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A sustainable European company – Notes from Sweden

This report describes recent changes in SE legislation in Sweden. It also describes the transposition of the SCE directive into Swedish law. The report highlights legal areas of particular concern regarding worker involvement in SEs and SCEs. As of December 2007, only five SEs had been registered at the Swedish Companies Registration Office. According to Office officials, one has tabled plans to move its seat to Germany. Two of the other SEs are shelf companies without active undertakings and are owned by a third shelf company. SEs thus account for a small part of trade and industry in Sweden.

There have been no major material changes to Swedish corporate law, and the SE has had only limited effects on the Swedish corporate structure. The legal discourse on the SE has focused on aspects of fiscal and corporate law. The trade union movement has not expressed any concerns that the SE per se will lead to a lower level of employee involvement. The Board Representation Act ( Lagen [1987:1245] om styrelserepresentation för de privatanställda) has not been debated or questioned. The change in government following the general election in autumn 2006 has not resulted in any proposals for changes in the most important legislation, the Codetermination Act ( Lagen [1976:580] om medbestämmande i arbetslivet), which concerns worker participation in corporations.

The legal framework for SEs has twice been subject to change since the transposition process. First, the law has been changed with regard to situations in which employees do not form a special negotiating body. The initial legislation was not clear on whether employees had a veto, and could halt the registration of an SE. During the debate on the government bill (prop. 2003/04:122 p. 41) questions were raised concerning the consequences of allowing employees such a possibility. The government assumed that the intention was never to grant employees the right to veto SE registrations. The situation was not legislated upon, and the government awaited action from the EU, thus postponing a national law on the matter. The issue was resolved at national level in subsequent legislative acts (prop. 2005/06:170 pp. 100). The so-called employees’ ‘veto’ (not setting up a special negotiating body) is now legislated for in the form of a timeframe for establishment. On condition that the employees are responsible for not setting up a special negotiating body negotiations must commence (within ten weeks), even in the absence of a special negotiating body. The second change in the legislation on worker involvement in SEs is technical and substantially insignificant (prop. 2007/08:20 pp. 65).

In one very recent instance the reshaping into an SE of a large German company with a subsidiary in Sweden was applauded by the trade union of clerical and white-collar workers in industry. The seat of the company is to be in Germany. The Swedish trade union officials say they are content with the degree and forms of employee involvement in the SE. The transformation into an SE of the Swedish bank Nordea has not yet been completed.

The SCE directive was implemented in Swedish law through the following legislation: Act on Involvement of Employees in European Cooperative Societies ( Lagen [2006:477] om arbetstagarinflytande i europakooperativ); Act on SCEs ( Lagen [2006:595] om europakooperativ); and the government regulation on SCEs ( Förordningen [2006:922] om europakooperativ). Preparatory work on the issue of employee involvement is contained in Ds 2005:10 (prop. 2005/06:170, bet. 2005/06:AU9, rskr. 2005/06:315). The corporate law issues are handled in prop. 2005/06:150, while fiscal law issues are handled in prop. 2005/06:36. The government bill for legislation regarding employee involvement passed through parliament without amendment.

In Swedish law, the SCE is based upon the Cooperative Societies Act ( Lagen [1987:667] om ekonomiska föreningar), which deals with the corporate law aspects. The law on employee involvement in SCEs is based upon the corresponding legislation on worker involvement in SEs. The implementation process was not regarded as difficult, although there are two areas in which special concern is warranted. First, the Cooperative Societies Act is based on the premise that such organisations are inherently monistic; Swedish law has traditionally acknowledged only monistic organisations. Introduction of the SCE implies that the law on this matter acknowledges dualistic organisations, as well as monistic ones, when an SCE is formed (prop. 2005/06:170 p. 66). It is too early to evaluate the implications of this change in the law. Secondly, the Swedish Cooperative Societies Act does not allow any one other than members of the cooperative society to vote at the general meeting. The agreement on worker involvement in SCEs therefore cannot contain provisions giving the right to vote at the general meeting to the employees (prop. 2005/06:170 pp. 67, pp. 85).

The new legislation on SCEs has not yet been examined by legal scholars; no articles on the subject, except brief overviews of the legislation, have been published. As of December 2007, the Swedish Companies Registration Office had not registered any SCEs.

In the preparatory work for the legislation on SEs and SCEs, the government discussed the aspect of gender equality at board level. The national legislation on both the SE and the SCE is based upon respect for voluntary measures; no mandatory rules in the shape of affirmative action or quota systems have been put forward. Those who propose delegates both to the special negotiating body and the works council are required to propose both men and women in equal measure (prop. 2003/04:122 pp. 50, prop. 2005/06:170 p. 55, 72).

The new Swedish government has announced that it is not willing to follow through with previous proposals (cf. government inquiry committees SOU 2003:16, Ds 2006:11) to legislate on affirmative action or quota systems regarding board level representation. The equal representation of men and women on executive boards is thus a goal that must be achieved voluntarily.

By LL.D. Bernard Johann Mulder, Senior Researcher at Lund University and Senior Lecturer at Växjö University. LL.M. Niklas Selberg, doctoral candidate at Lund University, assisted in the preparation of this report.

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