Joint JURI-LIBE meeting
Legend
Transcript markers
- text Sentence being played
- text Search result
- text Intervention cited by the link you opened
Click a sentence to play the video from that moment. Select text to quote it with the speaker, timestamp and link.
More options
JURI, LIBE European Parliament
Tineke Strik
And we also reintroduced the provisions regarding monitoring, reporting, and evaluation by the commission, as well as the types of actions that can be funded under the program in line with the current framework. So as such, the draft report is of a largely technical nature, but the amendment phase will also allow for an important opportunity to further specify some substantive elements that political groups feel should be further elaborated upon and strengthened. So I encourage colleagues to make use of this important opportunity, coming up with amendments to ensure that the justice program continues to be a fit for purpose instrument that translates our union's fundamental values into real tangible justice outcomes in people's everyday lives. Thank you.
Jaroslav Bžoch
Thank you, chair. Dear colleagues, first of all, let me thank the Liebe and jury secretariats and my team and team of Madame Strick for their work on this joint report that we are presenting to you today. As my colleague already mentioned, what is the justice program and why is that so important? There's no need to repeat all of that, but I will go straight to the main topics. Compared to the
Current justice program, the regulation establishing the justice program for.
The period 2028 and 2034, essentially presented by the commission, weakened the role of the European Parliament and member states. And, on the contrary, significantly expanded the competencies of the commissions in deciding which actions will be funded under the new program. Therefore, I'm very glad that we have found common ground with Yuri Kuropoda on this issue. In our joint report, we reinstated provisions that restored the role of the European Parliament and strengthened its competence in monitoring, reporting, and evaluating programs. Another important point is that we added article seven a on types of action back to the operative part, as it was in the current justice program.
This provision provides for demonstrative lists of actions that can be financed from the program, and thus limiting the commission from making discretionary decisions regarding funding. To conclude, I find the represent presented the joint report a very good starting point for the further discussions between the share reporters, as the main elements are already covered in it. The deadline for tabling the amendments is quite generous, so I believe we will manage to find a smooth compromise. Just a final remark from my side, the support is a living example that cooperation across the political spectrum is possible. With the Euricorporter, we might have different views on certain topics, but we have one common goal, to deliver the justice program for the period 2021 to 2027 in due time.
Thank you.
Ilhan Kyuchyuk
Thank you, Yaroslav. And also good that you agree to disagree on this, report with a common goal. With that, I go immediately to the shadow rapporteurs for EPP. It will be Axel Vossa for both.
Axel Voss
Emil Radev, unfortunately, can't be here today. So, but he would like to thank the co-rapporteurs for the draft report, which largely reflects several key EPP priorities, notably the reinstatement of the list of funded actions, the inclusion of monitoring and reporting obligations, and the use of clear indicators of assessed results. For the EPP group, it is essential that the justice program remains practical, measurable, and closely aligned with its core objectives. This way, the program will also strengthen democracy and the protection of fundamental rights, and contribute to growth and competitiveness as well as to the digitalization of justice. To achieve these objectives, we will table several further amendments in this regard. But thanks for your attention, and mister Radhev is looking forward to good cooperation and on the fight.
So, thanks.
Ilhan Kyuchyuk
For you. Okay. I move to s and d. First is Christos Miesek for jury, and then. Yep.
Krzysztof Śmiszek
Thank you, chair. So, I would like to thank the rapporteurs for a well-balanced and forward-looking draft of the future justice program. Let me start by expressing strong support for amendment seven A on the types of actions. Broadening and clarifying the scope of supported actions is essential if we want the program to remain flexible, responsive, and capable of addressing emerging challenges in justice systems across the union. In the same spirit, I also welcome the introduction of our article 10 a and b, which strengthens the program's transparency and improves coordination in implementation.
Such provisions are key to ensuring that the EU funding translates into tangible results for the citizens. At the same time, I would like to highlight a few elements that deserve stronger emphasis going forward. First, the rule of law must remain at the core of the program. Support for the judicial independence, access to justice, and effective enforcement and implementation of the EU law on a national level should not be treated as horizontal objectives alone, but as, guiding principles for all actions. Moreover, we would like to underline the importance of the recognition and enforcement of the European arrest warrant and will support any additional mechanism ensuring its correct application by member states.
Second, as we advance the digitalization of justice systems, we must ensure that this transformation is inclusive by design. Digital tools should enhance access to justice, not create new barriers for vulnerable groups. Third, we should reinforce a victim-centered approach. Justice systems must work for those most affected, ensuring that victims' rights are protected in practice, not only in legislation. This is especially important in the context of the article removed from the current proposal on gender mainstreaming and the protection of victims of gender-based violence.
We hope that these principles, together with children's rights in justice systems, will be included again in the upper operative part of the text. In conclusion, this is a strong basis for negotiations. By reinforcing these priorities, we can ensure that the future justice program delivers a system that is not only efficient, but also fair, inclusive, and truly centered on people. Thank you so much.
