
– differences in company law, tax and labour systems
• Company law–related costs: setting up and running
companies (subsidiaries) following different rules in
every MS – administrative costs, cost of expert legal
advice, etc.
• Lack of trust in foreign legal forms (esp. EU-12)
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Objectives of the SPE Statute
• Objectives: To reduce costs and to encourage
entrepreneurs to do business in other MS
• According to the respondents to public consultations
– savings could be up to € 10.000 – 20.000 when setting
up a subsidiary (reduced internal costs, consultant fees,
notary fees, no start-up capital) and € 1.000 - 8.000 per
year in relation to running the company
– the SPE would provide businesses with a European
label
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The SPE Statute
• The main features of the SPE:
– its name comes from Latin: Societas Privata Europaea –
no need to translate, European identity
– it is designed for SMEs but there is no size limitation
– it has legal personality
– its shareholders have limited liability
– it is a private company – its shares may not be publicly
traded
– its registered office and headquarters may be in
different MS - it may transfer its registered office to
another MS
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Which law governs the SPE?
• The mandatory provisions of the Regulation govern
major company law matters such as the formation
and the capital of the SPE or creditor protection
• Annex I lists the matters that shareholders must
regulate in the articles of association (e.g. shares,
management structure) – contractual freedom
• National law applies to insolvency, tax, labour and
when it is specifically required by the Regulation
• Model articles of association – examples for
entrepreneurs to facilitate start-up
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Formation of the SPE
• By any individual or legal entity in any MS
• Single-member company or multiple shareholders
• No cross-border requirement (e.g. shareholders from
different MS)
• From scratch, by transformation, merger, division
• Same registration procedure as national companies
• Online application possible
• A single legality check on formation
• Access to information in the BR from any MS
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Capital of the SPE
• Minimum capital requirement: €1 – to facilitate startup
– it has no role in creditor protection
– shareholders are the best placed to define the capital
needs of their business
• Instead, the assets of the SPE are to be protected
– broad definition of distributions
– a balance-sheet test to precede any distribution
– shareholders may also require the management to sign
a solvency statement (option)
+ transparency requirements
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Internal organisation of the SPE
• Most important decisions must be taken by the
shareholders (e.g. amendments to the articles of
association, capital increase or reduction, merger)
• Some by qualified majority (at least 2/3 of the votes)
• But no need to hold meetings – decisions may be
taken in writing, by e-mail, etc.
• Options for management: an individual director, onetier or two-tier board
• Supervisory board – optional in two-tier system
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Employee participation
• Employees' participation rights are left to the national
law of the MS where the SPE is registered
• The SPE should not be used to circumvent employees'
participation rights
• In the case of cross-border operations pre-existing
employee participation rights must be protected
– Cross-border mergers – Directive 2005/56/EC applies
– Transfer of the SPE's registered office to another MS –
obligation to start negotiations on participation rights –
if no success, pre-existing rules to be maintained
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Adoption procedure – state of play
• Council: Article 308 – unanimity
• Difficulties:
–
–
–
–
Lack of cross-border requirement on creation
Minimum legal capital requirement of €1
Rules on employee participation
Seat of the SPE
• Czech Presidency presented a revised compromise
proposal and a progress report to the Council
• Incoming Swedish Presidency is expected to reach a
political agreement
• European Parliament: consultation procedure
– Adopted its report on 10 March
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The Cartesio case
• 16 December 2008 – ECJ delivered its ruling in the
Cartesio case
• The facts of the case:
– In 2005 the Cartesio Bt. (limited partnership) filed an
application to the competent regional registering court
to change the address of its seat to an address in Italy
– The court rejected the application on the following
ground: Hungarian law does not allow a company
incorporated in Hungary to transfer its seat abroad and
remain subject to Hungarian law as its personal law
– Cartesio lodged an appeal against the decision
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The question to the ECJ
• Are the rules of national law that prevent a company
from transferring its seat to another MS whilst
retaining its status as a company under that national
law incompatible with Articles 43 and 48 of the EC
Treaty (freedom of establishment)?
• At the time of the case, Hungarian law defined the
seat of a company as the place where the company's
central administration (headquarters) is situated.
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The findings of the Court
• Seat transfer under Hungarian law would require the
winding up of the company and subsequent reincorporation in the MS of destination.
• Article 48 of the EC Treaty places the three possible
connecting factors (the registered office, the central
administration or the principle place of business) on
equal footing.
• Distinction between two situations:
– Seat transfer without a change in the national law
applicable to company form (Cartesio)
– Seat transfer with a change in the national law
applicable to company form
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Seat transfer with/without a
change in the applicable law
• Seat transfer without a change in the applicable law
– MS are free to decide on the connecting factor
– MS may prevent a company from transferring its seat
to another MS whilst retaining its status as a company
governed by the law of the MS of incorporation
• Seat transfer with a change in the applicable law
– MS cannot require the winding up of a company that
wants to relocate to another MS and convert itself into
a form governed by the law of the MS of destination, if
this is permitted under the law of the latter MS
– Such a barrier would be a restriction of freedom of
establishment unless it serves public interest
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Situation in the Member States
• No Community law instrument to govern seat transfer
• Inbound and/or outbound seat transfer (with a
change of the applicable law) is allowed in some MS,
e.g. ES, LU, CY, IT (outbound)
• Allowing the transfer is under consideration in some
MS, e.g. UK, NL, DK, HU, CZ
• Some MS and the EP would like to see a directive on
seat transfer – up to the next Commission to decide
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Interconnection of business registers
• E-Justice + end of BRITE project
• How to help the enforcement of the company law
directives? (cross-border mergers, seat transfer of the
SE, branch disclosure, possibly the SPE)
• By October 2009 DG Internal Market and Services
– will present a progress report on the state of play of
the interconnection of business registers
– will outline different options for the way forward (EBR,
E-Justice, IMI, possible legislative changes)
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Thank you for your attention.
For more information:
http://ec.europa.eu/internal_market/company/index_en.htm
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