Committee on Employment and Social Affairs Ordinary meeting
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EMPL European Parliament
Follow its sittingsMarcus Meyer Erdmann
Important difference here is, however, a dynamic application because we see this freeze-out effect when it comes to the SE. And a non-regression clause to prevent forum shopping because, again, if the EU Inc is more attractive for circumvention, then it will be used because it's not only innovative startups that are going to use it.
Next slide please just to show the map and next slide please on ESOPs just to I know I'm out of time the point that ESOPs cannot be a replacement for remuneration because otherwise it would create adverse incentives to use them and not just for attracting talent. Next slide please. And lastly I'm out of time but I would like to raise the point that this legal basis in itself is also problematic and is creating an issue for both businesses in terms of legal certainty but also workers. And I don't have time to go into details but I perhaps get some questions on that. Thank you.
Li Andersson
Thank you very much and I then give the floor to the representative of BusinessEurope Mr. Pedro Oliveira for the next six minutes.
Pedro Oliveira
Thank you. Thank you Madam Chair and thanks very much to for having invited BusinessEurope for this very important debate and timely debate. This is the first big hearing on this topic in in the Parliament since the proposal since the proposal was there so we're happy to be here. This is a big priority for BusinessEurope the EU Inc and for the wider business community.
And this is not only BusinessEurope that is asking for this. This was, as my colleagues were mentioning, mentioned in the Draghi report, the Letta report, the Council conclusions on many occasions, and this house as well, which has supported and has committed to deliver an instrument. Plus, there is a grassroots movement of around 25,000 companies, most of them small startups and scale-ups, which have co-signed a petition, the called EU-wing petition, together with venture capitalists that are really advocating for the need for this in Europe. So, from our perspective, the EU-wing project should be supported if Europe wants to take a definite step towards being more competitive. This is also about the credibility of Europe to do so.
Is the EU-wing going to solve all the problems that businesses are facing in the internal market, and we BusinessEurope have been advocating and pointing to a lot of them? No, it is not. And we should stop pretending that we are going to turn the EU-wing into something that it has not been designed to do. So, it is part of the solution. It is a help way for businesses, an enabling measure, and it's mainly addressing the different 27, let's say, corporate legislations that businesses face when they're setting up their shop.
And this is where the EU-wing can play a role, but no, this is not supposed to solve every single problem. And no, this is not an SE.
The SE is a completely different instrument. It's an European company form which the EUINC is not. So we need to make that distinction because this is not supposed to be mixed up. So is it also an instrument to solve other problems that are being identified whether whether we're talking about fraud or money laundering or or many other abuses such as unconventional labor law? I mean is this the main instrument for the EU?
No it is not. So we should not also use the EUINC to solve problems that affect all companies and all stakeholders. This is a company law instrument, an optional instrument that is not going to solve every single problem. So we from these two perspectives it's important that we make these distinctions. Now from BusinessEurope's perspective to make this right, to make the proposal right, we think that we need to stick as much as possible to the Commission original proposal.
We think that the Commission original proposal hit the right notes. It's not perfect.
There are things that need to be improved, and for example, insolvency is one of them, where we have quite a few criticism, but the right elements are there. We need to keep this a regulation, because this is the best antidote against, let's say, gold-plating and fragmentation of the internal market, which the EUing is intended to solve. So we need to keep this. It needs to be simple, and I emphasize the word simple, because we have seen the documents coming from this house, the first draft documents, which we think are adding a little bit of complexity that will make this very unattractive to use. Digital by design, relying on once-only, which and all of these things are not new.
We have, as my colleague was mentioning, the 2025 directive on company law, which added most of these elements. The creation digitally, or a simple or recognition of documents. This is all, it's already existing in the internal market. It's just being implemented by Member States right now. We also think that this should be open to all companies, so we are totally against a reduction of the, let's say, of the scope of this.
Let's think that a company needs to be reassured that when it chooses a company form, it doesn't come with an expiration date. This is wrong to have an expiration date.
But where is the brand of EUing if you know if you grow and you become more successful that you have to change legal form? So this is not valuing the brand, this is not making this system more attractive, and it doesn't give any legal certainty if you have to make changes when you are on the way to success. Then, we also like the fact that there is the list of prohibited practices. I think this brings a big added value. And then my colleagues earlier were mentioning about safeguards.
And I dedicate just the next minute of my intervention to safeguards. So I heard these words: it provides little controls and there's only one single article on preventive control. I mean, sometimes I have the impression I didn't read the same text. So it is not true that there is only Article 14. The whole acquis on company law, on anti-money laundering, on tax, on labor, it continues to apply to the EUing.
So the fact that it's not written in the proposal does not mean that the general EU acquis is not applicable. So we need to be very clear on this aspect and not try to mislead this reading of the article. We do agree that we need safeguards, the right safeguards need to be there, but they should not discriminate the EUing against other normal companies.
So I finish my intervention to say we need to make this right and and we are happy to contribute to that endeavor. Thank you very much.
Li Andersson
Thank you very much, and I would then like to give the floor to the representative from the ETUC, Mrs. Isabelle Schömann, for the next six minutes.
Isabelle Schömann
Yeah, thank you, thank you so much, Ms. President, and thank you for inviting us to this hearing. In a nutshell here, what is very important here is that the EU Inc cannot, cannot be above the legislations and has to comply with the acquis communautaire and of course, the whole the full picture of the acquis communautaire and not just part of of those. So the EU Inc should be brought back to what it was at the beginning of the discussions, of course for startup and scale-up, exactly those form of businesses that for the moment have no access to investment. That's the problem. The problem is certainly not the constituencies of those businesses, the workers, and clearly not should not be used to abuse the system in terms of money laundering and of course fiscal evasions.
