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The relationship between the Societas Unius Personae proposal and the acquis:
Creeping Toward an Abrogation of EU Company Law?
by
CORRADO MALBERTI
*
This article investigates several implications of the Commission’s new SUP Proposal and examines some
of its key features. As currently formulated, the SUP Draft Directive presents some peculiarities that must
be understood in the context of recent history in EU company law, particularly the Commission’s nowabandoned
SPE Proposal. The SUP Proposal engenders concern that certain problems will arise in
coordinating the SUP Draft Directive (if adopted as proposed) and the EU acquis on company law. More
precisely, exploring if and to what extent SUPs may be subject to the existing European company law
directives, I argue in favor of the inclusion of this new legal form within the scope of the EU acquis. I
conclude this article defending the possibility of continuing positive harmonisation of European company
law.
Table of Contents xxxx, xxx-xxx
I. Introduction............................................................................................................. xxx
II. The SUP proposal’s most relevant features in light of the acquis ............................. xxx
1. The legal basis .................................................................................................. xxx
a). Benefits and limits of introducing the SUP as a national company............... xxx
b). The SUP and the introduction of a new legal form....................................... xxx
ba). The introduction of new legal forms in the jurisprudence of the ECJ.... xxx
bb). The introduction of a legal form from the perspective of Advocate
General Stix-Hackl ..................................................................................... xxx
c). Art. 50(2)(f) TFEU as the SUP Proposal’s legal basis ................................. xxx
ca). The Commission’s choice of decision of adopting a different legal
basis.................................................................................................... xxx
cb). Can Art. 50(2)(f) TFEU be an adequate legal basis for the SUP Draft
Directive? ........................................................................................... xxx
cc). The coordination between Art. 50(2)(g) and Art. 50(2)(f) TFEU.......... xxx
2. The uneasy relationship with the EU acquis ...................................................... xxx
a). The explicit deviations from the EU acquis................................................. xxx
b). The relationship between the SUP Draft Directive and the harmonisation
directives .................................................................................................... xxx
3. Toward harmonising the legal framework governing groups of companies?....... xxx
4. The template articles of association ................................................................... xxx
5. The supervisory board of SUPs ......................................................................... xxx
6. The solutions to the unsolved problems of the SPE provided by the Draft
Directive........................................................................................................... xxx
a). Minimum capital requirements.................................................................... xxx
aa). The reduction of minimum capital requirements.................................. xxx
*
Associate Professor of Commercial Law University of Luxembourg.
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ab). The introduction of the solvency test ................................................... xxx
b). The applicable law...................................................................................... xxx
7. Some old and new problems left unaddressed in the SUP Draft Directive .......... xxx
a). Identification and anti-money laundering .................................................... xxx
aa). The identification of the founder........................................................... xxx
ab). The performance of anti-money laundering controls and the
identification of the beneficial owner .......................................................... xxx
b). Cross-border transfer of the registered office............................................... xxx
c). Employee participation ............................................................................... xxx
III. The compatibility of the SUP Proposal with the substance and the goals of the
existing European company law framework............................................................. xxx
1. The SUP Proposal: somewhere between coordination and negative
harmonisation ................................................................................................... xxx
a). Toward negative harmonisation?................................................................. xxx
b). The SUP Draft Directive’s coordination with the EU acquis found in its
silence ....................................................................................................... xxx
c). Extending the scope of harmonisation directives to new legal entities.......... xxx
2. The legacy of Dir. 68/151/EEC ......................................................................... xxx
3. For a policy-based harmonisation of European company law............................. xxx
IV. Conclusion.............................................................................................................. xxx
I. Introduction
On April 9, 2014, the European Commission published a proposal for a new directive (the “SUP
Initiative”)1
that would replace Dir. 2009/102/EC on single-member private limited liability
1
The actual ‘Proposal for a directive of the European Parliament and of the Council on single-member private
limited liability companies’, COM(2014) 212 final, 2014/0120 (COD), Brussels, 9 April 2014, is hereafter the
‘SUP Proposal’, which consists of both the Explanatory Memorandum (hereafter the ‘SUP Explanatory
Memorandum’) and the proposed directive (hereafter the “SUP Draft Directive”). After the publication of the
proposal, as of February 2, 2015, the most relevant official working documents concerning this proposal that
have been made public are: the ‘Opinion of the European Economic and Social Committee’, Brussels, 10
September 2014 (hereafter the “Opinion of the EESC”); the ‘Opinion of the Council’s legal service’, Brussels,
17 October 2014, concerning the legal basis of the proposal; the ‘Proposal for a directive of the European
Parliament and of the Council on single-member private limited liability companies’, Brussels, 1 December
2014, presented by the Italian presidency of the Council; the ‘Note to the proposal for a directive of the
European Parliament and of the Council on single-member private limited liability companies’, Brussels, 18
December 2014, all available at http://consilium.europa.eu (last visited March 30, 2015). Even if the SUP
Proposal was only published on April 9, 2014, it has already given rise to an interesting academic debate,
which, unfortunately, has not yet really crossed national borders. Among the most interesting contributions to
this debate, in addition to the articles published in the current issue of this review, see Αλεξανδροπουλου,
‘Societas Unius Personae (“SUP”), η νέα εταιρική µορφή’, ΧρΙ∆ (2014), 629; Anker‐Sørensen - Sjåfjell, ‘Vår
Europeiske Selskapsrett (Our European Company Law)’, available at http://ssrn.com/abstract =2532861 (last
visited January 27, 2015); Bauer - Weller, ‘Europäisches Konzernrecht: vom Gläubigerschutz zur
Konzernleitungsbefugnis via Societas Unius Personae’, ZEuP (2015), 6; Beurskens, ‘„Societas Unius Personae“
– der Wolf im Schafspelz? – Der Vorschlag für eine Richtlinie über Gesellschaften mit beschränkter Haftung
mit einem einzigen Gesellschafter –’, GmbHR (2014), 738; Boschma,‘Het plan voor een nieuwe EU-richtlijn
voor de eenpersoonsvennootschap: Is de voorgestelde nieuwe rechtsvorm van de SUP een goed idee?’,
Ondernemingsrecht (2014), 17, 144, 725; Cappiello, ‘Proposta di direttiva SUP: possibili implicazioni, rischio
di abuso e considerazioni sull'armonizzazione del diritto nell'area UE’, Studi e Materiali (2014), 661; Dreher,
‘Der Richtlinienvorschlag über die Societas Unius Personae und seine Regelungen zur faktischen
Geschäftsführung’, NZG (2014), 967; Drygala, ‘What's SUP? Der Vorschlag der EU-Kommission zur
Einführung einer europäischen Einpersonengesellschaft (Societas Unius Personae, SUP)’, EuZW (2014), 491;
Eickelberg, ‘SUP, EGVP, ePerso und XML - Die schöne neue (digitale) Welt der GmbH-Gründung’, NZG
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companies. The SUP Draft Directive is divided into two parts: the first part largely follows the
original structure of Dir. 2009/102/EC with some relevant differences, describes the scope of the
new directive, provides some definitions, and imposes certain obligations on any legal entity that
becomes a “single-member company” within the new directive’s definition. The second part,
which represents the substantive aspect of the new directive, grants the Member States a choice
between either (a) providing for the establishment of a Societas Unius Personae (hereinafter,
sometimes “SUP”) “as a separate company law form which would exist in parallel with other
forms of single-member private limited liability company provided for in national law”,2
or
(b) applying the provisions of that part of the directive devoted to the SUP to “all single-member
private limited liability companies so that all such companies would operate and be known as
SUPs”.3
The SUP Proposal presents innovative features and, arguably, reinvents the role of company law
directives as a tool to strengthen integration within the internal market. On the one hand, it gives
Member States the chance to introduce a new national legal entity, with characteristics different
from those already provided by the EU acquis on limited liability entities. On the other hand, this
initiative cannot be considered a harmonisation directive in a strict sense, as, in contrast to
previous European company law directives, the SUP Proposal is not intended to further
coordinate and make equal safeguards protecting shareholders and third parties.
(2015), 81; Fleischer, ‘Internationale Trends und Reformen im Recht der geschlossenen Kapitalgesellschaft’,
NZG (2014), 1081; Gongeta, ‘Promjene regulatornog okvira njemačkog društva s ograničenom odgovornošću
kao posljedica regulatorne konkurencije u području prava društava među državama članicama Europske unije’,
35 Zb. Prav. fak. Sveuč. Rij. (2014), 819; Guidotti, ‘The Proposal for a Directive on Single-Member Private
Limited Liability Company (Societas Unius Personae) from the Italian Perspective’, NDS (2015), n. 5, 96;
Hommelhoff, ‘Die Societas Unius Personae: als Konzernbaustein momentan noch unbrauchbar’, GmbHR
(2014), 1065; Hommelhoff - Teichmann, ‘Die Wiederbelebung der SPE’, GmbHR (2014), 177; Jung, ‘Societas
Unius Personae (SUP) – Der neue Konzernbaustein’, GmbHR (2014), 579; Koster ‘EU Legal Entities: New
Options?’, ECL (2015), 5; Lecourt, ‘La Societas Unius Personae : La nouvelle société unipersonnelle à
responsabilité limitée proposée par la Commission européenne’, Rev. soc. (2014), 699; Licini, ‘La “Societas
unius personae (SUP)” europea: ombre liberiste e abusi annunciati’, Notariato (2014), 229; Lucini, ‘En torno al
Proyecto de Directiva europea sobre la Sociedad Limitada Unipersonal (SUP) presentado por la Comisión
Europea el 9 de abril de 2014’, La Ley mercantil (2015), 24; Malberti, ‘La proposta di direttiva sulla societas
unius personae: una nuova strategia per l’armonizzazione del diritto societario europeo?’ Riv. soc. (2014), 848;
Mambrilla Rivera, ‘Propuesta de Directiva relativa a las sociedades unipersonales privadas de responsabilidad
limitada unipersonal’, Rev. Derecho Soc. (2014), 531; Neville - Sørensen, ‘Promoting Entrepreneurship – The
New Company Law Agenda’, EBOR (2014), 545; Omlor, ‘Die Societas Unius Personae – eine supranationale
Erweiterung der deutschen GmbH Familie’, NZG (2014), 1137; Ries, ‘Societas Unius Personae – cui bono?’,
NZG (2014), 569; Schmidt, ‘Der Vorschlag für eine Societas Unius Personae (SUP) – super oder suboptimal?’,
GmbHR (2014), R129; Schmidt, ‘Die Societas Unius Personae (SUP) – eine neue „europäische“ Option für
Familienunternehmen?’, FuS (2014), 232; Schoenemann, ‘Bauen am Baustein für einen europäischen Konzern
– Der Richtlinienvorschlag der Kommission zur SUP’, EWS (2014), 241; Seibert, ‘SUP – Der Vorschlag der
EU-Kommission zur Harmonisierung der Einpersonen-Gesellschaft’, GmbHR (2014), R209; Serra, ‘Societas
Unius Personæ (SUP) – Um Golem na União Europeia?’, 12 DSR (2014), 127; Teichmann, ‘Der Beitrag der
Societas Unius Personae (SUP) zur grenzüberschreitenden Niederlassungsfreiheit’, NJW (2014), 3561;
Teichmann - Fröhlich, ‘Societas Unius Personae (SUP): Facilitating Cross-Border Establishment’, 21 MJ
(2014), 536; Wicke, ‘Societas Unius Personae – SUP: eine äußerst wackelige Angelegenheit’, ZIP (2014),
1414; Wuisman ‘The Societas Unius Personae (SUP)’, ECL (2015), 34.
2
SUP Draft Directive at Recital 10.
3
Id.
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While this innovative strategy has some strengths, it also casts doubt on its practical
implementation and coordination with the existing European company law. This article suggests
that the content of the SUP Proposal, as well as the Commission’s new approach, should be
considered, primarily, in light of the difficulties faced by the Societas Privata Europaea
(sometimes hereinafter “SPE”), which was recently abandoned by the European institutions.4
From this perspective, it is difficult to predict if the SUP Proposal will be successful; surely, as
currently formulated, it raises questions whose answers may have consequences that go far
beyond rules that govern single-member companies and affects the scope, nature, and goals of
European company law.
