EU Company Law

İntroduction

During recent decades, the economic environment of European companies has changed and evolved rapidly, mainly due to the effects of globalization of economies and by dramatic technological breakthroughs. All this has prompted the legal environment to also undergo an evolution in line with them, including the adoption of international standards in the accounting field and the necessary development of the jurisprudence of the European Community Court of Justice to mitigate the legislative disorders and find the meaning of the European legal edifice. In recent years the jurisprudence of the Court of Justice has actively worked to clarify the scope of application of the fundamental freedoms of the Treaty, allowing the development of the path for greater business mobility in the European Union and greater transparency of European legislation.

In the field at hand, the increased movement of companies across the length and breadth of Europe, and of the world at large, requires that we find flexible answers in an environment that changes rapidly and continuously. Changes that can only be assimilated if the different Member States know how to react rapidly to all the new circumstances that are being drawn against a background, as described, a harmonized and rigid European framework can turn out to be, in some cases, a brake to innovation rather than an advantage for the internal market, which needs to equip itself with greater flexibility and adaptability to change. As for the worrying issue of business competitiveness, we can say that competitiveness will also depend on the level of administrative costs, directly or indirectly related to the activity, which European companies are subject to. And we must bear in mind that some of these administrative costs arise from community rules.

Of course, before this picture, there should be reductions in administrative burdens that SMEs are subjected to, and this reduction should be done at all levels. One important way is to combine the reports prepared for different purposes (for example, fiscal, statistic, related to social security or to labour) at a Member State level, so that we could reduce the overall burden represented by having to keep different information and accounting systems, thus being able to facilitate the use of electronic formats (XBRL) in the reports that must be submitted.

The current simplification project for SMEs coincides with the publication by the International Accounting Standards Board (IASB), of a Draft Proposal of International Financial Reporting Standards (IFRS) for Small and Medium Entities. Although we can assert that after an initial analysis by the Commission, the inability of the IASB has been highlighted in its accounting work for the SMEs to grant new elements that can make life simpler for European SMEs.

On the issue of harmonization, we cannot deny the positive effects that they also exercise on business competitiveness. It is an advantage for cross-border markets, and it may in many cases, allow clarifying the relationship between the potential legal systems which are involved, increasing legal certainty. Just like when creating minimum standards of transparency, standards to protect third parties against the dangers that a greater mobility of business at international levels can represent for them.

To develop and allow everything we have described above, and so that all the companies of the EU can fully exploit all the advantages of the single market, the legal framework has been built and developed day by day, which enables companies to restructure cross-border transactions and exerting activities in several Member States acting under the regulations developed by the EU.

We begin by emphasizing that possibly this has been one of the biggest challenges of the EU, the development of European Company Statute, or "Societas Europæa” (SE), which after several delays and problems in defining its content, was approved in October 2001. The main objective of the statute is to allow for companies incorporated in different Member States to be able to merge and form a group of companies, or to allow for companies to be able to create a joint subsidiary, thus avoiding all the legal and practical difficulties arising from the implementation of twenty-five different legal jurisdictions. This is so that the companies that adopt the SE statute may be able to work across the EU applying a single regulation, unified management and the same publication rules. The SE statute must be applied in conjunction with other dispositions in everything related to the involvement of their workers. Emphasizing that five of the twenty-eight Member States (hereinafter referred to as MS), from the EU and European Economic Area (Greece, Spain, Ireland, Slovenia and Liechtenstein), have not taken in due time national regulations necessary to implement it.

Another one of the measures expected by European companies was approved by the EU in October 2005; the directive about cross-border mergers of corporations, aiming to reduce the cost of such mergers, ensuring legal certainty and enabling them to benefit from the greatest possible number of companies. On the other hand, and operating within a legal framework, independent of the national legal systems, highlighting the European Economic Interest Grouping (EEIG), applicable since 1989 and whose objective is to facilitate and encourage transnational cooperation between companies in several MS, allowing, by creating a partnership, that different companies established in different MS can develop joint activities without being forced to merge or to form a joint subsidiary.

But we must also highlight the work that takes place in the EU to encourage the creation of economic and social enterprises that allow meeting the demands of a changing Europe (cooperatives, mutual benefit funds, associations and foundations).

Proof of this is the development of the Statute of the European Cooperative Society (SCE), approved in July 2003 to facilitate the development of transnational activities of cooperatives. As in the Statute of the SE, there are other provisions governing employee involvement in European Cooperative Society.