We know that indeed in the European Union, the way to do business might be abused.
68% of the SE are shelf SE, so it's a business in itself. And I think this is exactly what should be prevented with new form of business that will clearly be of competitions within national system of business possibility to operate. And this has to be taken on board. It's not in creating more competitions within the internal market that we will get more talent here in Europe. On the contrary, it's to provide very good working conditions to those talent.
And it starts with of course the scope, so back to startup and scale-up. And here indeed access to investment in the full respect of workers' rights in the acquis communautaire and of course with the respect of the rules where the workers are their habitual place of employment. So no divisions in terms of a registered seat versus a seat where employer should work but could not profit from the labor protection here. Safeguards are important. This is what we need to have.
The reference to individual rights but of course collective right, it has been mentioned. Here the board employee representation is exactly what is at stake.
It's not new but it has to be reinforced. And here as it was mentioned 18 member states have a form of co-determinations and it is exactly where here the EU should provide a not only a level playing field so a non-regression clause would be very important in reference to what exists but of course a more favorable clause is very important here to provide what workers need to be part of the governance structure. Digital by default, no need to invent the wheel in particular if it's to weaken the existing level of protections as it was adopted democratically by this house. And I think this is very important. The same goes for insolvency.
Here I would like to make clear that workers are special creditors and in that respect closing a business in 48 hours will not help for those workers to get access to the wages they have worked for and should own. So here clearly we need to maintain this protection. The European is not here to weaken the level of protections of workers clearly not.
On ESOP so the stock options it is very important that we don't mix things and that we are not a kind of alignment of shares with remunerations. A share is not a remuneration should never be a form of remunerations and here we clearly need to have a divide whereby those kind of benefits that represent share options are not put in a form of a risk for the workers. And I just give you just give you an example of existing practice here that we don't get any further remunerations increase but some of our colleagues are asked to buy shares if they want to have an increase of remunerations. It's not acceptable and this practice should not develop in the European Union. And of course here what we need is to prevent to prevent here again the issue of money laundering to prevent the issue of fiscal fraud and social security fraud.
So those business who are claiming to be EU Inc should be registered as business and should comply with the business obligations. And of course we are in line with the notaries to say we need the time to make the preventive checks because when a fraudulent business is operating in the European Union it's too late. The damages will be carried by workers and by consumers and this is not what the European Union should provide for.
So in a nutshell that's the point, the points that I would like, I wanted to make. And with the last minute of course we need to assess the situations of the legal base. It's nothing new. It is something that ETUC has already flagged very early in the process. And of course it's very important to assess the situations in light of these discussions here, potentially not so much with the EMPL committee.
We understand it's an issue dealt by the JURI, the rapporteur, but I think it is something that we should all be well aware of. Thank you so much, back to you.
Li Andersson
Thank you very much. And then I have, then I will give the floor to the JURI rapporteur for the proposal, Mr. Repasi. Thank you for being here for the next three minutes.
René Repasi
Thanks a lot, Madam Chairwoman, for inviting me to EMPL committee. It's always exciting for an MEP to be for the first time in another committee, the one that you are used to, as we can see how different committees work differently. So thanks a lot for the opportunity and to present some thoughts. We had today the JURI meeting with the consideration of draft report. There the advantage is rapporteur has more minutes than three, so I try to be even more condensed.
But let me in particular start with the very fact that I'm grateful for EMPL to do the work on the opinion and also under such time pressure.
It's the rules of procedure that forces us to that sort of schedule. We also try to accommodate a little bit the situation so that EMPL has a bit more of time to conclude the negotiations with the promise that a report that has found a majority will still be taken into very due consideration. And in that sense, I'm looking forward to receiving the results of the opinion. From JURI's perspective, I think what I would like to add is one thing, namely what we want to create with the EU Inc is a limited liability company form that has the privilege of being quickly established, all digital, once only, within two working days, but most and foremost having automatic access to the entire internal market, unlocking the potential of the internal market in particular for innovative companies that ideally become the next unicorns, so they have to grow quickly and become scale-ups.
In order to have this, we need a so-called stable connecting factor, so that anywhere where you are in the internal market, we can clearly identify to which legal order such corporate form belongs, because otherwise crossing the border means committing suicide from a corporate perspective. And therefore there is no alternative to a place of registration in order to have a stable connecting factor, Marcus was already mentioning it in his contribution. But if we are doing so, we must be also aware that that means that the place of the economic activity and the place of the legal registration can be two different countries. And that normally member states, if they are looking at vulnerable or weaker parties, be it consumers, be it creditors, be it even investors, be it workers and employees, they look at the place of the economic activity. And all those standards would be put into some sort of competition if the relationship to the registered seat is not regulated, and that's what we generally call forum shopping.
And if EU Inc is supposed to become a seal of quality, it must make ensure that the competition that we want to trigger with EU Inc is a competition based on merit, the old way of how Europe looks at competition, and not competition on the lowest standard and basically determining the price by the lowest standard that is achievable.
Hence, in order to give startups, scale-ups the right highway to come to a proper EU Inc, we need to preserve the stable connecting factor of the registered seat, but we need to address at the place where economic activity is taking place that standards are protected. Hence, we need to have a connection to the place of employment if we want to deal with the questions of determination. Given the multitude of codetermination and employee participation regimes in Europe, it is only right to then look at second instance at tailor-made solutions with the negotiation procedure where we do have sufficient experience and we should learn from this experience. I think that the suggestion made by Markus Meyer-Erdmann is a good one, where also the JURI wants to go into this direction. JURI is a committee full of lawyers that know a lot about law, but not per se a lot what is happening in employment.