Thank.
Katarina Barley
Thank you very much. I'd like to thank all the colleagues and the staff members who have contributed to this excellent first proposal. I can basically agree with everything that my colleague said, so I can be brief. The proposal from the commission is characterized by the fact that the commission, as often is the case, tries to get more freedom as compared to what they had in the past. So they want less dictated by the program than was the case in the past.
And I'm glad that we probably can agree that this should be turned back a bit, that this should be dialed back a bit. So we need minimum quotas so we can make sure that the money is spent properly, and that the commission can't just decide to spend all the money on a different project point. And the list of activities that can be supported should be back in. That's important. It's important for civil society to be mentioned.
I'm vice president responsible for relationship with the civil society, and that we also need to maintain the duty of the commission to report to the parliament that was dialed back in the original proposal. So, basically, I think this is a good basis for a joint solution, which I'm sure we can find. Thank you.
Thank.
Pascale Piera
you. Well, there's a chorus of praise, but perhaps I can just throw a spanner in the works. I mean, you can think ad nauseam about the point of a joint training program if it's not to apply the same legislation throughout, but something is being discussed in our group. And I'd like to come back to what you've just said, madam. I think you really minimized it, because this draft does not reduce the scope of the parliament's action.
It overrides it completely. It overrides any controls from parliament, and overrides any possibility for member states to act. So the draft from the commission aims to preempt, without any controls, without any checks, without any indicators, the implementation of the justice program. You'll see that in this proposal, all the indicators have been taken out. So we no longer monitor, and the parliament is no longer allowed to do a minimum check, which any parliament would if they were able to do.
So this is a red line as far as we're concerned. We can't just say that the program increases the funds made available to support the program by 162%. When we talk about increasing your budget by 162%, I think we need to look long and hard at how the funds are going to be used, and what the counterbalances are. If the idea is to reestablish some kind of monitoring system, I'd be in favor of that, because this is a red line for us. What I'm seeing is that the commission is trying to sell us a program where there are no checks on the staff at all.
Thank you to the colleagues for having noted that and for having worked on that particular point. We also need to reestablish the indicators because the commission says that in the future, there'll be another regulation, which will be a performance regulation with a list of indicators. We never know what those indicators are all about before they are imposed upon us. So I think we must insist on the indicators being put back in. That seems to be the minimum.
And then a fundamental red line, when it comes to the budget, is the list of actions which will be financed. I think it's incredible that we're moving towards an increase of 162% in the budget without having any idea of what kind of actions we're going to be financing. So as far as you can see, I have some red lines. Thank.
Assita Kanko
Thank you very much, and thanking my colleagues also for the comments. I will be brief because it's our first meeting. I just want to stress a couple of things. As shadow reporter, but also as a citizen, of course, I do support the continuation of the justice program. We have a lot of challenges at the European level that we need to cope with.
For example, to enhance judicial cooperation, but also to build the possibility for women to access justice the same way. There is a lot of discrimination. And in my opinion, that is also linked to the rule of law because when not everybody has the same rights, we do not have a system that is actually respecting the rule of law because all systems are equal. And these are challenges that we need to face, regarding our judicial system and the way in which we are approaching collaboration, at EU level. I would like to also stress the fact that we are going from the ECR side.
We are going to approach the draft report constructively. And we will, of course, table amendments, I am saying, mainly, in the areas of reinforcing subsidiarity, improving parliamentary oversight because we are here to represent people, and ensuring the budgetary discipline and keeping the program focused on concrete, result-oriented priorities. But we are going to be constructive and see what we can do at best respecting all these principles.
Ilhan Kyuchyuk
Thank you. Thank you. Asida. For New Europe, it will be mister Minshev. Supervisor Minshev.
Nikola Minchev
Thank you very much, chair. I would first like to thank the corruptors for their work and especially welcome the reintroduction of a clear list of eligible actions. That said, I think that one important element is still missing. That is better visibility and stable support for effective justice tools and actors. And that includes promising tools that can complement formal judicial procedures such as restorative justice and mediation. Take restorative justice.
A recent UK study found a society-wide return of £14 for every pound invested, with a direct return of £4 to the criminal justice system. Thanks to reduced reoffending. Beyond the societal benefits, the economic case is also clear. And that it should speak to everyone, especially to colleagues who know how rare such returns are in the private sector. But to develop these methods properly, they need predictable funding.
And the same logic also applies to the European Lawyers Foundation. The European judicial training network rightly benefits from stable support for training justice officials. But lawyers also need stable European-level training, as they are essential to the correct application of EU law and the protection of fundamental rights, including also the right of defense. Thank you very much.
Giuseppe Antoci
Thank you, chairman. I'd like to begin by thanking the rapporteurs for the work that they've done. The draft report is a solid and constructive basis for our work, and gives us a balanced framework on which we can further develop our proposals. The justice program remains a key instrument for the functioning of the European Justice Area. Effectiveness, efficiency, and mutual trust aren't abstract ideas.