This article is divided in four parts. After this introduction, Part II examines some key features of
the SUP Draft Directive. Some of the positions adopted in the SUP Initiative were already
discussed at length in the context of the SPE Proposal, while others are new and derive either
from the new legislative strategy of the Commission or from the substance of the SUP Proposal.
Part III investigates how the Commission’s approach to strengthening integration within the
internal market might be coordinated with the goals and the substance of European company law.
In this part, I also examine the benefits of continuing positive harmonisation of European
company law as an alternative to this new Commission’s approach. Part IV concludes this article.
II. The SUP Proposal’s most relevant features in light of the acquis
1. The legal basis
An innovative aspect of the SUP Initiative concerns the legal basis on which it is founded.
Unsurprisingly, the SUP Proposal broadly relies on Art. 50 TFEU as its legal basis, a solution
that – apparently – reflects the approach taken in Dir. 2009/102/EC and the other company law
harmonisation directives. The SUP Draft Directive, however, does not specify which particular
part of Art. 50 TFEU would allow enactment of the legislation, and the answer to that question –
that is, Art. 50(2)(f) TFEU – may be found in the SUP Explanatory Memorandum,5
which also
makes clear that the Commission firmly believes the legal basis for the SUP Proposal should not
be Art. 352 TFEU.6
This rather technical remark is pivotal, as it gives effect to one of the most important decisions
that concerns the SUP Draft Directive. When faced with a choice between (a) introducing a
supranational legal form like the SE or SCE and (b) adopting a different strategy closer to the
existing EU acquis on single-member companies, the Commission opted for the latter approach.
The important corollary to that decision ensures that adoption of the SUP Draft Directive will not
require the Council’s unanimous consent.
4
The ‘Proposal for regulation on the statute of a European private company’ was withdrawn by the ‘Annex to the
Communication from the Commission to the European Parliament, the Council, the European Economic and
Social Committee and the Committee of the Regions Regulatory Fitness and Performance (REFIT): Results and
Next Steps’, COM(2013) 685, Brussels, 2 October 2013, 9.
5
The ‘SUP Explanatory Memorandum’(n 1), 5, clearly states that “[t]he proposal is based on Article 50 of the
Treaty on the Functioning of the European Union (TFEU), which is the legal basis for the EU competence to act
in the area of company law. In particular, Article 50(2)(f) TFEU provides for progressive abolition of
restrictions on freedom of establishment as regards the conditions for setting-up subsidiaries.”
6
‘SUP Explanatory Memorandum’ (n 1), 5: “[u]nder these circumstances, Article 50 provides a sufficient legal
basis for the proposal and recourse to Article 352 TFEU is not necessary.”
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The second rather surprising Commission decision with respect to the SUP Draft Directive’s
legal basis is to specifically identify Art. 50(2)(f) TFEU as the legal basis for the SUP Draft
Directive. In the past, Dir. 68/151/EEC and other company law directives coordinated national
laws based on authority granted in Art. 50(2)(g) TFEU, a provision that addresses coordination of
“safeguards which, for the protection of the interests of members and others, are required by
Member States of companies . . . with a view to making such safeguards equivalent throughout
the Union”. Art. 50(2)(f) TFEU, on the other hand, addresses a completely different issue: the
“progressive abolition of restrictions on freedom of establishment in every branch of
activity . . . as regards the conditions for setting up agencies, branches or subsidiaries in the
territory of a Member State”.7
The reasons underlying the Commission’s decision to rely on
Art. 50(2)(f) TFEU are not expressly stated in the text of the SUP Draft Directive. However, it is
noteworthy that the Commission drastically changed its approach,8
by proposing a legal basis that
was not even used for the Directive on branches.9
In fact, as the EESC10
and some commentators11
have highlighted, it is debatable if this legal
basis would be admissible for the measures included and for the goals pursued by the SUP
Proposal. For the moment, however, the Council continues working on the SUP, as its legal
service delivered an opinion that recognizes the legitimacy of the legal basis proposed by the
Commission.12
a). Benefits and limits of introducing the SUP as a national company
By relying on Art. 50 TFEU rather than Art. 352 TFEU as the legal basis for the SUP, the
Commission found an innovative way to avoid the difficult political debate that forced it to
abandon the SPE Proposal. However, that decision also has another implication that goes beyond
simply resolving the need to get a unanimous vote in the Council: by adopting this approach, the
Commission makes clear that the SUP is not designed to be a supranational legal form.
Unlike SEs and SCEs, SUPs will not have a European nature, will be governed directly by
national law, and will only be indirectly affected by EU legislation. In the end, there will not be a
single form of SUP, but as many SUPs forms as there are Member States. Such SUPs will share a
common name (Societas Unius Personae)13
and be subject to the few rules and principles set
7
For further information on the past discussions regarding the appropriateness of the legal bases offered for Dir.
89/667/EEC or, more recently, Dir. 2009/102/EC, see, e.g., Edwards, EC Company Law (1999), 221 f.;
Habersack - Verse, Europäisches Gesellschaftsrecht (2011), 4. Aufl., 351 f.
8
Even in detailed investigations into the legal basis of European company law, no analysis of Art. 50(2)(f) has
developed. See, e.g., Vossestein, Modernization of European Company Law and Corporate Governance: Some
Considerations on Its Legal Limits (2010), 45 ff.; Grundmann - Glasow, European Company Law (2012) 2nd
ed., 53 ff.
9
In fact, Dir. 89/666/EEC, in its first Recital, makes an explicit reference to Art. 54(3)(g) of the Treaty
establishing the European Economic Community, which is now Art. 50(2)(g) TFEU.
10
Opinion of the EESC (n 1), 1.2 and 4.1.
11
See e.g. Serra (n 1), 130; Mambrilla Rivera (n 1), 535 f.; Lecourt (n 1), 700 f.; Omlor (n 1), 1138; cf.
Αλεξανδροπουλου (n 1), 630; Drygala (n 1), 493.
12
Opinion of the Council’s legal service (n 1).
13
Apparently that point became evident during the discussion at the Council, since Art. 7(3) of the Proposal for a
compromise presented by the Italian presidency requires that SUPs indicate, in addition to the acronym SUP,
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forth in the EU-level directive, but beyond that, each national SUP will remain a distinct national
legal form.14
In this context, it is more likely that, even a cross-border transfer of seat of such
entities – to the extent such transfers will be possible – will be considered a cross-border
conversion.15
In brief, when compared to the SE, SCE and the SPE Proposal, the SUP Draft Directive
renounces a great deal of potential uniformity in exchange for little, if any, apparent benefit for
the merits of the provisions that will govern these many SUPs.16
The reasons that led the DG
Internal Market and Services to opt for this arguably inferior legislative strategy are essentially
political and can be traced back to the difficulties faced by the SPE Proposal.17
Surely, since a
harmonisation directive may be adopted with the ordinary legislative procedure under Art. 50
TFEU – that is, without a unanimous vote of the Council – it will certainly be less difficult to
enact the SUP Proposal.
The obvious criticism of the Commission’s innovative approach is that, in principle, the choice of
legal basis should define the scope of the initiative and its legislative process. Yet, for the SUP
Proposal, it seems that the Commission’s choice of legal basis was driven by the desire to take
advantage of the ordinary legislative procedure and that the limited scope of the SUP Draft
Directive was a consequence of this choice.18
b). The SUP and the introduction of a new legal form
Introducing the SUP by means of a directive, rather than a regulation, also has another
implication. The SUP Explanatory Memorandum confirms that the Commission intentionally
their Member State of registration. On this point, see also Conac, ‘The Societas Unius Personae (SUP) : a
« passport » for job creation and growth’, in the current issue of this review, --.
14
Hence, it is difficult to agree with former Commissioner Barnier, who, while presenting the SUP Proposal, said
that this legal entity will function the same way anywhere in the Union, see Barnier, ‘Présentation d’un train de
mesures sur la Gouvernance des entreprises’, Brussels, 9 April 2014, available at http://europa.eu/rapid/pressrelease_SPEECH-14-310_en.htm
(last visited May 10, 2014), 3. Quite the opposite, since the scope of the SUP
Proposal is narrow, when compared to existing detailed national legislation on private limited liability
companies, the various Member States’ SUPs will certainly not function the same way across all of the different
legal systems.
15
Obviously, in accordance with the principles mandated by EU legislation and the CJEU’s jurisprudence. On
cross-border conversions, see, in particular, ECJ, 16 December 2008, Case C-210/06, Cartesio [2008] ECR I-
9641, n. 111 ff., and, in general, ECJ, 12 July 2012, Case C-378/10, VALE Építési kft.
16
On this point it is sufficient to recall the words of the Opinion of the Advocate General Stix-Hackl, 12 July
2005, Case C-436/03, Parliament v. Council [2006] ECR I-3735, n. 54. In commenting on the choice to use a
regulation for enacting the Statute for a European Cooperative Society, she said: “[i]n this particular case the
reason for choosing the form of a regulation was that a directive would first have had to be transposed into
national law. This would have led in turn to a large number of implementing provisions, which would each have
applied only in the territory of the particular Member State concerned. Hence, the advantages that a regulation
offers would not nearly have been achieved because a regulation can create uniform law of direct application. A
regulation that creates an additional legal form thus enables the Community legislature to resolve such
territoriality problems.”
17
Even Commission Barnier, when presenting the SUP Proposal, acknowledged the difficulties encountered by
the SPE proposal and suggested the need for a different strategy, Barnier (n 14), 3.
18
See Beurskens (n 1), 738 f.; Jung (n 1), 579 f.; Schmidt, ‘Der Vorschlag’(n 1), R130; Seibert (n 1), R209; Serra
(n 1), 130 f.; Lecourt (n 1), 700 f.
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rejected the option of making the SUP a supranational legal form. Yet, the SUP Draft Directive
also clearly acknowledges that its transposition into national law may result – if a Member State
opts for this approach – in the creation of a new form of legal entity.19
The SUP Draft Directive
gives Member States two options when transposing its second part: Member States may either
(a) add a new form of SUP to their existing list of legal entities that can be created in their
jurisdictions, or (b) transpose the rules and principles mandated by the directive, applying them to
all single-member private limited liability companies already authorized by national law.20
The SUP Draft Directive makes clear that, if the SUP is introduced as a new form of entity, this
form of entity could be distinct from any already existing in that Member State’s legal system.21
Thus, the SUP Proposal does not introduce a new supranational entity like the SE or the SCE,
rather it gives Member States the right to transpose the directive by introducing a new legal form
of entity into their national law.
ba). The introduction of new legal forms in the jurisprudence of the ECJ
The Commission’s intention that the SUP not be supranational legal form is important for the
Commission to defend its choice of legal basis, since there is authority that suggests that the
introduction of supranational forms cannot be justified by Art. 50 TFEU, but only by Art. 352
TFEU.22
This conclusion has been confirmed by the ECJ, which, in a decision concerning the
legal basis of the SCE, held that since this initiative:
leaves unchanged the different national laws already in existence, cannot be regarded
as aiming to approximate the laws of the Member States applicable to cooperative
societies, but has as its purpose the creation of a new form of cooperative society in
addition to the national forms.23
19
See SUP Draft Directive, at Recital 10. Yet, as Conac (n 13), --, correctly highlights, Member States are not
required to introduce the SUP as a new legal form.
20
See, e.g., Jung (n 1), 580 f.
21
This is a crucial aspect of the SUP Draft Directive: if a Member State introduces the SUP as a new form of legal
entity, it could hardly be considered a subtype of any existing form of limited liability company in that Member
State. Moreover, depending on the specific Member State, strategies put in place for the protection of SUP
creditors and other, purely national forms of private limited liability companies may be significantly different,
thus it is hard to imagine that changing from one company form to the other could be done without considering
the interests of creditors. Finally, as Dir. 2012/30/EU is not applicable to private limited liability companies and
as Member States adopt heterogeneous approaches to creditor protection, it is also worth noting that, depending
on the national legislation, it is difficult to predict in each legal system, as between SUPs and purely national
private limited liability companies, which company form may better protect creditors than the other. On the
possibility of considering the SUP as a subtype of private limited liability entities, see Hommelhoff (n 1), 1069
f.; Jung (n 1), 580 f.; Seibert (n 1), R209; Serra (n 1), 147 f.; Wicke (n 1), 1414; Conac (n 13), --.