And that's the reason why we need your expert advice on this matter, how the best would be dealt with in matters of labor law, be it individual or collective or employee participation. Hence looking forward to the debate within this committee and even more on the final result of the opinion. Thank you so much.
Li Andersson
Thank you so much, and we then move on to the question and answer session. I will do take the group representatives, the shadow rapporteurs, I think in one block, and then I will give the floor to the experts to answer, and if and hopefully there will be time for a second round where you can reply as part of your final remarks. But I will start with the shadow rapporteur, Mr. Danielsson.
Johan Danielsson
And thank you to all the speakers for being with us today. First, perhaps a question to Mr. Malberti from the side of the notary. Because when I looked at the reaction of these proposals from some institutions in my own home country, Sweden, I noticed that the police authority, the tax agency, the public prosecution authority, and the enforcement authority all have warned against the proposal and that it could make it easier for criminal networks to use this as a legal business structure. So from your perspective and in terms of controls that are in place in the proposal from the Commission, do you share this risk assessment?
Perhaps good because you only had six minutes, if you could perhaps further develop what would be your priority in terms of additional controls and checks at the establishment of an EU Inc in order to avoid this. And then to ETUI, several times I've spoken to the Commission and I heard from your presentation that you don't agree, but that the Commission proposal would have no effect whatsoever on national labor law, be it individual or collectively. So I mean, it's clear that you don't share that assessment, but perhaps especially regarding Article 12 also on employment participation right, if you could be clear what has to be done. Is one, is there even an alternative to just take out Article 12 or should it be amended and then more in detail how should it be amended because I think it's important for our discussion in the committee. Then for BusinessEurope, perhaps my, I mean, if the main objective of the proposal is to get access to the whole internal market, I would assume also for these startups and scaleups to be able to get capital.
Then of course perhaps it's not so important that it's done within 48 hours. I mean all this, it's not like Spotify moved to the US because it took a week to establish a company. So what is the priority in order to achieve the main goal? Because I think then perhaps we can solve some of these peripheral issues.
And also with what René said, if in order to get capital EU Inc needs to be this seal of quality, I mean the fears that are put in place of member states, if they are correct, let's say that we run the risk that a large majority of the EU Inc companies actually are letterbox companies in construction, wouldn't that also then be a risk of the main objective of the proposal? Thank you.
Dennis Radtke
Yes, I'm not the shadow rapporteur, as you might note, Chair, and as Mr. Danielsson knows. Romana Tomc cannot be with us, so she asked me to read it out on her behalf. And my personal questions and point of view is for later. Dear colleagues, distinguished guests, today's discussion on the EU Inc is about Europe's global competitiveness. The EPP's priority is clear: we must make it easier for our companies in Europe to grow within the single market instead of losing them to the US or Asia.
Of course, we agree that we need safeguards. This new framework must not become a vehicle for letterbox companies or a backdoor to bypass national labor standards. However, we must be pragmatic. If we over-regulate EU Inc, we will kill it before it even starts.
If we overload this initiative with excessive administrative burdens and rigid governance structures, no startup will ever use it. If it is not attractive, it is useless. I have two direct questions for our guests. To Mr. Oliveira, what are the absolute red lines for businesses? Which regulatory or administrative additions would make the EU Inc framework completely unattractive for young enterprises?
And to Ms. Schömann and Mr. Meyer-Erdmann, how can we design safeguards in a modern, flexible way that fits the reality of agile tech startups rather than forcing traditional heavy corporate structures onto companies that need speed to survive? Finally, let's not let the perfect be the enemy of the good. We need EU Inc to remain a light, powerful tool for European growth. So far on behalf of Romana Tomc.
Li Andersson
Thank you very much. And on behalf of Patriots, is it Ms. De La Pisa Carrión or Ms. ...?
We would like both to take the floor. I don't know if ...
Mélanie Disdier
You in the first round and then me.
Madame la Présidente, chers collègues, donc merci tout d'abord aux intervenants pour leur présentation claire et instructive. Ce 28ème régime, c'est le résumé parfait de l'action de l'Union européenne : une idée qui vend le rêve d'une intégration toujours plus poussée et qui se termine finalement en usine à gaz qui risque de créer plus de mal que de bien. Donc je souhaiterais poser quelques questions pour éclairer des... pour éclaircir un petit peu certains sujets, puisque ce texte inquiète quand même beaucoup de monde. Donc ma première question s'adressera en priorité à Monsieur Malberti. En tant que représentant des notaires européens, vous savez mieux que nous ici l'importance que votre profession peut avoir dans le contrôle a priori lors de la création d'entreprise.
Vous avez déjà mentionné les problématiques liées au contrôle et je voudrais insister sur le délai accéléré que veut mettre en place la Commission.
Pouvez-vous nous dire de manière réaliste combien de temps en moyenne prendrait un bon contrôle pour s'assurer au mieux de l'absence de fraude ? Seconde question s'adresserait principalement à Monsieur Oliveira. Elle concerne l'étendue de l'application du règlement qui permettrait à des sociétés déjà implantées de changer de régime juridique pour adopter celui beaucoup plus permissif de société européenne. Ce faisant, ne craignez-vous pas que ce régime, loin de créer un terrain de compétition équitable, mette en place un support de dumping administratif au détriment des PME pour qui ce nouveau régime ne serait pas adapté à leur activité ? Enfin, toujours à Monsieur Oliveira, et lié à ma question précédente concernant les droits sociaux et fiscaux, les entreprises européennes seront toujours soumises au droit national des États membres de leur choix, notamment en matière sociale et fiscale.