They're key tools to guarantee the rights of citizens, but I did want to focus on a few specific issues. Firstly, digitalization. And that's something that really could make a difference if it is actually implemented, because it reduces the time in which justice is served rapidly. And what we need here really is interoperability between courts' IT systems and the various systems in different member states, then the use of electronic communications, digital files, and training those who work in the sector is also important. Now, when it comes to the program, I recognize its importance, but its implementation looks a bit vague.
So I think it's important to boost support to specific programs such as specialized magistrates and prosecutors' networks and also providing specific training. Effective cooperation also requires investment in training staff so that they can use European instruments in a better manner, such as the European arrest warrant, the European investigating order, and also cross-border confiscation asset confiscation mechanisms. So basing ourselves on what the rapporteurs have proposed and moving a little bit further, I think we really can have a program that is an appropriate one, which meets citizens' expectations. Thank you.
Ilhan Kyuchyuk
Yeah. Then we are moving, actually, to mister Foss, who is going to speak on behalf of mister Wavykevich.
Axel Voss
Yes. Thank you. So, unfortunately, mister Wavrikevich can't be here today, but he's thanking all of you for the work on his draft report and for the solid basis it provides for our discussions. We welcome the overall direction of the text and the effort to strengthen the justice program in a structured and coherent manner. At the same time, he believes that it remains important to ensure that the program continues to focus on its core objectives, judicial cooperation, training, and access to justice while delivering clear added value and ensuring the efficient use of union funding in full coherence with other union instruments. Against this background, he believes that there are a few aspects that could be further developed.
In particular, digitalization appears as a key area where the program could be further strengthened. It should be approached not only as a general objective, but as a practical tool to improve efficiency, interoperability, and access to justice, as well as the resilience of justice systems. In addition, the question of governance remains central to the effective implementation of the program. In this respect, the use of implementing acts combined with the committee procedure would ensure an appropriate balance between efficiency, oversight, and member states' involvement. At the same time, strengthening, monitoring, and reporting could further enhance accountability while ensuring full alignment with the horizontal performance regulation and avoiding any risk of duplication or inconsistencies.
At the same time, the reintroduction of a clearer and more structured framework for the types of actions supported by the program would contribute to greater predictability and transparency in its implementation, while also allowing the program to better reflect current priorities. It is also important to preserve the link between effective justice systems and growth and competitiveness, as reflected in the current framework. At the same time, I would like to let you know that the EPP's approach on this work will be closely coordinated internally between Yuri and Lieber colleagues, ensuring a consistent and coherent approach throughout the negotiations. And thanks a lot.
Ilhan Kyuchyuk
Thank you, mister Foss, for reading out the statement of mister Wavrikevich. That was it for shallow rapporteurs or the replacements. Do other members wish to take the floor? We have Miss Garcia. We have Raquel.
We have Raquel Garcia Hermida. Yes. You have the floor.
Raquel García Hermida-Van Der Walle
Thank you, chair. Thank you, dear Ilan, for making it shorter. Okay. So thank you so much for having us here today. Thank you to the rapporteur and the shadows for all the good ideas.
I was just, I wanted to support the EPP colleagues in the duplication or avoiding duplication between funds. And at the same time, I was wondering if you're thinking of including, again, the possibility of third party contributions or member state contributions to the program, which has been taken out of the current regulation. So it's only financed via the EU budgets, and, I think that it would be good to have that included again, to allow for more resources. And, my last point is also, to echo what Mister Antoci said. We're going to be or member states are going to be implementing the anticorruption directive for the next two years, and then they will have to put it into practice.
So I think it would be very good to have a special attention to the implementation of this very important directive in the justice program because it's a very specific, as we say in Dutch, it's a very specific aspect of the judiciary, and it requires European attention. Thank you.
Ilhan Kyuchyuk
Okay. Mister Mantovani wants to intervene on the justice program. Yes. Okay. You have the floor, Mr. Mantovani?
Thank.
Mario Mantovani
You, chairman. Well, on the justice program, I really think we should learn from the past because the overlap of projects and the excessive bureaucracy have meant that beneficiaries haven't really benefited, particularly in more peripheral locations in the justice system. They haven't really got funds. I mean, I think we need to be clear on criteria so that funds are accessible. And then there is something that I would like to see in the program, which is the idea of bad justice.
I mean, there's a lack of monitoring, European coordination, and shared data, I think. I mean, apparently, between 6-15% of criminal proceedings lead to unfair or inappropriate rulings, which actually send people to prison. A Scottish study from 2021 said that 33% of people in prison had been imprisoned unfairly, and that was out of a sample of the prison population. So you can't talk about a European space of justice without dealing with people who are wrongly put in prison. And also, they need redress.
Currently, victims' redress is decided upon by the same systems that made the error, and the victims are often denied, excuse me, redress. So I think this would be an appropriate space to have appropriate training, appropriate monitoring, and European-level coordination. I'll be proposing that in my amendment because I think it's a fundamental right of citizens to obtain a transparent and appropriate response, also when errors have been made in the justice system.