22
The problem of the legal basis for optional instruments is not new and, recently, it has been carefully examined
in the context of the Proposal for a Regulation on a Common European Sales Law. Without reviewing the
debate on that proposal’s legal basis, it is sufficient to note that, in that controversy, an important point was
made by supporters of the idea that the regulation could be adopted following the ordinary legislative procedure
when, on June 8, 2012, Commissioner Reding communicated that the Council’s legal service found the
Commission’s suggested legal basis (Art. 114 TFEU) valid.
23
ECJ, 2 May 2006, Case C-436/03, European Parliament v. Council [2006] ECR I-3754, n. 44.
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Thus, the ECJ made clear that introducing new forms of cooperative societies cannot be
considered an authentic approximation, since existing national law remains in place, existing
national law addressing cooperatives remained unchanged, and the new SCE was simply to be
added to the list of the legal entities available in each Member State. Hence, in that decision, the
ECJ concluded that the Council did not err in finding that Art. 352 TFEU (at that time Art. 308 of
the EC treaty) was the correct legal basis for Reg. (EC) 1435/2003.
Obviously, the simple fact that creating supranational legal forms cannot be justified by Art. 50
TFEU does not automatically imply that it is possible to rely on that provision to introduce the
SUP as a new national legal entity.24
In fact, it cannot be taken for granted that Art. 50 TFEU can
be used to justify introducing new national legal forms like the SUP. The SUP Proposal probably
represents the first time that a European directive is being used to require Member States to
create a new form of legal entity in their respective national legislation.25
As such, the ECJ has
not yet had an opportunity to rule on what is (or could be) the appropriate legal justification for
this.
Moreover, existing ECJ case law does not provide any particular guidance as to how the Court
would ultimately respond if the question were to come before it. However, in the abovementioned
SCE case, the Court simply referred to “a new form” – as opposed a “new
supranational form” – of cooperative society that was to be added to the national forms through
the Member States’ SCE legislations.26
bb). The introduction of a new legal form from the perspective of Advocate General Stix-Hackl
Another source of guidance to better understand the problems raised by the legal basis of the SUP
Proposal is the opinion delivered by Advocate General Stix-Hackl in the above-mentioned SCE
case (“SCE AG Opinion”). In her opinion, the AG opined that while some parts of Reg.
24
From this perspective, it would be unwise to rely on the debate surrounding the Proposal for a Regulation on a
Common European Sales Law when considering the correct legal basis for the SUP Initiative. In fact, the SUP
is not an optional instrument nor does the SUP Initiative introduce a new supranational legal form. Yet, that
does not necessarily mean that the legal basis proposed by the Commission is, in fact, correct.
25
Perhaps, some parallels can be drawn between the SUP Initiative and the introduction of single-member
companies by Dir. 89/667/EEC, which, at that time, did not exist in some Member States. For example, see the
remarks of Edwards (n 7), 222, on the expressed legal basis for Dir. 89/667/EEC, as that directive “require[d]
provision for single-member companies” and not only harmonised safeguards for the protection of the interests
of members and third parties. See also Andenas - Wooldridge, European Comparative Company Law (2009),
42, who notes that, at the time the single-member company proposal was published, only five Member States
authorized such entities. Yet, even if Dir. 89/667/EEC imposed on some Member States an obligation to
introduce single-member companies, it did not oblige them to create a new legal form in a strict sense, as such
companies were to be introduced within the framework of private limited liability companies.
26
Interestingly, in response to concerns raised in connection with the Proposal for a Regulation on a Common
European Sales Law (C(2012) 9641 final, Brussels 10 January 2013, available at
http://ec.europa.eu/dgs/secretariat_general/relations/relations_other/npo/docs/austria/2011/com20110635/com2
0110635_bundesrat_reply_en.pdf, (last visited May 10, 2014), 2), the Commission argued that the legal basis of
that proposed Regulation was different from that of Reg. (EC) 1435/2003, as the former did “not create a new
legal form that is also subject to the requirements to conform to a legally defined legal form under national law
and can only be introduced by the legislator”, but the latter introduced the SCE, which is “a new legal form in
addition to the national forms of cooperative societies”. Moreover, in that case no specific reference was made
to the supranational nature of the SCE.
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(EC) 1435/2003, like those concerning the registered office and its transfer, are clearly related to
the freedom of establishment, other parts extend beyond that freedom and concern the abolition
of restrictions on other freedoms.27
For that reason, the AG determined that a new European legal
form could not be introduced using either the prior iteration of Art. 50 TFEU (Art. 44 EC
Treaty)28
or Art. 114 TFEU (Art. 95 EC) as its legal basis.
In addition, AG Stix-Hackl stated that her conclusions were “not as clear in the case of legal
forms that are not independent of national legislation”,29
saying that “[i]t is not finally
established, in particular, where the dividing line runs between genuine or completely new legal
forms and those new legal forms to which national law also applies”.30
The SCE AG Opinion
also suggests that it is not necessary to ascertain if a legal entity like the SCE “is really a
‘national company with a European character’”31
because what really matters “is the legislative
content of the regulation”.32
The AG concluded that existing “national law on cooperative
societies is not affected by the regulation” and, in addition, “[t]he legal form of an SCE certainly
does not replace the legal forms which exist in national law on cooperative societies, but is
distinct from them and exists alongside them”.33
When examined in light of the findings and conclusions expressed in the SCE AG Opinion, the
SUP has few characteristics in common with either the SE or SCE, such that it cannot be
considered a new European legal form. Moreover, just as the AG suggested that there were
aspects of Reg. (EC) 1435/2003 that could not be based solely on the freedom of establishment,
certain provisions of the SUP Proposal do not directly concern the freedom of establishment,
either. Thus, for these provisions – at least from the perspective of AG Stix-Hackl – Art. 50
TFEU cannot be considered an appropriate legal basis.34
A question which, for the moment, is difficult to answer is whether the category “new legal
forms” mentioned in the SCE AG Opinion should be understood to include only “new European
legal forms” or to include “new national legal forms” too. Undoubtedly, the Commission
interprets the phrase to mean the former and the Council’s legal service agrees with this
conclusion35
. However, in the SUP Proposal, the Commission has taken this approach to its
extreme: it permits a Member State to maintain – almost entirely unchanged – its existing
national law and simply add a new company, meeting certain requirements and with a particular
name, to the list of available legal entities. Specifically, a Member State may choose to transpose
the SUP Draft Directive in such a way that its SUP does not replace any of its existing national
27
AG Opinion on Case C-436/03 (n 16), n. 44.
28
AG Opinion on Case C-436/03 (n 16), n. 42.
29
AG Opinion on Case C-436/03 (n 16), n. 73.
30
Id.
31
AG Opinion on Case C-436/03 (n 16), n. 75.
32
Id.
33
AG Opinion on Case C-436/03 (n 16), n. 90.
34
Interestingly, the Opinion of the Council’s legal service (n 1), n. 32, argued that an evident difference between
the SUP and the SCE could be found in the fact that the former does not “provide for the possibility of
transferring the registered office”, which is one of the few point for which Art. 50 TFEU would surely have
been a legitimate legal basis.
35
Opinion of the Council’s legal service (n 1), n. 25 ff.
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legal forms, such that its SUP will be distinct from and exist alongside those forms.36
In any case
it is hard to imagine that Member States’ national company law will remain completely
unaffected by the transposition of the SUP Draft Directive. Yet, this does not mean that the
introduction of a new national company can be based on Art. 50 TFEU simply because the
Member States’ law will be somehow affected.37
Finally, examining what is now Art. 50 TFEU, AG Stix-Hackl also argued, with a statement
whose exact scope and correctness is debated,38
that
the coordination requirement also creates a restriction as regards the creation of new
forms under company law. Such legal measures could not therefore be based on
Article 44 EC.39
In conclusion, surely, since Reg. (EC) 1435/2003 left unchanged the different national laws
already in existence, it could not be regarded as aiming to approximate the laws of the Member
States; however, as the Council’s legal service also admits, this does not mean that any measure
– like a directive – that does not leave the different national laws untouched would be admissible
under Article 50 TFEU.40
At least in AG Stix-Hackl’s words, it seems that what is needed is an actual coordination of
national law actually aimed at the attainment of the freedom of establishment. Ironically, the less
invasive the SUP Proposal is for national forms, the more likely it is that it cannot be considered
a coordination measure, since the creation of new legal national forms can hardly be considered
as approximating existing laws.41
c). Art. 50(2)(f) TFEU as the SUP Proposal’s legal basis
36
In Opinion of the Advocate General Kokott, 22 September 2005, Case C-217/04, United Kingdom of Great
Britain and Northern Ireland v. European Parliament and Council of the European Union [2006] ECR I-3771,
n. 24, which provides some useful comments on AG Stix-Hackl’s Opinion, AG Kokott argued that “Advocate
General Stix-Hackl’s view must be accepted in the case of the creation of new kinds of companies, if they take
their place alongside the kinds of companies in the individual States’ legal systems”. Interestingly, also in this
dictum, emphasis is given to the fact that simply a new company – not a supranational legal forms – is created
alongside the kinds of companies existing in a given Member State.
37
Cf. the Opinion of the Council’s legal service (n 1), n. 28, which argues that “Article 50 TFEU is justified only
when the measure in question is designed to approximate the national legislation applicable to company law,
and not to create a new legal form of European company which supersedes national forms of companies”, but,
at n. 30, also concludes that “the SUP is a purely national company, set up on the basis of national provisions
and in accordance with those national provisions – even though those provisions may be harmonised – and not a
supranational form of single-member company governed first and foremost by an act of the Union and set up
directly on the basis of such an act”.
38
Vossestein (n 8), 87, n. 186, and accompanying text.
39
AG Opinion on Case C-436/03 (n 16), n. 41 f.
40
Opinion of the Council’s legal service (n 1), n. 29, recognizing that the fact that the measure proposed by the
Commission is a directive is not “legally decisive” to justify the appropriateness of the legal basis.
41
However, it should also be noted that the reference to the coordination requirement made by AG Stix-Hackl,
even if made generally to Article 44 EC, could also be interpreted as addressing only what is now Art. 50(2)(g)
TFEU, where explicit reference is made to the coordination of the safeguards for the protection of the interests
of members and third parties.
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As previously noted, the SUP Draft Directive simply cites in its preamble Art. 50 TFEU as its
legal basis, without further specifying which particular subsection provides the directive’s precise
legal basis. The SUP Proposal follows the example of Dir. 2009/102/EC, which simply cited Art.
50 TFEU’s predecessor, Art. 44 TEC, without any further specificity, in line with other company
law directives that were also based on that article. However, it is only in the SUP Explanatory
Memorandum that the Commission reveals its significant departure from the traditional legal
basis used for company law directives. In the past, the Commission’s stated legal basis has been
Art. 50(2)(g) TFEU, but for the SUP Proposal, the Commission clearly states that the intended
legal basis is Art. 50(2)(f) TFEU, instead. Two different questions raised by this change must be
considered: (a) why did the Commission opt for an alternative legal basis for the SUP and (b) is
Art. 50(2)(f) TFEU an adequate legal basis for this directive?
ca). The Commission’s choice of a different legal basis
The Commission probably rejected Art. 50(2)(g) TFEU as the SUP Draft Directive’s legal basis
because that provision would have been too narrow to justify the different measures included in
the SUP Draft Directive.42
Even a cursory review of the SUP Draft Directive shows that it is not
limited to the simple coordination of safeguards with a view to making them equivalent for the
protection of the interests of members and third parties; rather, its scope extends beyond this
objective. For example, it is doubtful that the entire second part of the SUP Draft Directive,
which allows Member States to introduce the SUP, can even be considered a true coordination
measure with respect to national law, as the Member States would still be allowed to maintain,
virtually unchanged, their existing company laws, by simply adding the SUP to the list of
available national forms of legal entities.
cb). Can Art. 50(2)(f) TFEU be an adequate legal basis for the SUP Draft Directive?