Ce faisant, pensez-vous que ce régime ira dans le sens d'une plus grande simplification administrative pour nos entreprises ? Voilà, je vous remercie.
Li Andersson
Thank you, and the next shadow I have present is Ms. Franssen-Bartels from the Greens.
Kim Van Sparrentak
Thank you very much, and thank you so much for your input.
We had a shadow meeting this morning and I think some of the things that we're still unclear about can hopefully now be a bit more clarified. And actually there's for that matter actually one question that I would have for all of you, and that is because we've indeed seen the proposal in the Draghi report, in the Letta report, the European Commission came forward with it, we had our own INL in the European Parliament. But in all those different instances, the idea and especially the goal of EU Inc or the 28th regime was different. And it's very difficult for us to negotiate on the basis of a very different goal. So I'm very happy to hear in one, two sentences from all of you, what do you see as the goal of EU Inc?
What are we trying to achieve here? That would be really nice and helpful. Thank you.
Because because I have my idea, but curious if you have the same. Then, specifically to BusinessEurope, in my view it is important that employee participation rights are not undermined through the EU Inc. and that businesses in Europe get the necessary legal certainty on what rules need to be applied. So now, the way it says it now is that we should follow the rules on employee participation rights of the member state of registered office, but the person next to you already explained that that might lead to a situation where you have 27 different regimes in one member state because of the way that it would work then, because for example you would apply then German rules on employee participation in Italy. And my question is, do you have the feeling that you by having it like that give enough legal certainty to companies, or do you think that we should in another way make sure that we genuinely make it simple for European businesses, because right now it sounds a bit nightmarish if you would have all these different systems in one member state. Thank you.
And then a last question to Isabella Schömann. Very very fast. Sorry. How do you see the risk for the abuse of the EU Inc. for the circumvention of labor rights, money laundering and criminal activity in high-risk sectors, and what is the experience from the ground, and would the simplified regime be an accelerator for abuse in your view, because I think that's the last thing we want. Thank you.
Özlem Demirel
Yes, thank you, Chair.
I would like to speak in German if someone needs translation. Okay. Ja, danke schön, Frau Vorsitzende, danke für die Anhörung und auch für Ihre Inputs. Ich hätte verschiedene Fragen und ich würde gerne bei Herrn Oliveira anfangen. Sie haben in Ihrem Input auf die Petition hingewiesen, wo ja eine Art EU Inc gefordert wurde.
Aber wenn ich diese Petition richtig gelesen habe, wurde diese Petition für Start-ups und Scale-ups ausschließlich gefordert und nicht für alle Unternehmen. Und der jetzige Vorschlag sieht aber keine Begrenzung der Unternehmen vor. Könnten Sie das bitte bestätigen oder haben Sie eine andere Petition erwähnt? Das Zweite ist, Sie haben richtigerweise gesagt, dass die EU Inc keine SE ist, sondern etwas anderes ist. Ja, wenn ich es richtig verstehe, und ich habe mich mit beiden Rechtsformen beschäftigt, geht die EU Inc viel viel weiter als die SE es schon macht.
Und Sie haben hier einfach gesagt, Sie sehen überhaupt keine Grundlage dafür, dass Geldwäsche oder Ähnliches damit betrieben werden könnte, Briefkastenfirmen sprießen werden. Aber Sie haben es nicht begründet.
Ich würde gerne wissen, an welcher genauen Formulierung des Vorschlages Sie sehen, dass das nicht begründet ist als Gefahr, ob Sie das belegen können empirisch, damit ich etwas beruhigter bin. Und an Sie, Herr Meyer-Erdmann, hätte ich auch tatsächlich die Frage: Ja, die EU Inc ist nicht die SE, aber auch von der SE wissen wir bereits europaweit, dass die Mitbestimmung durchaus unterlaufen wurde. Haben Sie da Negativbeispiele schon von der SE? Und wenn ich richtig informiert bin, ist die EU Inc eigentlich vergleichbar mit der Delaware Inc aus dem US-Bundesstaat, und da habe ich tatsächlich Horrorgeschichten wahrgenommen, welche Auswirkungen das hatte. Haben Sie da vielleicht ganz konkrete Beispiele für mich?
Und eine aller-allerletzte Frage, Frau Vorsitzende, an alle, die sich vor allen Dingen auch rechtlich damit beschäftigen: Verstehe ich es richtig, dass wenn wir EU Inc in der jetzigen Form umsetzen, wir im schlimmsten Fall in einem Mitgliedstaat möglicherweise 27 verschiedene Mitbestimmungsrechte hätten, weil ja jedes Unternehmen in jedem Staat sich registrieren lassen kann, aber in jedem Staat dann nach dem Registrierungsort dann die Mitbestimmung gestalten müsste? Und wenn es so wäre, wie schätzen Sie das ein, wie das überhaupt rechtlich prüfbar wäre, wären die Mitgliedstaaten überhaupt in der Lage, das zu schaffen?
Li Andersson
First round of questions, two minutes per expert for the answers, starting with Mr. Malberti. Two. And then there will be a second round. Otherwise it's impossible to schedule. I'm sorry.
Speaker 14
Thank you very much, Chairperson. So really quickly to Mr. Danielsson, is it risky? It is really risky. I'm not pretending that the notary control are the best. I'm saying that there should be a control.
Not all Member States know this control, but there should be controls because in fact if you don't have controls, then if you add the cross-border element to legal entities it would be really difficult to carry out enforcement. To Mr. Radtke, is it possible to have a modern way to company law? Yes, it is, and we have it in Directive 25 of 25. And let me be clear, the rules you have there are not the same you have in the BEFIT proposal. It would have been really easy to do that.