Ilhan Kyuchyuk
The floor to the representatives of the European Commission, and we have today with us Miss Pawel Cervo and Miss Marie Ronsmans. You have the floor.
Marie RONSMANS
Thank you, mister chair and honorable members of the parliament. At this stage, the commission would like to thank you all for your constructive engagement and work so far on this draft opinion for the proposal on the justice program, and we look forward to keep engaging with you on this file. Thank you.
Ilhan Kyuchyuk
Thank you. That was it? Alright. And the floor goes back to the core apertures, starting with Tinek Eszczyk.
Tineke Strik
Yep. Thanks a lot to, for all the contributions from the different political groups. And, I really take your contributions as a big broad support for more scrutiny possibilities for the parliament. And this is exactly actually also resonating in the proposal that we did because what we did was taking the scrutiny procedure that is in the current justice justice program, including monitoring, reporting, but also the list of actions back into the new justice program proposal. Indeed, exactly to ensure that the objectives are being achieved, that the commission can have flexibility but within certain limits so that we can make sure that the indicators, the objectives are being served.
I would also like to thank S and D for the many good suggestions for amendments, including also attention to the specific categories. And I'm also happy that ECR is actually confirming this, also wants to, is supporting better access for women to the justice program. So I really see possibilities to align here. Also, thanks a lot for the renewal, for the attention to restorative justice and mediation. I'm sure that you're also thinking of amendments already on this side.
And also to my colleague Raquel, just as Ennan said, that fighting corruption is, of course, a key element in the current justice program, and that should definitely also be reflected in our proposal. And the issue of third party contribution, that is a cross-cutting issue. So we need to see also with the other committees if we can reintroduce this year as well. And it's good that the left and the EPP both are mentioning digitalization as an important issue to be tackled, to be mentioned because it needs to be updated. It needs to fit in the current times, of course.
So thanks a lot for all of this. I really look forward to the amendments, and I really hope for a good cross-cutting cooperation between the Liebe and the Juhri shadows. And of course, thanks a lot to my co Robert Thurmiss Zurch, and to the Juhri and Liebe secretariat because they did a tremendous supportive work, and also good cooperation with us. And, of course, lastly, my big thanks to my group adviser, Helinda van Hoydong, and my adviser, Marika Freiker. Thank.
Thank you.
I'm very good. Thank you.
A good spirit.
Jaroslav Bžoch
Thank you very much. And don't worry about the name. Even in the Czech Republic, they have troubles with it, so no worries about that. Yeah. I was just, I would be just, saying the same things.
I can see that we have the common ground, so I would like to thank all the shareholders because, if we, for us, it was always the priority was one of those were digitalization, of course, because we are quite slow on that, and we know that we have to speed up that process because everyone will benefit from that. Then on the other part, we really want to restore the control of the European Parliament because we were taken out, and we don't want to be out of that because it's really important, especially when we have almost tripled the budget for that. So it's really important to have the list of the sections. So I'm really happy that we have common ground on that, and I'm also looking forward to other negotiations. Thank you very much.
Thank you.
Ilhan Kyuchyuk
Thank you very much. Deadline for tabling amendment is May 18 at 6PM. Any other business under this joint committee? No. That is not the case.
The next meeting's not confirmed at this stage. With that, I would like to thank you very much for your today's presence. I adjourn the meeting for a couple of minutes, and I will resume it exactly at fifteen forty five. So be on time, colleagues. Ladies and gentlemen, the next point on the agenda is the exchange of views on the twenty-eighth regime proposal, a landmark legislative initiative, and a top priority for this committee.
As we all recall, we have already laid significant groundwork on this matter. Last year, this committee adopted an own initiative legislative report on the twenty-eighth regime, a new legal framework for innovative companies, a report that reflected our shared ambition to foster innovation while ensuring robust legal certainty. Today, we take the next step forward, a critical step examining the commission's formal legislative proposal. First, I would like to give the floor to the commissioner for democracy, justice, the rule of law, and consumer protection, Michael McGrath, to present the proposal. It's a long title, Michael.
have
Ilhan Kyuchyuk
a lot of responsibilities for about 10 minutes. Is it okay for you? Okay. And would and after that, I'll go immediately to the rapporteur, mister Lepasi.
Michael McGrath
Well, thank you very much, dear chair, dear Ilhan, honorable members. I'm glad to be back at the jury committee this afternoon to exchange with you on the twenty-eighth regime EU Inc corporate legal framework. I appreciated the constructive cooperation we had during the parallel preparation of the parliament's own initiative legislative resolution and the commission proposal, and I am confident that we will continue in the same spirit with this committee in the lead and the rapporteurship in the experienced hands of MEP, Rene Rappazi, and the shadow rapporteurs. The EU Inc proposal, the commission presented on March 18, sets out an ambitious and comprehensive corporate legal framework. It is a key initiative to enhance Europe's competitiveness and improve the business environment for EU companies.