While it is clear that Art. 50(2)(g) TFEU cannot prove a sufficient basis for the SUP Draft
Directive, the Commission’s choice of Art. 50(2)(f) TFEU is not completely satisfactory, either.
Certainly, some parts of the SUP Draft Directive, like those devoted to the SUP’s registered
office, fall within the scope of subsection (f), as they are directly related to the freedom of
establishment. However, other provisions in the SUP Draft Directive, such as those concerning
the representative powers of directors or the internal structure of the SUPs, can hardly be
considered measures that abolish restrictions on the freedom of establishment.43
In addition, it is
not yet clear whether the Commission’s choice of Art. 50(2)(f) for the SUP Proposal may have
any impact on the nature or scope of the first part of the SUP Draft Directive, as that part
generally follows the structure and wording of Dir. 2009/102/EC.44
Moreover, the scope of Art. 50(2)(f) TFEU is limited to setting up agencies, branches, and
subsidiaries. Since SUPs will have full legal personality, the SUP Draft Directive arguably only
42
Cf. AG Opinion on Case C-436/03 (n 16), n. 44.
43
Cf, again, AG Opinion on Case C-436/03 (n 16), n. 44, but also infra, n. 54.
44
In fact, in addition to old doubts concerning the appropriateness of the legal basis of Dir. 89/667/EEC and Dir.
2009/102/EC (cf. supra, n 7), further uncertainties could arise.
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falls within its scope with respect to subsidiaries.45
Nevertheless, despite the fact that the SUP
Initiative is certainly relevant to companies wishing to create subsidiaries in other Member
States, the new SUP legal form is also to be made available to natural persons. Hence, the part of
the SUP Draft Directive that authorizes natural persons to create SUPs does not fall within a
literal reading of Art. 50(2)(f) TFEU.
Furthermore, Art. 50(2)(f) TFEU is intended to promote the “progressive abolition of restrictions
on freedom of establishment.” Even without considering the merits of existing national law
restrictions on the freedom of establishment (something that has yet to be proved),46
it is worth
noting that single-member companies are already profoundly influenced by EU legislation, which
has already harmonised substantial parts of national company law that will need to be amended
when transposing the SUP Draft Directive.47
cc). The coordination between Art. 50(2)(g) and Art. 50(2)(f) TFEU
In this context, the Council’s legal service adopted a benevolent approach toward the
Commission’s choice of Art. 50(2)(f) TFEU as the legal basis of the SUP Proposal. In fact, the
opinion of the Council’s legal service suggests that, although this provision refers only to the
conditions for setting up agencies, branches or subsidiaries, it must be interpreted broadly as also
concerning primary establishment – that is, the creation of the new company.48
This reading of Art. 50(2)(f) TFEU, however, raises an important problem, that is, that of the
coordination between Art. 50(2)(f) and Art. 50(2)(g) TFEU. More precisely, it is difficult to
reconcile such a broad interpretation of the former provision provided by the Council’s legal
service with the argument, also evoked in Advocate General Stix-Hackl’s Opinion, that the
creation of new forms under company law cannot be based on Article 50 TFEU and with the need
to satisfy the “coordination requirement”.49
In brief, it is difficult to understand why, in company law, the safeguards for the protection of the
interests of shareholders and third parties could only be coordinated under Art. 50(2)(g) TFEU, if
Art. 50(2)(f) TFEU or, even more broadly, Art. 50(1) TFEU,50
allows the possibility of enacting
directives that, in the pursuit of the attainment of the freedom of establishment, permit the
European institutions to create and design the rules applicable to existing and new national forms,
including those rules that concern the protection of the interests of shareholders and third parties.
From this perspective, it is true that the possibility, recognized by Art. 50(1) TFEU, of enacting
directives in order to attain freedom of establishment is not limited to the topics listed in
45
Cf. Opinion of the Advocate General La Pergola, 16 July 1998, Case C-212/97, Centros Ltd v Erhvervs-og
Selskabsstyrelsen [1999] ECR I-1459, n. 15, clarifying the distinction between subsidiaries and branches.
46
Cf. infra, n 125.
47
On the functions played by 50(2)(g) TFEU, see, e.g., Cotiga, Le droit européen des sociétés (2013), 61 ff.
48
‘Opinion of the Council’s legal service’ (n 1), n. 9.
49
Cf. supra, n 39 and accompanying text.
50
Cf. Drygala (n 1), 493, and Omlor (n 1), 1138. In fact, such a broad interpretation of Art. 50 TFEU, even if not
uncommon (see Vossestein (n 8), 154 ff.), would be difficult to reconcile with AG Stix-Hackl’s idea that the
coordination requirement creates a restriction as regards the creation of forms of companies (cf. supra, n 41).
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Art. 50(2) TFEU.51
However, it must be conceded that it is not sure that the former provision
could be read to completely disregard the content of latter (with particular regard to Art. 50(2)(g)
TFEU), since it has been argued that the two paragraphs of Art. 50 TFEU are simply two facets
of the same legal basis.52
The foregoing discussion suggests that Art. 50(2)(f) TFEU is, at best, a problematic legal basis on
which to base the SUP Draft Directive or, at worst, an inappropriate one. Unfortunately, it is
difficult to find a valid alternative. Obviously, Art. 352 TFEU would offer a more solid
foundation on which to build the SUP. Using it as the SUP Proposal’s legal basis would also
allow further development of rules governing SUPs as well as ensure greater coherence with
existing company law EU acquis under both harmonisation directives and supranational legal
forms. But, choosing Art. 352 TFEU would force the Commission to seek unanimous approval
from the Council. However, considering the Commission’s success in obtaining such approval
for the SE and the SCE, as well as the lessons it learned from its ill-fated SPE Proposal,
convincing the Council to give such unanimous approval is still an eminently achievable goal.53
In truth, what really seems to be at stake, more than the recognition of Art. 50(2)(f) TFEU as a
legitimate legal basis for the SUP, which is questionable, or the transnational or domestic nature
of the SUP, which is not particularly decisive, is the definitive acknowledgement that Art. 50
TFEU could be used by European institutions as they see fit54
to design – with a previously
unknown degree of freedom – national company law.55
This could, among other things, (a) result
in the final abandonment of the harmonisation – that is, coordination – strategy of European
company law, (b) lead to the adoption of measures that are not intended to actually approximate
national laws, and (c) require reconsidering the reasons that justify the legal basis of the SE and
the SCE and, more generally, the correct scope and limits of Art. 352 TFEU as a legal basis for
European company law.
2. The uneasy relationship with the EU acquis
a). The explicit deviations from the EU acquis
51
For a detailed analysis of this point, see Teichmann, ‘Corporate Groups within the Legal Framework of the
European Union - The group-related aspects of the SUP Proposal and the EU freedom of establishment -’, in the
current issue of this review, --.
52
See, e.g., Forsthoff, ‘Art. 50’, in Grabitz - Hilf - Nettesheim eds., Das Recht der Europäischen Union (2014) 54.
Ergänzungslieferung, Rn. 4; Müller-Graff, ‘Art. 50’, in Streinz ed., EUV/AEUV (2012) 2. Aufl., Rn. 10, who
argue that Art. 50(2) TFEU is not a different legal basis from Art. 50(1) TFEU. This interpretation would also
be coherent with the conclusions of Advocate General Stix-Hackl in Opinion on Case C-436/03 (n 16). For a
more liberal approach see Vossestein (n 8), 87.
53
For this perspective, see Harbarth, ‘From SPE to SMC – The German Political Debate on the Reform of the
“Small Company”’, in the current issue of this review, --, who argues that the adoption of a statute for the SPE
would be preferable to the enactment of a directive addressed to single-member companies and gives
suggestions on how a political consensus could be achieved to solve the issues that proved problematic during
the discussions on the SPE Proposal.
54
Vossestein (n 8), 90 f., opines that the limit to the scope of Art. 50(1) TFEU as a valid legal basis is limited to
the attainment of the freedom of establishment. Yet, as Grundmann - Glasow (n 8), 56 f., argue with regard to
art 50(2)(g) TFEU, with an argument that could also easily be extended to Art. 50(1) TFEU, the harmonisation
of EU company law, since the enactment of Dir. 68/151/EEC, also concerned measures that were not related to
the attainment of this freedom.
55
See, in particular, Vossestein (n 8), 154 ff.
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The SUP Draft Directive raises important issues as to its relationship with existing EU acquis on
company law. One example arises in connection with the proposed rules on the representative
powers of directors and authorised agents (Art. 24 of the SUP Draft Directive), which, at least for
SUPs, effectively repeal the EU acquis of Dir. 2009/101/EC. Hence, the alleged restrictions of
the freedom of establishment that should be abolished are nothing but the legitimate offspring of
Art. 10 Dir. 2009/101/EC, which, when it was first adopted in 1968,56
was considered an
important achievement of EC law.57
Such a repeal, even if only partial, would result in the dishonorable demise of an important
provision of EU company law, whose faithful implementation by the Member States has never
been challenged by the Commission. In addition, the new SUP rules will not be adopted to
further advance coordination or making equivalent the safeguards for the protection of the
interests of members and third parties, but because the provision was, in the end, discovered to be
an intolerable restriction on the freedom of establishment.
These observations also raise the more general question of whether the legal basis proposed by
the Commission would allow such repeal. For example, it has been argued that for those aspects
of the national laws to which Reg. (EC) 2157/2001 makes reference, a presumption of
equivalence exists, which would not make obvious the need for harmonisation of these aspects of
national law in view of the attainment of the freedom of establishment.58
If this is true, it is also
difficult to believe that obvious restrictions of the freedom of establishment exist in company law
areas that have already been coordinated in view of the attainment of this freedom.
b). The relationship between the SUP Draft Directive and the harmonisation directives
Examining the relationship between the SUP Initiative and the existing European company law
framework, the articles of the SUP Draft Directive that openly deviate from EU acquis are
probably easier to evaluate; for those provisions, at least, the Commission’s intentions are clear.
In contrast, it is more difficult to understand if the existing EU acquis on company law, with
particular regard to harmonisation directives, will apply to SUPs. From this perspective, it is
worth noting that Dir. 2009/102/EC imposes harmonisation of the rules governing single-member
private limited liability companies on Member States, specifically mentioning the national legal
56
See Art. 9 Dir. 68/151/EEC.
57
Among the first, generally positive, comments following the enactment of Dir. 68/151/EEC, see, e.g., Ault,
‘Harmonization of Company Law in the European Economic Community’, 20 Hastings L. J. (1968), 77; van
Ommeslaghe, ‘La première directive du Conseil du 9 mars 1968, en matière de sociétés’, Cah. dr. eur. (1969),
495 and 619; Stein, Harmonization of European Company Law (1971), 195 ff.; La Villa, ‘The Validity of
Company Undertakings and the Limits of the E.E.C. Harmonization’, in 3 Anglo-Am. L. Rev. (1974), 346.
With regard to the first dissenting voices, the only member of the European Parliament to cast a negative vote
on the proposal deserves special mention: he famously defined this provision a “beast with a Latin head and a
German body and tail” (reported by Stein (n 57), 296).
58
See Vossestein (n 8), 107, citing and concurring with Timmermans.
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forms to which it is addressed.59
In fact, the Annex to the SUP Draft Directive, makes reference
to virtually the same list of companies.60
However, Dir. 2009/102/EC is not the only piece of European legislation that is applicable to
single-member private limited liability companies: principally, reference should be made to Dir.
2009/101/EC on the coordination of safeguards for the protection of the interests of members and
third parties and to Dir. 2013/34/EU on the annual and consolidated financial statements.61
In
addition, other directives, such as Dir. 2005/56/EC on cross-border mergers and Dir. 89/666/EEC
on the disclosure requirements in respect of branches opened in other Member States, currently
address single-member private limited liability companies.62
Yet, according to the SUP Draft Directive, none of these directives makes – and it is not
anticipated that they will be modified to make – explicit reference to SUPs, which Member States
may choose to incorporate in their national law as a new and distinct legal form from their
existing private limited liability companies.63
An important difficulty left open in the SUP Draft
Directive is that of determining whether the EU acquis on private limited liability companies
necessarily extends to such entities.