It would have been sufficient just to say let's apply the rules that we approved one year ago.
And this is not, this was not the choice made by the Commission. And in fact, it also reenacted legislation that was deleted in the Directive. It proposed to reenact legislation that was deleted in Directive 25 25. With regard to the comments by Ms. Didier, two days is probably not sufficient. At least I would say it is important to have two working days.
I should say that in many cases this is sufficient, but the problem is the regulation, the draft regulation doesn't consider what happens in case the control goes south and you have to say that the company shouldn't be incorporated. And this is something that tells a volume about the proposal in itself. You have a control, but it is implied that the control will be positive. And there is not a real framework for saying what happens when the control results in a negative outcome. What is the goal of the EUINC?
I don't know, frankly speaking. If you read the Letta report, it mentions several ideas. OHADA, this is not similar to the substitution of national law you have in Africa with the OHADA law. It is not similar either to the Uniform Commercial Code, as still the Letta report says. This is a soft law instrument.
It is not Delaware, as sometimes Letta said. It is not the Draghi report that says that we need to have innovative framework for innovative companies, including tax and labor law.
This is not it. It seems to me something closer to the European private company. But this, does it help startups? Not much. And in fact, many scholars closely linked to startups say that, for example, the fact that this initiative doesn't take care of shareholder agreements is in itself proof of the fact that it's not really useful for startups.
With regard to Ms. Demirel, we should say that we had this is another point. I frequently hear that there were 25,000 participants that wanted this proposal. This was a petition. Then you had the consultation launched by European institutions, and you had 880. Then you had the presentation of the proposal, and there was a feedback to the presentation of the proposal.
Now, the persons that replied to this consultation were only 169, and mostly with negative comments. Have a look at that.
And so I really wonder where there is this broad participation from the bottom really pushing for this proposal. With regard to the point of how can you have 27 participation legislation, I really invite you to read the treaties and to see the only provision that talks about co-determination. And this will maybe tell you more on the problems related to the legal basis and what could be the likely outcome of the negotiation. Thank you very much.
Marcus Meyer Erdmann
Thank you, Madam Chair. I try to be brief. As Mr. Repasi said, we need a stable connecting factor and also coming back to what the colleague from BusinessEurope said, it's not an SE. However, it's an EU regulation based on a faulty legal basis in my opinion, but it is a regulation and the Commission based on 114 has to stay away from social matters according to Article 114 sub-paragraph 2. This is why the Commission is arguing so hard that it has nothing to do with social rights because otherwise it entraps itself with regard to the legal basis.
However, company law is not neutral. Company law is the sole connecting factor for all other areas of law, for social law, for taxation, for all of these other matters. And therefore it is vital that we don't treat it as neutral because if you are imposing or the supremacy of a regulation makes it so that national law cannot derogate. Even BusinessEurope said it's positive that Article 103 prevents member states from going further.
However, that also prevents from applying the same legal checks that are to be done for a normal limited liability company under national law, say a GmbH. Therefore, this is not possible any longer because this regulation trumps this. To the question of Mr. Danielsson, yes, Article 12 can be fixed, I think, but it would require a special connecting factor which the Court of Justice, by the way, allows. And would mean that you choose the place of employment combined with a negotiated model which BusinessEurope and ETUC have negotiated for the SE framework, for instance, and which is tailor-made, which is also in place for the European Works Councils Directive and has therefore 30 years of experience under EU law. It will then also allow for if you have two competing board-level representation systems, say take the German and the Swedish model or the Dutch model, that you can reconcile them because we cannot find a one-size-fits-all for the whole of Europe.
This has proven impossible since the 70s and therefore the Gordian knot was cut when it came to the SE compromise in the end of in 2000 and therefore this should be fixed.
What would be the main goal? I think the main goal going back to Ms. Van Sparrentak and then I will finish is that the main goal was clearly outlined by the Letta reports and Draghi reports to foster startups and scaleups. And this is not doing it because big corporations can abuse this which will be to the detriment of those same startups which indeed need investment and startup ecosystems which is not in this proposal. Thank you.
Pedro Oliveira
Okay, so I'll try to be brief on on the different questions. On the seal of quality, on the fears from the member states. So this is mostly due a lot of mythology and scaremongering that is being done around the EU Inc. Letterbox companies are there. They are there.
They are being created every day. You don't need the EU Inc to create one. You go to a country, there's one country in Europe in less than 20 minutes you create a company. So this is nothing new. Letterbox there's there's no evidence that countries notaries, countries with unity of seat or countries also where there's codetermination that there is less fraud or circumvention.
So let's be clear on that. Then what are the absolute red lines? Let's not discriminate the EU Inc in relation to national companies. Let's not create additional requirements because it will not be used. It will be useless.
So this is important, keeping the regulation also and avoiding creating too many additional rules. Then in terms of, let's say, the, the fiscality, social, social rights, I mean they are still of application, the BE-UNC changes nothing on this. Then on the question on the goal of the BE-UNC, facilitate investment, fight fragmentation and by the way, BusinessEurope we do not, we do not advocate for fragmentation. And I just heard just now saying member states would be hampered from adding new requirements, that's why we need the BE-UNC, because member states do not stick to regulations and, and especially to, to directives and they keep adding fragmentation to the internal market. On the question on is the fact that we're applying the lex societatis as the referring, referring factor for co-determination, this doesn't make it complicated, this makes it simple because it's exactly what the Court of Justice in the TUI case has determined, this is just applying the normal, the normal rules and it's even the opposite is much worse.