It tackles the fragmentation of corporate rules in the single market. Today, founders face over 60 different legal forms for limited liability companies in 27 member states. The proposed regulation provides an alternative to this complexity with a common, harmonized set of corporate rules for EU ink companies. Since March 18, we have already received extensive feedback from a wide range of stakeholders. Discussions are ongoing with member states in the council and with the European Economic and Social Committee, which is preparing its own opinion, as well as with many other stakeholders, including businesses, employees' representatives, and professional bodies.
There are many different views on this proposal, which will be carefully considered and discussed throughout the legislative process. However, I hope we can all agree on what we need to achieve. With this initiative, we must help Europe strengthen its competitiveness and provide the right framework to ensure that companies can set up, scale up, and grow in Europe rather than choosing other jurisdictions. Successful European companies bring innovation, investment, and employment to the European Union. This is an objective that we cannot afford to miss.
Let me take you through the main elements of this proposal. Overall, this proposal builds on existing rules and solutions, while introducing new and innovative elements to meet the needs of businesses and investors. At the same time, and very importantly, the proposal provides safeguards and strikes a balanced approach that ensures legal certainty. First of all, in line with the parliament's resolution, the proposal provides fully digital procedures throughout the life cycle of EU link companies. This will range from registration of an EU ink company through a central, EU interface using standardized multilingual templates within a 48 hour time frame and subject to €100 price cap throughout its operational phase, with fully online filing and digital governance to simplify digital winding up procedures.
Without undermining the speed and efficiency called for by stakeholders, the proposal integrates safeguards into the registration and filing processes. Mandatory preventive control is key for the prevention of abuse or fraudulent letterbox companies linked to tax evasion or money laundering. In addition, if a director is disqualified in any of the member states, he or she cannot be appointed as a director of an EU Inc. Company. All digital procedures are based on secure electronic identification in line with the EU eIDAS framework.
Secondly, the proposal implements the once-only principle, ensuring that the business registers share with tax and social security authorities, as well as beneficial ownership registers, the information about the EU Inc. Companies, which are subject to preventive control. This reduces administrative burden as companies will not need to provide the same information to different national authorities. At the same time, it will help tackle abuse by ensuring consistency of information across authorities. I note the parliament has also stressed the importance of the once-only principle, in its resolution.
Thirdly, in order to increase trust and transparency about EU ink companies and to provide third parties, whether business partners, creditors, consumers, or public authorities, with reliable information, the proposal ensures public access to information about EU Inc. Companies, in line with existing EU rules, essential information about EU companies throughout their life cycle will be publicly available in national business registers and at EU level through the business registers interconnection system or BRIS. Tax, labor authorities, and other relevant authorities will also benefit from direct connection to BRIS to further facilitate their access to company information. As also supported in the parliament's resolution, the digital framework in the EU. Proposal builds on Briss.
Fourthly, and very importantly, the proposal enables EU Inc. Companies to attract investment, as called for by this parliament. It provides fully online procedures without mandatory involvement of intermediaries for share subscriptions and share transfers, and allows founders to raise equity efficiently through early stage financing instruments. EU Inc. Companies can have their shares traded on SME growth markets and multilateral trading facilities.
Member states are encouraged to also access to regulated markets in line with applicable union and national rules. As part of measures to facilitate investment, the proposal allows EU Inc. Companies to issue classes of shares with different economic or voting rights. This gives founders tools to protect the company against hostile takeovers, a concern that was also expressed in the parliament's resolution. At the same time, the proposal does not provide for asset locks as such a mechanism, locks would require a fundamentally different governance model and could hinder investment.
Fifthly, in line with the parliament's call to enable companies to attract and support talent, the proposal introduces an employee stock option scheme at EU level with harmonized features under which employees will only be taxed on the income generated once the shares are sold. The aim is for the EU and companies to offer employees stock options as a long-term incentive aligned with company growth, not as a substitute for fair remuneration. Last but not least, the proposal will make it easier for EU and companies to wind down their operations, reducing costs and complexity. Innovative start-ups will have access to simplified insolvency procedures under our proposal. These are the main elements of the proposal, but let me also be clear about what the proposal does not do.
The EU Inc. Proposal introduces a new national corporate legal form, which will be embedded in the legal order of each member state. It harmonizes corporate aspects for such companies. In doing so, the proposal does not affect individual or collective labor rights, corporate taxation, or anti-money laundering rules. Therefore, national and EU employment, corporate taxation, and AML rules will apply to EU companies as they would apply to any other EU limited liability company.
Similarly, as regards employee participation, the commission proposal ensures that the EU and companies are treated as any other EU limited liability company. In this specific regard, the proposal took a different approach from the Parliament resolution, which recommended specific rules related to employee participation for EU Inc. Companies to avoid creating a separate regime that could create complexity, reduce legal certainty, and ultimately discourage companies from choosing the EU Inc. Form. Finally, while the EU ink proposal is a comprehensive one in terms of corporate law, it cannot alone tackle all the barriers faced by companies.