As it does not appear that the existing company law directives will be amended to mention SUPs,
a literal interpretation of the Commission’s initial SUP Proposal would allow Member States to
decide to exempt SUPs from many rules currently applicable to single-member limited liability
companies. For example, Member States could interpret the SUP Draft Directive, if adopted in its
initial form, to give them the freedom to adopt completely different rules relating to the
preparation and disclosure of financial statements or to modify the principles governing the
nullity of companies. Unfortunately, this possibility jeopardizes the very uniformity already
achieved in European company law. For the moment,64
then, suffice it to say that, as formulated
by the Commission, the SUP Draft Directive poses significant risks to the subjective scope of the
59
In reality, Art. 6 Dir. 2009/102/EC extends, somewhat, the scope of that directive to public limited liability
companies by imposing on those Member States that also allow these companies to become single-member
companies to apply the same rules provided in that directive.
60
In principle, the SUP Draft Directive does not make a direct reference to public limited liability companies: the
wording of its Art. 1(3) mentions “other companies than those listed in Annex I.” However, the SUP
Explanatory Memorandum (n 1), 6, makes clear that such reference should be understood to address “public”
limited liability companies, too.
61
Malberti (n 1), 854.
62
A more delicate issue relates to the legal technique used to define the scope of both Dir. 2005/56/EC on crossborder
mergers and Dir. 89/666/EEC on the disclosure requirements in respect of branches opened in other
Member States. Both of those directives make reference to Dir. 68/151/EEC. As the proposed SUP could be a
new legal form that will be, according to the Commission, clearly distinct from other private limited liability
companies, it cannot be included within the scope of the first company law directive or these other two
directives. Dir. 2005/56/EC might apply to SUPs by virtue of the SUP Draft Directive’s Art. 2(1)(b), which
extends the scope of the directive to the companies “with share capital and having legal personality, possessing
separate assets which alone serve to cover its debts”. Yet, some doubt as to the appropriateness of any such
extension may still arise because it also requires that such companies, under national law, are subject “to
conditions concerning guarantees such as are provided for by Directive 68/151/EEC.” Certainly, some
provisions of Dir. 68/151/EEC (now Dir. 2009/101/EC), by definition, cannot apply to SUPs (cf, e.g., Art. 10
Dir. 2009/101/EC and Art. 24 of the SUP Draft Directive). Thus, any such extension could not be considered
justified.
63
Cf. supra, n 21.
64
See infra, III.
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harmonisation directives and could even result in increased uncertainty within the legal
framework governing single-member private limited liability companies.
3. Toward harmonising the legal framework governing groups of companies?
The SUP Draft Directive raises yet another question because it may introduce new regulation of
groups of companies. While it is unnecessary to repeat the history of the debate on the
harmonisation of group regulation,65
it is worth recalling that Art. 2(2) of Directive 2009/101/EC
currently provides that:
Member States may, pending coordination of national laws relating to groups, lay down
special provisions or penalties for cases where: (a) a natural person is the sole member
of several companies; or (b) a single-member company or any other legal person is the
sole member of a company.66
Interestingly, a similar provision is not included in the SUP Draft Directive; on the contrary, it
emphasizes the fact that SUPs can be used to structure groups.67
In other words, the SUP Draft
Directive, if approved in its initial form, will become the first substantial piece of European
legislation to directly address the rules governing groups of companies.68
This result is not surprising and, to some extent, it derives directly from the work that preceded
the SUP Initiative, which focused its attention on, among other things, solving the problems
faced by groups of companies. The Commission’s choice of legal basis for the SUP Draft
Directive (Art. 50(2)(f) TFEU) further supports such an interpretation, as that provision refers to
abolishing restrictions on the freedom of establishment of subsidiaries in other Member States.
The Commission’s approach, however, raises several questions. For example, it appears that the
Commission’s decision to abandon the wording of Art. 2(2) Dir. 2009/102/EC was not taken
until after the first working draft thereof was prepared, but subsequent revisions did not
specifically address the reasons for or the many implications of the decision to delete said
wording.69
An obvious criticism of the Commission’s choice of language (or lack thereof, as the case may
be) in the SUP Draft Directive is that it introduces an embryonic regulation of European groups
of companies without really addressing the key problems related to it. Interestingly, before the
65
For additional information on initiatives concerning harmonisation of the legal framework on groups of
companies, see Edwards (n 7), 390 f.; Grundmann - Glasow (n 8), 754 ff.; Bauer - Weller (n 1), 18 ff.;
Teichmann (n 51), --.
66
In addition, Recital 5 of the quoted directive refers to the pending coordination of national laws concerning
groups of companies.
67
Recital 23 of the SUP Draft Directive states: “[i]n order to facilitate the operation of groups of companies,
instructions issued by the single-member to the management body should be binding”. The right to give
instructions has been considered as one key and useful innovation of the SUP Proposal, see Conac (n 13), --.
68
Teichmann (n 51), --, suggests that the SUP Proposal could introduce a set of enabling provisions for managing
cross-border groups.
69
In principle, working drafts of Commission proposals are not typically made available. However, a document
that can reasonably be considered a working draft of the SUP Draft Directive is available at
http://www.linklaters.de/fileadmin/redaktion/Gesellschaftsrecht_M_A/Gesetzesmaterialien/EinpersonenGesells
chaft_SUP/Einpersonengesellschaft.pdf (last visited May 11, 2014). Art. 3 of this early working draft closely
follows the wording of Art. 2(2) Dir. 2009/102/EC.
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SUP Draft Directive was officially published, the Commission explored the possibility of
regulating “group interests” and group structure disclosure obligations, two topics on which the
respondents to the consultations of the Commission showed interest. However, the final SUP
Draft Directive does not incorporate any substantive provisions on these points.70
Perhaps, the SUP Draft Directive can be understood as being only a first step toward regulating
groups of companies.71
However, unless it is revised before it is finally adopted, the SUP Draft
Directive will not provide any solutions to the various problems faced by groups of companies.
4. The template articles of association
An interesting aspect of the SUP Proposal is the possibility of creating such new legal entities by
using template articles of association and registration forms. The SUP Draft Directive specifies,
however, that such template articles of association can be modified by the single member.
The Commission’s approach is not new and it is already practiced in many jurisdictions. Yet,
giving the template articles of association and registration forms a European dimension could
raise new challenges. More precisely, given that an SUP will be a domestic entity governed in
large part by the national law of the Member State in which it is formed, it will be difficult to
draft such a template set of articles of association that will fit all national legislation.72
Moreover,
given the existing differences in national law, it is difficult to find one-size-fits-all solutions that
will work for all Member States for a variety of different issues.73
70
The problems raised by implications for regulation of groups have been examined in particular in German
scholarship: see e.g. Hommelhoff (n 1), 1065 ff.; Teichmann (n 1), 3563 ff.; Teichmann - Fröhlich (n 1), 540 ff.
71
Conac, ‘Director’s Duties in Groups of Companies – Legalizing the Interest of the Group at the European
Level’ (2013) 10 ECFR, 194 ff., also published in Engsig Sørensen - Birkmose - Neville eds., Boards of
Directors in European Companies (2013), 75, who suggests that a recommendation would be the most suitable
instrument to move harmonisation of legislation governing group of companies forward.
72
From this perspective, experience with Italy’s template articles of association is instructive: after the adoption of
template articles of association for the recently-introduced Srls, the Italian legislature decided to partially
modify the rules governing these entities, making the template obsolete. At the same time, the legislature
decided that the template was mandatory, raising numerous questions about the possibility of creating Srls using
the obsolete template. On these problems, see, e.g., Spolidoro, ‘Una società a responsabilità limitata da tre soldi
(o da un euro?)’, Riv. soc. (2013), 1085, 1104 ff.
73
A practical example might better illustrate the issues to be resolved in such any attempt at implementation. In
Germany, for example, the UG Musterprotokoll essentially provides that a director is exempt from the
restrictions of § 181 of the Civil Code (author translation from original: “Der Geschäftsführer ist von den
Beschränkungen des § 181 des Bürgerlichen Gesetzbuchs befreit”). § 181 BGB, a German Civil Code provision
relating to contracting with oneself, stipulates that “[a]n agent may not, unless otherwise permitted, enter into a
legal transaction in the name of the principal with himself in his own name or as an agent of a third party, unless
the legal transaction consists solely in the performance of an obligation”. German law permits a waiver of the
restrictions set forth in § 181 BGB in the articles of association of private limited liability companies, which
waiver has become so customary that it is now included in the UG Musterprotokoll. Italy, on the other hand,
does not permit a waiver of this type in the articles of association (see Ventoruzzo, ‘Commento sub art. 2475ter’
in Marchetti et al. eds, Commentario alla riforma delle società. Società a responsabilità limitata (2008)
599, at 660 ff.). Thus, in the absence of a waiver in the articles of association, a German single-member private
limited liability company would not be allowed to conclude contracts within the scope of § 181 BGB on the
basis of the single shareholder’s decision (for some reflections on this principle, see Zöllner - Noack, ‘§ 35’, in
Baumbach - Hueck eds., GmbHG (2013) 20. Aufl., Rn. 140; Stephan - Tieves, ‘§ 37’, in Fleischer - Goette
(herausgegeben von), Münchener Kommentar zum GmbHG (2012) 1. Aufl., Bd. 2, §§ 35-52, Rn. 185 ff.;
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Even though the use of the SUP template articles of association would not be required, one can
hardly imagine the trouble that would ensue if the applicable national law and the template’s text
have not first been properly coordinated. In addition, the problem should be considered from a
dynamic perspective, taking into account possible developments in national law.
Finally, another important aspect of such a template relates to the manner in which the
Commission expects it to be implemented. To ensure uniformity, the implementing act would
have to be a regulation. But, if that were the case, such a regulation would preempt national
company law, which would, in turn, exacerbate existing coordination problems. In that case, to
comply with the SUP Draft Directive while simultaneously avoiding conflicts with any national
law, the template articles of association would have to be extremely succinct,74
which would
probably result in a template that is not particularly detailed or specific about the rules governing
the SUP, leaving many gaps that will have to be filled by default rules or by implied terms.75
5. The supervisory board of SUPs
The SUP Draft Directive raises yet another issue regarding the internal structure of SUPs: the
provisions of the SUP Proposal appear to be more coherent with a one-tier board structure.
Nevertheless, in Art. 22(3), it is said that
[t]he management body may exercise all the powers of the SUP that are not
exercised by the single member or, where applicable, by the supervisory board.
The exact implications of that reference to a supervisory board – where applicable – are difficult
to predict. Certainly, the Commission’s proposed SUP has many traits in common with existing
private limited liability companies (much more so than with public limited liability companies)
and many Member States simply do not allow private limited liability companies to adopt a twotier
board structure so the circumstances under which a supervisory board would be applicable
remain unclear.76
However, Art. 22(3)’s inconsistency with existing national law is not the biggest concern the
provision raises; Member States probably have the right to choose to adopt or reject a two-tier
model of corporate governance for their private limited liability companies and, in all likelihood,
would have the same right to choose with respect to SUPs.77
Yet, even suggesting that Member
States can adopt a two-tier board structure for their SUPs decreases the level of uniformity of
SUP rules across jurisdictions. Moreover, as any rules that would relate to any such supervisory
Altmeppen, ‘§ 35’, Gesetz betreffend die Gesellschaften mit beschränkter Haftung (GmbHG) (2012) 7. Aufl,
Rn. 84 ff.). Thus, if the uniform template fails to include such a waiver, German SUPs will not likely be allowed
to engage in such transactions, making the SUP a potential trap for the unwary. If, on the contrary, that same
uniform template includes such a waiver, the articles of association adopted in conformity with this solution will
conflict with an established principle of Italian law, which prohibits such waivers.
74
Existing articles of association templates available in different Member States follow different approaches.