Imagine you have fluctuating workers in many member states and then you have to change your corporate structure according because of fluctuations in country A, B, C, D and F. So it makes it much more, much more complicated. Now in terms of risks, risks are always there. Whether BE-UNC is there or not, we will always have to face risks.
We are always hoping that 99.9% of companies will do the right thing, but risks will always be there. And we need the safeguards of course, but not discriminating against the EU Inc. Now it is not true that this is being only devised for scale-ups and startups. This was not the plan of the Commission and people like Corrado that and myself that were in the Justice for Growth meetings of last year have witnessed this. This has never been a decision, it has always meant to be an open regime for everyone.
And just a couple of more seconds, again the this is not the SE, this is not an SE statute and the SEs all these shell SEs, 50% of the SEs are in one country. And most of them are shell companies. So but there are a lot of serious SEs, but we should not mix this up. SE is a very complicated statute, 120,000 euros to create, ask an entrepreneur if he wants one. Thank you.
Isabelle Schömann
Yeah, thank you so much. So it would be very wrong to say that we have to design, and by doing, by designing the safeguards, we have to face and deconstruct a heavy, and I mentioned, and I quote, heavy structure of workers' protections. I think this is a very wrong perception that this structure is heavy. It is indeed a structure which is needed to protect the workers and to make sure that the European Union makes the difference in terms of providing good working conditions in an environment where business can do business on the basis of no labor exploitation and no discrimination. So here it would create a very unfair competition with the existing system of doing business in the European Union if the EUINC would have a different treatment.
Isabelle Schömann
And this is exactly what we, what we don't buy. However, I do think that I disagree with what has just been said, not learning from the mistakes that have been made and not acknowledging the situations of abuses of the SE is, is very wrong because exactly what EUINC will be is an SE, but a cheaper one and a quicker one. So the increase of the fraud, the increase of the money laundering, and the increase of labor exploitation would just exponentially explode if the EUINC does not provide the necessary protections. Nothing along the line of bringing competition in the European Union. On the contrary, it will bring a system which does not fit with the European one, which is the Delaware.
And guess what? Will it bring simplifications?
No, it does not even bring any simplification in the US. You have 51 plus system in the US of doing business. You don't have just one. So I think we we need to get rid of this issue of it's too complex or it's too costly. The price of health and safety at the workplace is not costly.
And I would like to go back to the unfortunate grave accident that happened today in the construction sector, Place de Brouckère. Six person died. It might be an accident. But I think that the protections on a sit on a construction sit is an must and cannot be cannot be traded or compromised for the sake of simplifications.
Li Andersson
Thank you very much. I then ask which members would like to take the floor for a second round. I have Radtke and Mrs. De la Pisa Carrión. Is and Mrs. Vind. Who great.
You have one and a half minutes each. So Dennis please.
Dennis Radtke
Ja, thank you. I'm going to speak in German. Und ich spreche für mich selbst.
Ich muss ganz ehrlich sagen, ich bin, das wird jetzt wenig überraschen, noch nicht so ganz überzeugt, weil auch in dieser Anhörung für mich noch nicht ganz deutlich geworden ist, was jetzt der Mehrwert dieser ganzen Geschichte sein soll. Also ich habe jetzt auch von BusinessEurope gehört, was es alles nicht sein soll, was es alles schon gibt, was auf gar keinen Fall gemacht werden darf, aber was jetzt am Ende wirklich dazu führt, dass wir hier einen Gamechanger haben, das habe ich ehrlich gesagt immer noch nicht verstanden. Und wenn die öffentliche Diskussion, die geführt wurde, auch mit noch mal mit Fingerzeig auf die Petition, sagt, wir brauchen das für Start-up und Scale-ups, bitteschön, kann ja sein, aber warum begrenzen wir dann den Anwendungsbereich nicht einfach auch genau darauf? Wenn wir es für Start-up und Scale-ups brauchen, dann lasst uns beschließen, dass das für Start-up und Scale-ups gelten soll. Wo, das möchte ich jetzt auch von BusinessEurope wissen, ist der echte Mehrwert, dass jedes börsennotierte Unternehmen in Deutschland in diese Rechtsform wechseln kann?
Für was brauchen wir das, außer dass wir die feuchten Träume von einigen Neoliberalen in die Tat umsetzen, die die Mitbestimmung kaputt machen wollen?
In Deutschland laufen die Gewerkschaften Sturm, die Steuerberater laufen Sturm, Insolvenzrechtler laufen Sturm, Notare laufen Sturm. Also feuchte Träume für Neoliberale, für Geldwäscher, für Bankrotteure. So, und deswegen meine Meinung: Entweder wir begrenzen es auf Start-ups und Scale-ups oder wir lassen die ganze Geschichte am besten gleich ganz sein.
Marianne Vind
Thank you, I'll speak in Danish. Dennis, jeg er fuldstændig enig med dig. Vi skal begrænse scope. Det her, det er blevet alt for bredt. Det er i mange lande i Europa utrolig nemt at starte virksomhed.
Jeg kan se rigtig mange af de nystartede virksomheder, der kommer op alle steder, også i Danmark. De kommer med billigere service, billigere produkter, det hele er billigere. Inden et år er de lukket uden at betale moms, uden at betale skat, uden at betale feriepenge til medarbejdere, uden at betale pension. Samfundet betaler igen og igen og igen. Det her kan blive rigtig, rigtig dyrt for samfundet, og det kan ikke være meningen.
Ja, vi skal hjælpe start-ups. Vi vil gerne have flere start-ups i Europa. Vi vil ikke have mere svindel. Vi har rigeligt svindel. Vi skal den anden vej.