It is the centerpiece of the 28th regime. It is not the entirety of it. That is why the communication towards the twenty eighth regime adopted alongside the proposal referred to complementary measures, including as regards investment, digitalization, taxation, and employment issues, which will also help companies and will contribute to building the twenty eighth regime. In addition, both the communication and the EUing proposal encourage member states to designate or establish specialized judicial chambers or courts for disputes involving EUing companies, an issue I know was also raised by this parliament. Honorable members and chair, we have a tremendous challenge ahead of us.
The European Council and the joint declaration of the European Parliament, the Council of the European Union, and the Commission, One Europe, One Market Roadmap, have called for an agreement on this proposal by the end of this year. To achieve this, we simply must work together. Harmonized and modern corporate rules are essential to make a real difference for companies, and clearly, this means change. If we remain attached to the status quo, we will not be able to introduce the new rules and solutions that Europe and European companies need. I count on you to enter the negotiations on this proposal with an open mind and a constructive approach, with a focus on our shared objective.
And I can assure you that the Commission stands ready to support the Parliament and the Council throughout the negotiations that lie ahead. So thank you all for your work to date on this important file. And, Jerry, look forward to our engagement here this afternoon as well. Thank you.
Ilhan Kyuchyuk
Absolutely. Thank you, dear commissioner. I open the floor to members, starting with the rapporteur, Mister Lepassi. You have the floor, mister Lepassi, for about 3 minutes.
René Repasi
Thank you, chair. Thanks, commissioner, for presenting the proposal to us. And, I'm indeed glad also to the committee that we can continue with the team, also that was responsible for the parliamentary own initiative report. I think that was already a good step in the right direction. EU Inc.
Is, as a proposal, to be welcomed except for the name, which is a reference to US American corporate forms. And I think our EU single market should have more self-esteem than to refer to US company forms, but that's just in the name. What is meant for it is we need to create a booster for start-ups, to create innovation in Europe, and indeed to be there for scale-up so that innovation actually stays in Europe. And for that, the proposal of the commission is a good starting point for our legislative procedure. We should be all united by achieving one goal, namely that EU Inc should become a seal of quality for investors, for innovators, and for talent.
That is what we shall achieve. And for that, we need to build indeed a legal highway for founders, for innovators. And as we look at the highway, especially one where we want to drive on in high speed, 48 hours, all digital, we need guardrails or as the British call it, crash barriers. And that is indeed what I'm a bit concerned about, that they are namely lacking. You mentioned in your presentation that you consider that there are sufficient safeguards.
I do believe that this is based on a wrong observation of how EU Inc. Is supposed to be built. If you look at it from the perspective of a founder, does a founder look at EU Inc.? And chooses between EU Inc. And any other EU foreign company form?
Say, a German founder says, I want to have a Cypriot one or an EU Inc. No. It will be a choice between the domestic corporate form and the EU Inc., and that is the right comparison group. So therefore, it is true that under the Court of Justice's case law, foreign shopping is already possible for any other foreign law company form. But do we want to be to EU Inc.
To be just another vehicle for foreign shopping, as currently some other EU foreign law companies are? I do not think so. It should become a seal of quality. And therefore, the current proposal, in my eyes, still lacks sufficient guardrails in terms of employee protection, in terms of creditor protection, in terms of money laundering, and others. I do not say that the proposal is completely ignorant.
On the contrary, there are sufficient stepping stones on which we can build during the legislative process. So, therefore, improvements will be done. And luckily, there is the old rule in this house that no legislative product at the end will look like the proposal in which it was started. What we do not want to have ultimately is with EU ink, a label that is stained after already a couple of months of its existence. We do not want to have charlatans build their sandwiches within EU Inc.
In there for further tax optimization, or better call it harmful tax competition. We do not want it to undermine protection standards. So by protecting EU Inc. Against charlatans, we create this label of excellency that we actually want to have for future innovation, which will materialize in a couple of years. That top label is the one that we want to give.
Ultimately, we do not award the name of ink to a company form. What we do here is we do award the label of EU to a company, and therefore, we must be very cautious what is inside the EU that we want to give to a company form. And inside the EU, there is the internal market that makes us all stronger, but at high social levels of protection. And that's the ambition that we should also follow in this legislative procedure. Thank you.
Ilhan Kyuchyuk
Thank you. The next speaker is Mister Foss, the Shadow Rapporteur for EPP.
Axel Voss
Thank you, Chair. And the Commissioner, thank you for presenting this proposal here. And first of all, let me congratulate you and your team, also Kevin Barrett and Ralf Sauer, for what you have achieved with this EU Inc proposal. I do not say this very often, but I think this proposal is a very solid basis for such landmark legislation. So if we could keep the text exactly as it is, it would be already a huge step in the right direction, especially when it comes to cross-border mobility and registration.