Some, like the UK Companies (Model Articles) Regulations 2008, provide a detailed set of rules; others, like
the UG Musterprotokoll, are more succinct. The Italian and the French model articles of association are concise,
while the Spanish model is more explanatory, even if not as detailed as the UK Model Articles.
75
And, therefore, not particularly useful, cf., e.g., Neville - Sørensen (n 1), 568 ff.
76
For some few remarks on the role of the supervisory board in SUPs, see Beurskens (n 1) 743; Jung (n 1), 590;
and Lecourt (n 1), 706.
77
See Lecourt (n 1), 706.
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board would be entirely national, important SUP organizational aspects, such as the powers and
the duties of the supervisory board, will remain entirely outside the scope of European company
law.78
6. The solutions to the unsolved problems of the SPE provided by the SUP Draft Directive
As noted above, the Commission abandoned its SPE Proposal due to political deadlock over
three different aspects of the proposed legal form: (a) its minimum capital requirements, (b) its
ability to separate its registered office from its central administration, and (c) the participation of
the employees.79
The SUP Draft Directive adopts the same formula as used in the SPE Proposal
with respect to two of those issues – that is, for the minimum capital requirement and the
possibility of separating the registered office from the central administration – while the problem
of the participation of the employees is not addressed.
a). Minimum capital requirements
aa). The reduction of minimum capital requirements
With regard to the minimum capital requirement, it is not necessary to reiterate the debate over
the various strategies used to protect creditor interests, the different arguments in favor of the
legal capital versus the solvency tests, or other alternative strategies.80
Rather, suffice it to say
that, just as it did for the SPE,81
the Commission chose to set the SUP’s minimal capital
requirement at one euro (Art. 16(1) of the SUP Draft Directive).82
This approach is in line with
78
That limitations on the director’s representative powers may derive from a resolution of the supervisory board
poses yet another difficulty. SUP Draft Directive Art. 24 states that “[a]ny other limitation of the powers of the
directors, by the articles of association, by a decision of the single-member or by a decision of the management
body, may not be relied upon in any dispute with third parties, even if that limitation has been disclosed”. This
formulation does not take into account limitations arising from a supervisory board resolution, which may well
be, for limited liability companies, included within the scope of Art. 10(2) Dir. 2009/101/EC, a situation that, in
contrast, was expressly contemplated by Art. 33(2) of the SPE Proposal.
79
The difficulties faced by the SPE Proposal were also mentioned in the ‘Commission Staff Working Document
Impact assessment accompanying the document Proposal for a directive of the European Parliament and of the
Council on single-member private limited liability companies’, SWD(2014) 124 final, Brussels 9 April 2014,
19, n 61 (hereafter the ‘Impact Assessment’) and accompanying text.
80
It is virtually impossible to provide a detailed description of all the positions taken in this debate. Rather, for
some of the most influential contributions see: Lutter ed., Legal Capital in Europe (2006); Hirt, ‘The Wrongful
Trading Remedy in UK Law: Classification, Application and Practical Significance’, 1 ECFR (2004), 71;
Miola, ‘Legal Capital and Limited Liability Companies: the European Perspective’, 2 ECFR (2005), 413;
Ferran, ‘The Place for Creditor Protection on the Agenda for Modernisation of Company Law in the European
Union’, in 3 ECFR (2006), 178; and the contributions in 15 EBLR (2004), 1029; and in 7 EBOR (2006), 1.
Further details on the debate regarding the minimum may also be found in Hansen ‘The SUP proposal –
Registration and Capital (Articles 13 – 17)’ in the current issue of this review, --.
81
On strategies to ensure creditor protection in the SPE Proposal, see Schutte-Veenstra - Verbrugh, ‘The
European Private Company and Capital Protection’ in Hirte - Teichmann eds., The European Private Company
- Societas Privata Europaea (SPE) (2013), 263; Hommelhoff - Teichmann, ‘Societas Privata Europaea (SPE) –
General Report’, in Hirte - Teichmann eds., The European Private Company - Societas Privata Europaea
(SPE) (2013), 17 ff.
82
Or, in the countries where the euro is not the national currency, to one unit of the national currency.
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the trend in Member States, which picked up substantial momentum following Centros,83
to
lower the minimum capital requirements for their private limited liability companies.84
With respect to minimum capital, two things should be noted. First, this aspect of the SPE
Proposal was probably not the decisive problem that led to the deadlock in the negotiations, but
it was, instead, only one controversial issue discussed by the Council.85
Moreover, rather than
attempt to accommodate the position of those Member States that still believe a minimum capital
requirement to be important, the Commission chose to rely on a different legal basis for its SUP
Initiative, so that such Member States could not derail the SUP Initiative.
Second, as Advocate General La Pergola famously said in his opinion in Centros, “in the
absence of harmonisation, competition among rules must be allowed free play in corporate
matters”.86
In this sense, the fact that many Member States have modified their national law to
decrease minimum capital requirements in the wake of that decision can be understood, at least,
as a race toward uniformity rather than a deliberate determination by Member States that a
minimum capital of one euro was preferable. The Commission’s choice to harmonise the
minimum capital requirement for SUPs along the same lines as the recent national law trend is
less a reflection of harmonisation of company law and is more a reflection of its recognition of
the results of the competition among national rules contemplated by AG La Pergola.
ab). The introduction of the solvency test
Another interesting aspect of the SUP Draft Directive, which is directly related to the SUP’s
minimum capital requirement, is the Commission’s choice to incorporate a solvency test for any
distributions.87
Although this test in not exactly the same as that proposed in its SPE Proposal, it
follows a similar path.88
83
ECJ, 9 March 1999, Case C-212/97, Centros Ltd v Erhvervs-og Selskabsstyrelsen [1999] ECR I-1484.
84
On the reduction of the minimum capital requirement, see Conac (n 13), --. Although this trend followed
Centros, it would be inaccurate to conclude that it was driven solely by the Court’s recognition of the breadth of
companies’ freedom of establishment. Another possible driver that cannot be underestimated is the importance
of international rankings, such as the “Doing Business” ranking, which considers high minimum paid-in capital
requirements as a negative element in connection with “Starting a Business.” From this perspective, it is
interesting to note that at least some of the Member States that have reduced minimum capital requirements
imposed stricter rules on required reserves and, thus, did not abandon their general approach to capital and
reserves. For some interesting remarks on the evolving role of the legal capital in Europe, see Portale, ‘Società a
responsabilità limitata senza capitale sociale e imprenditore individuale con « capitale destinato » (Capitale
sociale quo vadis?)’, Riv. soc. (2010), 1237.
85
In addition, as Hansen (n 80), --, correctly highlights, in light the recent evolutions of the national laws of the
Member States on this point, this feature of the SUP Proposal is probably “no longer the provocation that the
similar tuned SPE proposal was deemed to be”.
86
AG Opinion on Case C-212/97 (n 45), n. 20.
87
A detailed analysis of the rules of the SUP Proposal devoted to distributions may be found in Knapp, ‘Directive
on single–member private limited liability companies: distributions’, in the current issue of this review. For
more on this aspect of the SUP Proposal, see also Conac (n 13), --.
88
Cf, in particular, Art. 21 of the SPE Proposal. See also Hommelhoff - Teichmann (n 81), 18 ff.; SchutteVeenstra
- Verbrugh (n 81), 276 ff., who also underscores that the SPE proposal, in reality, did not necessarily
require the introduction of the solvency test. However, it must be acknowledged that the SUP Proposal is only
addressed to single-member companies, thus, it could be argued that in such companies, creditors, and third
party protection could have specific features. Yet, it is difficult to say that, in connection with the SUP Draft
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Nevertheless, the inclusion of such a test partially contradicts the conclusions of the DG Internal
Market and Services: when it reviewed Dir. 77/91/EEC, it found no real evidence existed to
suggest the superiority of the solvency test over a minimum capital requirement.89
At least with
respect to SUPs, it seems that the Commission may have reversed its position, as the documents
accompanying the SUP Proposal state that, by establishing a minimum capital of one euro while
simultaneously introducing a solvency test, “[t]he objectives could be fully
achieved, . . . guaranteeing at the same time the adequate creditors’ protection”,90
while
suggesting that the use of a higher minimum capital requirement does not achieve the same result
as “[c]reditors are only partially protected . . . , since capital turned into assets does not guarantee
the liquidity, which is important for creditors”.91
Finally, while the Commission acknowledges
that, in the absence of a minimum capital requirement, the interests of creditors could be put at
risk, it concludes that the best strategy to address such risks would be to introduce a solvency
test.
b). The applicable law
The SUP Draft Directive allows SUPs to separate their registered office from their central
administration or principal place of business. There is, of course, no need to rehash the debate on
the freedom of establishment of companies. However it is important to recall that the EU acquis
on SEs and SCEs requires both the registered office and central administration of such entities to
be located in the same Member State, which approach has proved viable for them, but which the
Commission apparently does not consider appropriate for SUPs.92
In addition, even recently, the
European Parliament, in the context of its discussions on the now-abandoned European
Foundation, supported the notion that the registered office and central administration of such
entities should be located in the same Member State.93
Directive, the mandatory introduction of a solvency test will necessarily result in more effective creditor
protection or that this new strategy may be considered expressly designed to protect the interests of creditors or
third parties of single-member companies.
89
‘Results of the external study on the feasibility of an alternative to the Capital Maintenance Regime of the
Second Company Law Directive and the impact of the adoption of IFRS on profit distribution’ available at
http://ec.europa.eu/internal_market/company/capital/index_en.htm (last visited May 11, 2014), 2, where it is
said that “[i]n the light of the conclusions of the external study, the view of DG Internal Market and Services is
that the current capital maintenance regime under the Second Company Law Directive does not seem to cause
significant operational problems for companies. Therefore no follow-up measures or changes to the Second
Company law Directive are foreseen in the immediate future”. For the external study mentioned by the
Commission, see KPMG, ‘Feasibility study on an alternative to the capital maintenance regime established by
the Second Company Law Directive 77/91/EEC of 13 December 1976 and an examination of the impact on
profit distribution of the new EU accounting regime’, January 2008, available at
http://ec.europa.eu/internal_market/company/capital/index_en.htm (last visited May 11, 2014).
90
Impact Assessment (n 79), 38.
91
Impact Assessment (n 79), 37 f.
92
In fact, the SUP Explanatory Memorandum (n 1), 3, suggests that “[t]o enable businesses to reap the full
benefits of the internal market, Member States should not require that an SUP’s registered office and its central
administration be necessarily located in the same Member State”.
93
‘European Parliament resolution of 2 July 2013 on the proposal for a Council regulation on the Statute for a
European Foundation (FE)’ (COM(2012)0035 – 2012/0022(APP)).
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Rather than address such issues piecemeal via the SUP Initiative and other EU-level initiatives,
the time has probably come to address the “applicable law” for both national and European legal
entities in a more systematic way, as was suggested some years ago by the Stockholm
programme. In fact, among the many measures discussed in the context of that programme,
mention was made of possibly adopting, in 2014, a “Green paper on private international law,
including applicable law, relating to companies, associations and other legal persons.”94
Certainly, implementing such a global strategy would provide a more general and coherent
solution to problems that have long been debated without resolution, and which deserve an
adequate, certain, and definitive solution.95
Finally it should also be acknowledged that the Italian presidency of the Council suggested
taking inspiration from the experience acquired with the acquis of the SE and the SCE to address
this issue and proposed a different approach from that of the Commission. More precisely, the
proposed approach, which is, in part, different from that adopted for the SE and SCE, would
simply allow the Member State of registration to require that the registered office and head office
of an SUP are located in its territory.96
This strategy, surely, has the advantage of being more
coherent with existing European company law, even if, just as surely, it does not provide a
general solution to the broader problem of the determination of the applicable law to both
national and European legal entities.