Og jeg kan ikke forstå BusinessEurope, og det vil jeg gerne have svar på. Hvad siger alle de gamle etablerede virksomheder til, at der skulle kunne komme nye ind på helt andre spilleregler? Altså, de bliver jo, det er jo ikke fair konkurrence. Det undrer mig. Tak for ordet.
Margarita de la Pisa Carrión
Muchas gracias. La idea de EU-Inc es una oportunidad para crecer, para que Europa crezca, que es algo que necesitamos. La realidad es que no necesitábamos el informe de Draghi ni Letta para reconocer la falta de competitividad que sufren las empresas europeas, la necesidad de simplificación regulatoria, especialmente aquellas regulaciones ideológicas, y generar el ambiente que haga atractiva la inversión en Europa. Las empresas innovadoras hoy no se constituyen en Europa y queremos que esto cambie. Pero esta opción debe aportar más soluciones que problemas.
¿No creen que en parte lo que quiere resolver ahora EU-Inc son cargas creadas desde aquí, es decir, por otras legislaciones europeas?
Se habla hoy de acervo comunitario que está por encima, pero EU-Inc ya tiene de por sí este nivel. ¿Se tienen identificadas las posibles incompatibilidades? Sobre todo por no generar inseguridad jurídica, que tendría el efecto contrario de lo que se persigue, ¿no? Necesitamos simplificación, pero a la vez predictibilidad y seguridad jurídica. No sé, pienso, ¿no tendría sentido seguir el camino de la simplificación regulatoria derogando aquellos marcos que estén restando competitividad y capacidad de crecimiento?
Se nos ocurren muchas ideas. El due diligence ha sido un intento, pero se ha quedado corto. Pienso, ¿no?, las empresas europeas hoy tienen un montón de normativas que les están restando competitividad y a lo mejor es allí también donde tendríamos que poner el foco. Gracias.
Li Andersson
Thank you very much and my apologies to the shadows and the rapporteur, but I only will take those that did not speak in the first round for the second one. So answers once again, two minutes. And if you have any final closing remarks as part of your answers during these two minutes. Starting once again with Mr. Malberti.
Speaker 14
Thank you very much, Chair. So as Mr. Radtke says, I don't see much added value to this proposal also because it replicates several proposals made in the past by the Commission that were not successful: the SPE, the SUP, the original draft of Directive 1151. I think we should focus more on making work what we have in place.
And, for example, this proposal relies heavily on the BRIS, the interconnection of business registers. Do you know that even today it is impossible to download a certificate from a foreign business register to the BRIS after 15 years? I wonder how it would be possible to pay the 100 euros to incorporate a company if after 15 years we weren't able to download the certificate of existence of a company. What does it change? Well, it will change that if Article 114 is adopted as a legal basis, national company law will be more or less gone, because then it will be possible to adopt legislation in company law with a regulation under Article 114, and this will change entirely the landscape.
But also be aware that originally Draghi said that also tax and labor law had to be harmonized to some extent, but then it seems not to be a big problem, the fact that there is tax fragmentation, probably because it is advantageous to some. And also with regard to labor, somebody could say that maybe for the co-determination unanimity would be required.
So I wonder how Article 114 can be used. So what can we do, focus on the transposition of the current directive that are already quite difficult to put in practice and provide some tools for startups to really grow, because I think that what is proposed in the draft regulation is not really meeting their need. And I invite you again to have a look at the consultation following the presentation to the proposal and the lukewarm feedback it received. Thank you very much.
Marcus Meyer Erdmann
Thank you, Madam Chair. So the question is what is the added value and also would it introduce more problems? And answering again to the point of BusinessEurope, that it's not an SE, but it is still a European instrument that needs to be transposed by the member states in full because it is a regulation as it stands right now.
And therefore it introduces a lex specialis when it comes for instance to social rights. And if Article 4.2 is not changed in its current wording, it says that all matters that are not covered by this regulation, all the articles of association, even putting the articles of association above national law, mind you, so that is just very poor drafting on the part of the Commission, if I might say so, even though, you know, it's not my place to criticize the Commission normally, but in this case the order should be really changed, so therefore not sticking to this kind of formulation I think is just better drafting and better regulation making. And it, the lex specialis point is especially true for board-level employee representation because what the SE directive did was it was a coordination mechanism to make sure that if we have conflicts, the default is indeed where the registered office of the company is. But if there are rights, acquired rights of employees, and we have these acquired rights directives and other forms of acquired worker participation rights, that these are safeguarded. We have this non-regression principle under EU law and therefore we have this coordination mechanism.
It is not adding something new. It's also not discriminating the EU Inc vis-à-vis other national company forms, but rather making sure that it's on an equal footing because otherwise we would have an EU Inc which goes below the level of the existing acquis or national board-level employee representation systems. And therefore it's simply advantageous for a company to immediately register in another EU member state or even splitting up into multiple chains of EU Incs and chaining them to indefinitely stay below the thresholds, even putting a single employee into one EU Inc because it's so cheap. Tesla is already using this, for instance, with the Gigafactory in Berlin: 9,000 employees, zero employee participation, simply by buying an SE for 35,000 euros. An EU Inc costs only 100 euros, therefore you can do this much faster, much cheaper and circumvent existing protection standards.
Pedro Oliveira
So competition, the competition legal basis was not dead after the DMA and the DSA have been adopted under Article 114. So Article 114 can do a lot. You can read, it's a very ample legal basis and it was adopted, created after the European Single Act in '86. So and a lot of the company law directives have been adopted before, before under the Article 50, under the other, the other legal basis. So and EU Inc goes beyond just company law.