Nevertheless, I understand that many in the business community say it has to be the first step of many. So we will still lack the desired level of harmonization in company law, and we will still need to deal with fragmented taxation. So this should be the other steps for the future. But my question to you is, first of all, there are certain aspects in the proposal that should be a reality for all companies, not just EU Inc. For instance, the once and only principle after registration.
Do you think such elements can also be made available for all companies? And second, I believe you had planned to include templates for investment purposes, which seems like a good idea to attract and simplify investments. Why is this no longer part of the proposal? So, thank you.
Pascale Piera
You, chairman. Commissioner, you finished your proposal mentioning three projects, which I thought were nostalgic. Commissioner, I think that being against this project is actually being quite discerning about the future. The freedom to register oneself under a regime could lead to situations that you are unaware of, meaning that certain national requirements could be circumvented. As you underscored, you would then have lots of shadow companies being set up.
You also risk causing major fraud risks because, as you know, many of the beneficiaries will be more and more difficult to identify. You will promote unfair competition between different social systems, as well as tax and statutory systems. You will deprive the regime of headquarters, which is very important when it comes to business status. Now opening up registering companies means that the activities of the company in question would take place elsewhere, and this is just opening the door to fraud. When it comes to France, the senate on March 24 this year rendered or gave an opinion saying that this threatens a country like France, and it means it'll be difficult for us to fight against money laundering because you are short circuiting the system.
Finally, commissioner, I am very surprised that no one here is talking about the rights of employees, because in reality, this option of having stock options means that there's no point in having employees. It's not clear what their purpose would be. We saw this in the US because that's how things work there. Giving stock options is a poison chalice, which in the end will deprive employees of having the status of an employee. So when you mention safeguards or guardrails, respectfully, commissioner, you mustn't confuse modernism with digitalization, particularly when it comes to this project, which is all about fighting fraud.
Thank.
Mario Mantovani
you. Good afternoon, commissioner. Welcome. Finally, a proposal that's going to help companies, particularly startups and scale-ups. It's important for company law to have less red tape when it comes to registering and setting themselves up within forty-eight hours, and also helping self-employed people as well as extending this to traditional companies and the possibility of already existing companies to convert themselves.
And we think that this facilitates the process. Now EU Inc has characteristics that respect various different risk markets and startups. These mechanisms are about proportionality. However, commissioner, there are some limits to this. Companies who want harmonization and certainty, unfortunately, this regulation doesn't account for.
There are 27 different national orders, different courts, and 27 different tax systems. And in a volatile market like innovation, we think that this is a bit of an imposition. And what we really want to avoid here is fiscal dumping. The business judgment rule gives excessive responsibility to the administrators. So we think that this will create further fragmentation and further uncertainty in a market that is supposed to be a safe harbor, and a harmonized one at that.
Now there is a professor from Hamburg, and I will use his words. He says that the EU ink is well calibrated for the initial phases, but for scale-ups and beneficiaries, it's more ambiguous. There's persistent fragmentation, limited harmonization when it.
comes to.
Mario Mantovani
Insolvency and tax, which causes uncertainty. And this will, it also means that venture capitalists will only be partially satisfied. So, commissioner, we welcome your proposal, but I think that we can do better. Thank you.
Ilhan Kyuchyuk
Mario. Now I'm going to read the points of the renewed shadow rapporteur, Pascal Kampfah. We thank Commissioner McGrath for the proposal, which is quite ambitious in its scope. As we all know, our group has always been behind the idea of such an EU Inc. Proposal.
We'll work in making it a success before the end of the year. We're very happy to see the level of ambitious, to 48 hours, €100 maximum cost, no capital requirements, no notary's obligations. We'll work to ensure that the proposal not only attracts new companies but can make conversions easier. This is a key point when it comes to the EU employee stock option plans. And this is one of the key questions here.
How can we make sure that the national schemes feed well into the EU? Proposal? A second question from Pascal Convais. How can we make sure that existing start up, which has given employee stock options to its employees, is interested in transforming to EU Inc. Can do without having fiscal friction for its existing stock options schemes under national plans.
With that, I'm moving to Kira Marie Peter Hansen, the Green Rapporteur.
Kira Marie Peter-Hansen
Thank you very much, and thanks, commissioner, for being here. And I would also like to extend congratulations on the proposal. It's been a long way on the go, and I'm also very happy to hopefully see it through quite quickly. I have two questions, one very concrete and technical, and one more broadly, so I'll start with the latter. When it comes to the scope, if I understand correctly, you've kind of differentiated a little bit between corporate law and insolvency law, and I'd like to understand the political reasoning behind this, both for this, but also moving long term if you see it as a way to include, for example, other elements, could be taxation, could be other things by differentiating in the scope.