7. Some old and new problems left unaddressed in the SUP Draft Directive
Although the Commission has explicitly addressed several issues in its proposed SUP Proposal,
it still leaves many questions unanswered. Even a cursory review of the SUP Draft Directive
reveals three unresolved issues: (a) the consequences of the SUP Initiative on personal
identification and anti-money laundering policies mandated by both the Member States and the
European Union, (b) the possible transfer of an SUP’s registered office to another Member State,
and (c) employee participation.
a). Identification and anti-money laundering
The SUP Draft Directive, if adopted in its current form, would require Member States to allow
the registration procedure “for newly incorporated SUPs [to] be completed electronically in its
entirety” (Art. 14(3)), which may make SUPs less transparent than currently-existing singlemember
private limited liability companies,97
since such electronic registration would,
94
‘Communication from the Commission to the European Parliament, the Council, the European Economic and
Social Committee and the Committee of the Regions of 20 April 2010 – Delivering an area of freedom, security
and justice for Europe’s citizens – Action Plan Implementing the Stockholm Programme’ COM(2010) 171
final, Brussels, 20 April 2010, 25.
95
On the potential role of the Stockholm programme in company law, see, e.g., Geens, ‘The Stockholm Promise’,
7 ECL (2010), 182.
96
See Art. 10 of the Proposal for a compromise presented by the Italian presidency of the Council and the ‘Note to
the proposal for a directive of the European Parliament and of the Council on single-member private limited
liability companies’ (n 1), II.D.
97
Guidotti (n 1), 106.
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necessarily, result in a documentary procedure without the ability to verify that the identification
documents actually correspond to the person incorporating the SUP.98
Although the issue is acknowledged in the impact assessment, it appears that the Commission
does not believe it is necessary to avoid potential abusive use of SUPs at any cost:
The risk of the misuse of direct on-line registration procedure for fraudulent aims
potentially exists, but it must be offset against the benefits of the creation of
companies and positive economic and social impacts connected with the increase of
entrepreneurship in the EU.99
Thus, the Commission, in the context of its SUP Initiative, makes clear that, if a choice must be
made between a potential increase in entrepreneurship and the potential for abuses, the former
should prevail.
aa). The identification of the founder
With respect to concerns regarding the verification of the electronic information provided in an
SUP’s on-line registration, the Proposal for a compromise presented by the Italian presidency of
the Council makes an explicit reference to Reg. 910/2014, which provides a European
framework on the rules governing electronic identification and trust services for electronic
transactions.100
However, as has been correctly noted, that Regulation is not intended to be
applicable to the information that should be filed in public registers.101
In addition, identification cannot be confused with certification of such identity by public
authorities of a Member State.102
From this perspective, verification of the identity of the founder
and the information filed with the register – and, more generally, a check on the conformity of
the documents filed – is also important to the maintenance of the integrity of the registers, which,
in turn, is essential to recognizing the strong legal value of the information filed in these
registers.103
Finally, it should also be noted that the framework provided by Reg. 910/2014 does not obligate
Member States to accept and recognize foreign means of electronic identification in all
98
Interestingly, problems concerning the lack of certification of the identification have also been raised in
countries like Portugal (see Serra (n 1) 140, 143 and 150), where the on-line registration of companies seems
possible (see Impact Assessment (n 79), 27).
99
Impact Assessment (n 79), 29.
100
See, in particular, Art. 13(1a) and 14b(1) of the Proposal for a compromise presented by the Italian presidency
of the Council, and Note to the proposal for a directive of the European Parliament and of the Council on singlemember
private limited liability companies (n 1), II.A; cf. Conac (n 13), --; Lecourt (n 1), 702, who supports
this approach.
101
See Teichmann - Fröhlich (n 1), 543; interestingly, the only reference to business registers in Reg. 910/2014, is
made in Recital (21) to make clear that the regulation “should not affect national form requirements pertaining
to public registers, in particular commercial and land registers”.
102
Lucini (n 1), --.
103
See in particular Eickelberg (n 1), 85 f. arguing that the information in the business register can only be as good
as the process that leads to its registration. From this perspective it is not surprising that Member States that do
not impose strict controls, in spite of what appears to be a plain reading of Art. 2(6) Dir 2009/101/EC, do not
recognize a positive value to the information that is published pursuant to that directive (see, e.g., Edwards (n
7), 30 f.; Hannigan, Company Law (2012), 142, n. 25.
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circumstances.104
That regulation simply seeks to improve the framework for cross-border
recognition of electronic identification, without imposing on Member States a duty to adopt such
identifications.105
Hence, the goal pursued by the Commission with regard to cross-border online
registration can hardly be achieved by relying heavily on this piece of legislation.106
ab). The performance of anti-money laundering controls
and the identification of the beneficial owner
If the SUP Draft Directive is adopted as proposed by the Commission, the likely result in many
Member States will be a loss of several protections mandated by Dir. 2005/60/EC on the
prevention of the use of the financial system for the purpose of money laundering and terrorist
financing. More precisely, Art. 2(1)(3)(b)(v) of that directive applies to legal professionals who
assist their clients in the context of the “creation, operation or management of trusts, companies
or similar structures.” Because the SUP Draft Directive, as proposed, allows an “entirely
electronic” registration procedure, this safeguard, which mimics the recommendations of the
FAFT, will be easy to circumvent.107
Moreover, the SUP Draft Directive’s approach is not
particularly coherent with the Commission’s own recently-proposed legislation on anti-money
laundering, in which the Commission said that “[t]here is a need to identify any natural person
who exercises ownership or control over a legal person.”108
Finally, in the absence of any
verification of the identity of the person or persons who actually create an SUP, the integrity of
any information concerning its beneficial ownership could be put in danger.
It may be suggested that, in order to solve this problem, a declaration by the person establishing
the SUP identifying who is the beneficial owner could be sufficient or that the anti-money
laundering controls could be performed by the bank in which the initial capital of the SUP is to
be deposited. Another alternative would be to require identity verification be carried out by video
transmission. Such solutions, however, raise some relevant problems: first, it is evident that a
declaration submitted by the person that creates the SUP cannot be equated to verification of
information performed by a third party and, in particular, to such verification performed by a
public authority. Second, even if an anti-money laundering review performed by a bank could be
considered as trustworthy as that performed by an authority or a professional, that review would
concern only the specific transaction – that is, the particular deposit – and would not be a review
of the creation and acquisition of legal personality by the SUP, which is a distinct type of
104
Wuisman (n 1), 41.
105
Wuisman (n 1), 41 f.; see also ‘Electronic identification, signatures and trust services: Questions & Answers’
Brussels, 4 June 2012, available at http://europa.eu/rapid/press-release_MEMO-12-403_en.htm (last visited
January 30, 2014); but cf. Lecourt (n 1), 702.
106
Cf. Wuisman (n 1), 41 f.
107
FAFT, ‘International Standards on Combating Money Laundering and the Financing of Terrorism &
Proliferation’, Paris, February 2012, available at www.fatfgafi.org/media/fatf/documents/recommendations/pdfs/FATF_Recommendations.pdf
(last visited May 11,
2014), 20.
108
Recital 10 of the ‘Proposal for a directive of the European Parliament and of the Council on the prevention of
the use of the financial system for the purpose of money laundering and terrorist financing’, COM(2013) 045
final, 2013/0025 (COD), Strasbourg, 5 February 2013.
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verification mentioned by anti-money laundering legislation.109
Moreover, apparently more
promising is the possibility to conduct identifications and anti-money laundering checks via
video transmission, as it seems that this possibility is already used, within a well-defined
framework, in some Member States.110
However, also this approach raises concerns, for
example, like the potential impossibility of performing an actual authenticity inspection of the
identification documents provided by the founders.111
b). Cross-border transfer of the registered office
The second problem not explicitly addressed in the SUP Draft Directive is the entities’ crossborder
mobility. Unlike the ill-fated SPE Proposal, the SUP Draft Directive does not make
reference to any specific procedure for the cross-border transfer of an SUP’s registered office.112
In principle, such transactions would have to be governed by both the national law of the
Member State in which an SUP currently has its registered office and that of the destination
Member State. It would appear that the Commission deliberately chose not to address the issue
in light of the fact that, in the context of the negotiations on the failed SPE Proposal, crossborder
transfers were seen by some Member States as a threat to employee protections granted
by national law.113
The approach adopted by the Commission certainly limits the potential for taking advantage of
legal arbitrage. However, for some Member States, requiring a new criterion for determining the
applicable law to an SUP – that is, that of the registered office – could open new possibilities for
previously unknown cross-border transfers of seat and cross-border conversions.114
109
See Lecourt (n 1), 702, who – incorrectly – equates the verifications concerning the opening of a bank account
to those concerning the creation of legal entities. And see cf Conac (n 13), --, who praises the approach adopted
in the SUP Proposal that would require registration authorities to identify the beneficial owner. Yet, the
Proposal for a compromise presented by the Italian presidency of the Council simply makes reference to the
need for the possibility for Member States to require a simple “declaration by the person establishing the SUP
identifying the beneficial owner of the SUP” (Art. 13(1)(da)).
110
For example, this possibility was recently introduced in Germany and detailed in a circular issued by the BaFin
(Rundschreiben 1/2014 (GW)).
111
Among the different requirements that, in Germany, must be satisfied to conduct the identification process via
video transmission, Rundschreiben 1/2014 (GW) specifies that only “identity documents featuring optical safety
features which are equivalent to holographic images may be used as proof of identity within the scope of this
process.” Arguably, the idea behind this requirement is that only recourse to these security features may allow
verification of the authenticity of the documents via video transmission. Unfortunately, not all Member States
rely on holographic images for their national identity cards. Consequently, if authentication via video
transmission is adopted, even those Member States – such as Germany – that already allow this identification
procedure will most likely be required to accept, for the registration of SUPs, identification documents whose
authenticity may be difficult to verify at distance.
112
The reluctance of the Commission to address the problem of the transfer of the registered office is clearly
expressed in Impact Assessment (n 79), 41.
113
Id.
114
For example, it is difficult to imagine the ultimate consequences of introducing the registered office principle in
countries that do not recognise the possibility of a cross-border transfer of seat for domestic limited liability
companies without a European nature and, instead, adopt the incorporation theory. Therefore, either the SUPs
created in these countries will not be allowed to transfer their registered office abroad or such companies will be
granted the right to abandon their nationality, a possibility that might not be available to domestic private
limited liability companies. Further, according to Art 10 of the SUP Draft Directive, SUPs must have their
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Thus, the mere fact that the SUP Draft Directive does not specifically address cross-border
transfers of seat does not mean that it could not have consequences on this problem. Quite the
contrary, imposing the registered office criterion for determining the applicable law for SUPs
may open new avenues for cross-border mobility. But, as the rules that will govern these
transactions will not be harmonised, the legal framework in which they can and will take place
will remain disorganized.
c). Employee participation
Finally, the third issue left unaddressed in the SUP Draft Directive is employee participation in
the management of the SUP: there is a complete absence of any provision related to this
problem. The Commission’s approach is interesting in light of its position on the matter in the
context of the failed SPE Proposal, where the issue resulted in the Council’s deadlock and the
Commission’s ultimate withdrawal of the SPE Proposal.115
Rather, the Commission only made
one cursory remark relating to employee participation in the impact assessment:
As the preferred options would not touch upon the question of the transfer of
registered offices or employee participation, and these would remain covered by
national laws, it would not be necessary to introduce measures to minimise the
potential circumvention of applicable social and other rights, since anti-abuse
measures, if necessary, are laid down by national law.116
The Commission emphasizes that national law will govern employee involvement in the SUP’s
governance. However, as mentioned in the context of the transfer of registered office,117
it is
evident that national rules on employee participation, while not formally modified by the SUP
Draft Directive, will still be impacted by it. Rather, the SUP Draft Directive’s reference to the
SUP’s registered office as the only criterion for establishing the national law applicable to the
SUP will force greater flexibility under national law: for example, an SUP could be formed in a
Member State that does not recognise any form of employee participation, and that SUP could,
by virtue of its freedom of establishment, operate in other Member States, even if those other
Member States impose an employee participation obligation on their own SUPs.
