The Swedish presidency will on 4 December attempt to secure agreement on the creation of an EU-wide statute for limited-liability companies.
Efforts to get a deal have been hampered by fears in some member states that firms will use the new statute to move their registered offices to other EU countries. They believe that companies would do this to escape national rules requiring them to involve employees in decision-making and to hold relatively large amounts of capital.
Unanimous agreement is required to set up the statute, which would allow entrepreneurs to set up ‘European private companies’ (or SPEs). A standard set of company law rules would apply to SPEs throughout the EU. Existing businesses would be allowed to transform themselves into SPEs. The statute has been tailored to entrepreneurs and small businesses, but no limit would be set for company size.
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Cheaper and easier
The European Commission believes that the SPE statute would maker it easier and cheaper for companies to set up subsidiaries in other member states. It argues that the statute would eliminate costs incurred in complying with diverse national rules on company formation and management structure, and estimates that a company using the statute could save €2,000-€10,000 in legal fees.
Ben Butters, director of European affairs at Eurochambres, an association representing European chambers of commerce, said that his members “are hoping very much” that agreement can be reached. The statute “would have added- value, particularly for businesses that want to trade cross-border,” he said.
Ambassadors discussed the latest Swedish compromise text on Friday (13 November), but little progress was made in resolving outstanding disagreements. Ambassadors will hold a further discussion tomorrow (20 November).
Austria is the country with the most strident concerns about the statute, with some support from other member states. The German government is understood to be among those that share Austria’s concerns, although the country has yet to take a formal position.
Both Germany and Austria require limited-liability companies (GmbH) to hold larger amounts of capital than is the European average. In Germany, a GmbH must have €25,000 in founding capital, while in Austria it must have €35,000. Both countries believe that the capital requirement is necessary to protect creditors. The UK, however, imposes no minimum capital requirement on its private limited companies.
Standard EU fee
The Commission proposed a standard EU fee of €1 to set up an SPE, but this is strongly opposed by Austria. The Swedish presidency has proposed a compromise under which individual member states would be allowed to impose a higher requirement. The Austrian government fears, however, that this would encourage companies to register outside its borders. It wants SPEs to be obliged to register in the country where they have their central administration.
Austria’s position has been challenged by some other governments, which argue that accepting its demands would make the statute less attractive to small businesses.