And then my more technical question is on labor law, because, like, I understand that or I would like to understand how the commission sees labor law being covered or not covered by this proposal, because we can read in recital 83 that it's not covered. But that's only a recital, and it's not clearly stipulated in article four two that it's not included. So I would like to understand which rules apply when it comes to labor law for the companies in scope. And do you intend a full exclusion of labor law, or how should we kind of understand the proposal? Thank you.
Ilhan Kyuchyuk
Thank you, Kira. I have two more members wishing to speak, Angelika Nibla and Mister Luca Siper. Angelika Nibla, you have the floor.
Angelika Niebler
Thank you so much, Chair. Thanks, commissioner, you know, for presenting this proposal and also for giving us the broader perspective, as regards one Europe, one market road map over here. I have I when I'm running around in my constituency, there are huge expectations for these new legal forms. So in particular, startups and scale-ups are really waiting for, you know, having this proposal becoming a reality. But I have two questions, one of which was already addressed by my colleagues as regards to the fragmented taxation issue.
When you ask my start up company, when I ask my start up companies, they tell me even today, you know, you can establish a limited liability company in 24 hours. You get everything done. You know, the statutes, you get the registration, you get we get everything except the number from the tax authorities. That takes 14 days, three weeks. So even though we cannot move on the taxation harmonization, but do you have an idea how we can speed up also that the companies get their taxation ID more quickly?
Are you planning to get out, come out with a recommendation or whatever? And the other issue was addressed by my colleague right now, the labor law issue. Under our German law, we have the code determination for the employees. And I was just wondering, do you have any idea how we can cope with that determinations concept which we have under German law in regard to this new EU Inc proposal? Thank you.
Lukas Sieper
Thank you, chair. I think, dear colleagues, this committee can be very honored to have one of the brightest legal minds of the parliament sitting in its row. But enough talking about me, mister Repazi, I think one can see the expertise that went into this file, and I can only give my full support for me. This is one of the legislations where, as a young person learning about Europe, you think it already exists, and then you learn it doesn't. So I think this is very important, and I would like to touch very briefly on what my colleague from the right from France said.
Only because you can misuse legislation, that is never a good reason to not impose it. Any law can be broken. Any rule can be circumvented, and any loophole can be used. And only because you fear that, you should not fear to enact modern and necessary legislation. I have one question to the commissioner, given the fact that we should have had this years ago.
How do you envision the development of this legislation in five, 10, and 15 years? Thank you very much.
Ilhan Kyuchyuk
Thank you, Lucas. Certainly, your presence brought a bit of cover to our committee. Thank you also for that. The next one is Maravias Abadios Hoffer. Maravis.
Maravillas Abadía Jover
I'm going to speak Spanish. Thank.
you. And thank you, Commissioner McGrath, for your presentation. For a long time now, Europe has been facing legal fragmentation, which makes it difficult to create new companies. We all think that the twenty-eighth regime will depend on how it is implemented in practice and how much trust people have in it. So Europe isn't starting from scratch.
Over the last few years, we've made a lot of progress when it comes to interconnection with registries, the development of the BRISS, and other procedures. And so we think it's important that this needs to be built on what already exists in terms of registrations, and we don't want duplication. And what we really want is interoperability between the various systems. So I've got two questions. Firstly, the commission put forward the possibility of creating a centralized register.
How will the commission justify the need for new European structures when mechanisms like BRIS already exist? And secondly, the combination of the freedom of choice of a member state of registration and the what law will be implemented. I think we need to be careful. So how will this proposal avoid differences between companies and affect legal certainty in the single market? Thank you.
Ilhan Kyuchyuk
Gracias. Maravias, commissioner, back to you. I think there were many questions, many good questions, and we have, I would say, ten, fifteen minutes to answer them, even a bit more.
Michael McGrath
Great. Well, thank you very much, Chair. And can I sincerely thank all of the members for their comments and questions? And this is, in many ways, the beginning of the next stage of the process as I know you worked together under MEP Repazi's lead now to agree on a negotiating position, and the council will be doing the same. And then we look forward to the formal negotiations getting underway, hopefully, in the not too distant future so that we can work together to achieve the ambitious goal, but I think it is achievable, to have political agreement by the end of this year.
And please be assured of my full support and that of my team to the difficult task that lies ahead in the coming months. But I know that with the same spirit that has characterized our partnership and our collaboration so far on this issue, I believe we can be successful. And I welcome the general acknowledgment that has been given here today by a number of you that the commission proposal is a solid basis for an agreement ultimately. I hope it will be more than a solid basis, but we can go through all of those details now and over the months ahead. I do hope as well that in the course of the negotiations, when we do eventually reach a conclusion, we can say we have retained the principle of simplicity.
It is important we don't build in excessive complexity into the EU Inc proposal, which could ultimately undermine its potential success and its reach. And I think we do need to bear that in mind over the period ahead. It is also worth saying, and I have said this to my colleagues around the commission table, that this is both one initiative, as part of our overall set of efforts to break down barriers into.
single
Ask anything about this video — I analyse its transcript to answer.