500 active European Companies (SE)
Since introduction of the European Company Statute or Societas Europaea (SE) in October 2004, the number of European Companies has increased steadily, year by year, at almost exponential rates of growth. In February 2010, the ETUI’s “SE database“ exceeded, for the first time, the total of 500 active SEs. This rather impressive total should, however, not blind observers to the fact that many SEs do not conform to the standard definition, for they are, in their overwhelming majority, SEs without any employees (‘empty SEs’) and/or without even a specific business purpose (‘shelf SEs’). Only roughly one quarter of the total number of SEs are today considered “normal SEs” in the sense that they have both employees and business activities.
SEs can today be found in 22 countries of the “EU-27+3“ (Norway, Liechtenstein, Iceland). Whereas Germany is home to almost half of the normal SEs, the Czech Republic shows the “highest score“ with regard to the overall number of SEs. Little being unfortunately known about the employee figures of most Czech SEs, a large proportion of them are classified as so-called “UFO SEs” (Unidentified Flying Objects). Besides these two member states, significant SE home countries are the UK, the Netherlands, France, Slovakia, Luxembourg, Austria, Cyprus and Sweden. The “TOP-10“ SE countries together host approximately 90% of all SEs.
The SE legislation represents a milestone not only in the field of EU company law but also in that of European industrial relations. The SE Directive contains provision for a legally binding procedure of company-level negotiations on employee information, consultation and participation (at board level). By February 2009 an agreement on worker involvement had been concluded in only 54 of the 131 known “normal SEs”. In 25 SEs the rights enshrined in the agreement include board-level participation, thereby adding an important dimension for workers’ voice in company decision-making.
Today, more than 80 employee board members represent the interests of the workforce on SE supervisory or administrative boards. A fundamental innovation introduced by the SE legislation is the transnational component of participation at board level. In a number of SEs (e.g. Allianz SE, BASF SE, and MAN Diesel SE) employee representatives from several countries sit on the board and represent the interests of the whole workforce in Europe. SE employee board-level representatives come today from 10 different countries (AU, BE, DK, FR, DE, IT, NL, NO, PL, UK).
From an employee and trade union perspective, experiences with the SE are mixed. A crucial problem remains the high number of “activated shelf SEs”, for this is a development representing a potential threat to rights of worker involvement. It has to be borne in mind, in this respect, that, since mechanisms for securing employee rights to information, consultation and participation are guaranteed at the moment of founding an SE only, it is difficult to negotiate workers’ rights at a later point in time, when the company has recruited its employees. Several cases have indeed already arisen of employees being deprived of their involvement rights through the activation of a former shelf SE company. A similar danger basically exists for all normal SEs in the situation of structural change after the founding of an SE. Another negative development is that, in Germany, the SE has in several cases been used to “freeze” the current level of board-level participation and/or reduce the size of the supervisory board.
However, it is also important to mention that, in many SEs, employees and their trade unions have succeeded in negotiating substantial agreements on worker involvement. The agreements of many larger SEs, in particular, are generally in line with good ‘European Works Council practice’ and on certain points they even go beyond the provisions of the SE Directive.
For the future, it will be important to use the forthcoming revision of the SE Directive to remedy the flaws that have been described above and to ensure that workers are not deprived of their involvement rights. Moreover, it needs to be ensured that the involvement standard set by the SE Directive is not lowered in upcoming EU legislation in the field of company law. The current debate on a possible European Private Company bodes ill in this respect.