Then in terms of the whole startups and scale-ups, the EU Inc petition says clearly that this should be an open regime to everyone because what do you do if you grow? What do you do if you change your business model? What do you do?
You have to change, but then that's a cost, then that gives you no predictability. So it makes no sense to limit this, to give it an expiry date on, depending on your growth. So that's why it needs to be an instrument for the whole life cycle of the companies. As for listed companies, it's an option for Member States in the proposal. And it's very clear that if you want to take this form and the Member State authorizes you, you need to fulfill EU and national law.
So there's no difference compared to other normal companies if they want to list in a stock, in a stock market. As for the, the objective of this, of course, we have a competitiveness problem in Europe. This is clear. The European Parliament says this, the Council says this, the Commission says this, stakeholders say this. So we need to start somewhere.
EU Inc is not going to solve everything, it's not a silver bullet, it's an optional instrument, but it's a place to start. And it's a fact that there's a lot of divergences between the Member States when you set up and you operate a company. And it's not scholars that we hear, it's the ground persons dealing with the company every day that say, that say this. Finally, but not least, are we going to destroy notaries? No, we are not.
Notaries can be part of the preventive checks, this is also, this is foreseen in the directive actually.
And then are we destroying codetermination? We are not. It's just enough to read article 12. It changes nothing. It just says the obvious that all the safeguards that exist for conversions, divisions and also mergers are applicable to the SE with to to the EU Inc with a lot of very strict rules that are applicable there and protective.
And by the way, you even need two thirds of the thresholds at national level to be able to apply these rules. So at the end of the day, this comes with a lot of protection. So it is not true that there is no protection for codetermination in this directive. Thank you very much.
Isabelle Schömann
Yeah, thank you, thank you very much. So if we look at the Commission Commission initiative, of course we are missing exactly the protections for the constituency of business like the ILO says. It's clear that creating a new business form will have definitely an impact on workers. It's wrong to say the contrary. And that's exactly where the EU Inc proposal for the moment is lacking the necessary protections.
And without the work of the ETUC, this proposal would be empty. And I would like to thank the European Parliament to make these extra miles to make sure that here again we are not creating an additional level for doing business, doing wrong business, doing bad business. Because those businesses who are well prepared, and please listen to the startup and the scale-up of those world, they have no interest whatsoever to be in competitiveness with or in competition with multinationals. They want to have a system where they can develop, when they can grow, and here of course with access to investment, which is their problem. The problem is not the willingness to circumvent legislation.
Because there are some of them, good businesses, and want to do business with the workers and not against them. So here the plea of the ETUC, if the EU Inc should see once light, it has to be bringing with the whole package of the safeguards, starting with the scope, up to the safeguards, up to excluding ESOP in relations to remunerations, to make sure that insolvency, no digitalisations downgrade existing rights. And here again, not fixing a maximum, which a regulation does, for labor protections and workers' rights. And this is exactly where the legal base comes in. This is not a surprise that for the SE there is a regulations and a directive.
And I think this is exactly what we are missing in this, in these discussions. Not only the legal basis is wrong, but the way to move forward, to use, abuse a regulation just to have a copy-paste at the national level on the top of excluding the unanimity, so excluding the responsibility, that's not acceptable. So the ETUC will fight for the respect of workers' rights and if need be, we don't need to have the EU Inc.
Li Andersson
Thank you very much. And our final speaker today is from the Commission, Mr. Dionisi, and since everybody has gotten only two minutes, I will give only two minutes to the Commission.
Dan DIONISI
Thank you, Madam Chair. That's very challenging because a lot has been said, but also I don't need to, to repeat really and I had prepared a statement but don't, don't need to make this statement.
Just to quickly react to to some of the points. On the scope. Also on other points like why this proposal cannot harmonize employee participation and has to simply apply the cross-border safeguards. I would refer you to the impact assessment which accompanied the proposal. It's a solid impact assessment.
It passed at the first hearing the Regulatory Scrutiny Board. And those are discarded options and there is an annex explaining why they are discarded. But indeed a lot has been said already by by among other by Mr. Oliveira but was extensively discussed as well at this high-level forum on justice for growth. Preventive controls. I mean I tried it it was very quick.
I tried to take a picture of the slide of Mr. Malberti who was listing controls that are missing. And I was looking at that slide. I mean everything is in. So indeed not all the preventive controls are in one article because the flow of company registration is is a bit changed to make it you know more European to have this central interface as a possibility also to to enable this fast-track procedure when pre-approved articles of association standardized templates are used. I would there are also comments about this being too quick.
First, of course, to remind that there are already companies registering even quicker in Europe fully online, which can do business across Europe in virtue of the treaty freedoms. Also to recall that there is a declaration, joint declaration by 26 member states, if I'm not mistaken, so only one is not part of it, European Startup Nations Alliance declaration, which calls for being able in Europe to register a company within 24 hours for maximum 100 euro. So this has already I think more than five years old. So it's an existing commitment. But also to say that controls are not taking place only when a company is registered.
I have two things to say here.
This is a continuous process and this proposal actually facilitates the safeguards and the controls by ensuring that the company information that is valid is in the business register is also shared with tax authorities, with social security authorities, with beneficial ownership registers which are in charge with anti-money laundering controls. So therefore reducing the room for fraud and misrepresentation.
Thank you very much. I'm so sorry but I knew we would be short on time. So thank you to all the colleagues who were here. We started a bit early, we end a bit late. Just want to remind you all that the EMPL vote on this opinion is scheduled to take place on the 10th of September 2026.
But I'm sure debates and discussion on this topic will continue. Thank you.
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