It is difficult, at present, to know whether and to what extent the SUP Draft Directive, if adopted
in its current form, would result in increased abuse of the freedom of establishment. If looking at
it solely from the perspective of using foreign SUPs to avoid employee participation obligations,
for example, it is fairly obvious that similar results can already be achieved using the existing
forms of single-member limited liability companies permitted by Member States’ current
national law.118
registered office and either their central administration or their principal place of business in the EU, new
arguments for invoking the ability of a cross-border transfer of seat might be advanced.
115
The difficulties faced by the SPE Proposal are also mentioned in the Impact Assessment (n 79), 19, n 61; cf.
also Hommelhoff - Teichmann (n 81), 23 ff.
116
Impact Assessment (n 79), 41.
117
Supra, II.7.b).
118
Yet, the SUP Draft Directive, if adopted in its proposed form, grants an additional degree of freedom to single
shareholders as it allows companies incorporated in Member States that use the real seat theory to operate
abroad without losing their nationality. For example, it would allow to an SUP created in Luxembourg – which,
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Cleary, if adopted as proposed by the Commission, the SUP Draft Directive will increase, and is
intended to increase, cross-border creation of subsidiaries and such entities could well be used
for both legitimate and fraudulent purposes. Perhaps, at least from this perspective, SUPs could
arguably increase the risk that companies will avoid national laws concerning employee
participation, and it is difficult to say if the costs deriving from these risks will outweigh the
benefits generated by the SUP.
Moreover, it is worth noting that, after the SUP Proposal’s publication, trade unions expressed,
among other things, concerns about the possibility that companies that are subject to national
employees participation laws could decide to register subsidiaries in other Member States where
such rules do not exist.119
These criticisms were also voiced in the Opinion of the EESC120
and
are currently discussed by the Committee on Employment and Social Affairs of the European
Parliament.121
Thus, it appears, that employee participation will remain a controversial aspect of
the SUP Proposal, even if the SUP Proposal does not directly address the topic.
In this context, the fact that the Proposal for a compromise presented by the Italian presidency of
the Council suggests taking, somehow, inspiration from the experience with the acquis of the SE
and the SCE for the determination of the applicable law may also be understood in light of the
need to introduce some limits to potential abuses of the freedom of establishment.
III. The compatibility of the SUP Proposal with the substance
and goals of the existing European company law framework
1. The SUP Proposal: somewhere between coordination and negative harmonisation
It is important to examine how the SUP Draft Directive, if adopted as proposed by the
Commission, can be coordinated with the existing harmonisation directives. The initial SUP
Proposal reflects an entirely new strategy in its efforts to strengthen integration of the internal
market, one that should be examined carefully. A move away from coordination and toward
“negative harmonisation” with respect to single-member companies was first suggested by the
Reflection Group when it recommended that any future directive addressing such entities
should not only exempt single member companies from certain harmonised
rules . . . , but in order to secure the basic needs of entrepreneurs, it would identify
the rules that are indispensable for a single-member company.122
in principle, applies the real seat doctrine – to operate abroad, preserving its nationality without maintaining its
central administration in Luxembourg.
119
See ETUC ‘Position on single-member private limited liability companies’, 11-12 June 2014, available at
http://www.etuc.org/documents/etuc-position-single-member-private-limited-liabilitycompanies#.VNUXeixmLFk
(last visited January 30, 2015).
120
See Opinion of the EESC (n 1), 1.6; 3.3, 4.4 and 4.4.
121
See Draft Opinion of the Committee on Employment and Social Affairs of the European Parliament, 12 March
2015, available at http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-
%2f%2fEP%2f%2fNONSGML%2bCOMPARL%2bPE-549.466%2b01%2bDOC%2bPDF%2bV0%2f%2fen
(last visited April 2, 2015), which recommends a rejection of the SUP Proposal.
122
‘Report of the Reflection Group on the Future of EU Company Law’, Brussels, 5 April 2011, Riv. soc. (2011),
911, also available at ec.europa.eu/internal_market/company/docs/modern/reflectiongroup_report_en.pdf (last
visited May 10, 2014), 66.
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From this perspective, the question of how the SUP Draft Directive is to be coordinated with the
EU acquis becomes crucial, not only with respect to the practical implications of such
coordination, but, more generally, to understand in what direction European company law is
headed.
a). Toward negative harmonisation?
One way to examine the question is to assume that, in putting together the SUP Draft Directive,
the Commission, taking up the Reflection Group’s suggestion, incorporated all of the rules it
believes are indispensable for single-member companies.123
Accordingly, if a specific rule of an
existing harmonisation directive is not incorporated into the SUP Draft Directive, that rule is not
applicable to SUPs, as an extension of such rule’s scope was not considered necessary.
Unfortunately, such an assumption (and the reasoning that would follow), is probably false
because, to some extent, the SUP Draft Directive presented by the Commission relies on existing
EU acquis without actually reproducing some provisions whose applicability is obviously
assumed. For example, its Recital 14 states:
In order to ensure a high level of transparency, all documents registered at the
register of companies should be made publicly available via the system of
interconnection of registers referred to in Article 4a(2) of Directive 2009/101/EC of
the European Parliament and of the Council.
Similarly, the entire electronic registration procedure, which the SUP Draft Directive carefully
regulates, clearly assumes the existence of such business registers, which registers, in turn, are
arguably governed by national rules transposed from Dir. 2009/101/EC.
b). The SUP Draft Directive’s coordination with the EU acquis found in its silence
Aside from those harmonisation directive rules reproduced in the SUP Draft Directive itself,
those rules that clearly diverge from the existing EU acquis, and those rules whose application is
clearly assumed by the SUP Draft Directive, a number of grey areas remain, where, to the
considerable detriment of legal certainty, the absence of further guidance permits a plethora of
potential interpretations. For example, the SUP Draft Directive makes reference to annual
accounts (see, e.g., Arts. 18(2) and 21(2)); however, the SUP Draft Directive offers no additional
details of the rules that apply to such documents or their preparation. Are Member States
permitted to define for themselves what such annual accounts should include? Or, should existing
EU acquis regarding such annual accounts apply?
In still other situations, important issues, such as the nullity of SUPs, are not even mentioned in
the SUP Draft Directive. Are Member States required to limit the situations in which an SUP is to
123
However, the Report of the Reflection Group (n 122), 66, also suggests that “Member States would have to
allow this simplified vehicle to be introduced in their legal system, thereby adopting the “Simplified
Sarl/GmbH/BV”, etc. Although the essential characteristics of this entity would be formulated at the European
level, such regulatory approach would obviously not change the domestic nature of the company type”. That
clarification is important because it demonstrates that, from the perspective of the Reflection Group, these
simplified single-member companies were to be considered as a simplified form of existing private limited
liability companies, to which, arguably, the EU acquis would already have been applicable (cf. supra, n 21).
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be considered null and void? Must such nullity be declared by a court? Does any declared nullity
have retroactive effect? Does an invalid SUP ever acquire legal personality? Are Member States
obliged to require that the formation of an SUP be subject to a preventive administrative or
judicial review or that any instrument of incorporation be drawn up by a qualified person and
certified to be in due legal form? Even a careful reading of the exact wording of the SUP Draft
Directive leaves such questions unanswered, although, at least with regard to the final question,
one might conclude that the SUP Draft Directive abandons the idea that prior administrative or
judicial review of an SUP’s incorporation is necessary, at least in those Member States where the
preventive check is ensured by the authentic legal form of the incorporation instrument. Such an
impression arguably arises from Art. 14(3), which states:
Member States shall ensure that the registration procedure for newly incorporated
SUPs may be completed electronically in its entirety without it being necessary for
the founding member to appear before any authority in the Member State of
registration (emphasis added).
The documents accompanying the SUP Draft Directive suggest that the Commission is aware of
the differences that exist between a legal entity’s instrument of incorporation and its
registration.124
In addition, it also seems that its drafters are well aware that, in many
jurisdictions, registration is not carried out by the founder, but by the entity’s directors or other
intermediaries.125
Yet, the SUP Draft Directive is silent as to the practical conclusions that could
be drawn from the wording of Art. 14(3) vis-à-vis Art. 11 Dir. 2009/101/EC, namely the possible
implicit abrogation of the last part of the latter provision where it makes reference to the fact that
Member States may require that the instrument of incorporation be “drawn up and certified in
due legal form”.126
124
The SUP Draft Directive does not provide satisfactory rules relating to the instrument of incorporation, which
appear to be confused with the legal entity’s articles of association. Its Art. 2 defines the “articles of
association” as “articles of association or statutes or any other rules or instruments of incorporation establishing
a company”. This definition may lead to further issues. For example, its Art. 7(4) goes on to say that “[t]he
SUP, and its articles of association, shall be governed by the national law of the Member State where the SUP is
registered.” If one reads the two provisions together, it appears that until the company is registered, the law
applicable to an SUP’s instrument of incorporation is, arguably, unknowable (this problem is also raised by
Wuisman (n 1), 43).
125
For example, the Impact Assessment (n 79), 30, clearly acknowledges that registration need not be made by the
SUP’s founder. From this perspective, it is also surprising that the same Impact Assessment (n 79), 28,
emphasizes that the SUP Draft Directive, if adopted as proposed, would “make it possible for EU founders
(legal and natural persons) to establish a company in another MS directly from their computer without a need
for travel to the MS of registration for the purpose of registering the company”; see also Lecourt (n 1), 702;
Gongeta, (n 1), 840. This idea reflects a certain lack of awareness of how cross-border subsidiaries and
companies are currently created – using “powers of attorney” – as these do not require the physical presence of
the founder either (on this point see also Lucini (n 1), --). Interestingly, since the Proposal for a compromise
presented by the Italian presidency of the Council suggests that the Member State of registration may require
that the registered office and the head office of the SUP are located in its territory, it seems that at least the
directors of an SUP could somehow be required by national law to be physically present in the Member State of
registration. Obviously, if this will be the approach that is finally retained, it will become difficult to argue that
the physical presence in the Member State of registration of a future director of the SUP – or of any person –
acting on behalf of the founder, could be an unacceptable restriction on the freedom of establishment.
126
It has been highlighted that there may not be an irresolvable contradiction between Art 14(3) and the current
wording of Art. 11 Dir. 2009/101/EC (see e.g. Hansen (n 80), --, Conac (n 13), --); yet, in the SUP Proposal, the
Commission does not provided any suggestion on how these two provisions could be reconciled.
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In addition, given the wording of Art. 14(3), one could also argue that the use of a template could
act as a substitute preventive check concerning the creation of the legal entity. However, since
there will always be variable parts in the template, like the object clause and the name of the
company, whose conformity with the law will have to be verified, and since these parts of the
instrument of incorporation are normally those that deserve more careful preventive scrutiny, it
might be difficult to agree with this conclusion.
In this intricate context, it is important to highlight that the problem of coordination with the
acquis has been raised in the Proposal for a compromise presented by the Italian presidency of
the Council, which states, in Recital 10a, that, in order to ensure consistency, the rules applicable
to private limited liability companies in the Member State of registration of the SUP should
apply to SUPs, including Directive 2009/101/EC and Directive 2013/34/EU. This reasonable
addition, if maintained in the final text of the directive, reveals that the SUP directive should not
be understood as a general repeal of the acquis, as that would allow Member States to introduce
a new national legal form not subject to the existing harmonisation directives.
c). Extending the scope of harmonisation directives to new legal entities
Whether harmonisation directives should be extended to new legal entities is not a new question;
European company law has already faced similar coordination issues in the past.127
For example,
new limited liability company forms have been introduced by Member States that were not – just
as the SUP will not be – explicitly mentioned in existing harmonisation directives.128
In other
cases, coordination between Dir. 68/151/EEC and subsequent directives, such as Dir.
78/660/EEC, was complicated by the fact that some of the legal forms mentioned in the latter
directives were not mentioned in the former.129
Legal scholars debated a number of different
ways to resolve such coordination problems.130
In the past, the ECJ,131
and, arguably, the
Commission,132
appeared to adopt a rather loose interpretation of the subjective scope of Dir.
127
On such problems, see the seminal contributions of Mülbert - Nienhaus, ‘Europäisches Gasllschaftsrecht und
die Neubildung nationaler Gesllschaftsformen’, 65 RabelsZ (2001), 513, 533 ff., and Tellis, ‘Expansion of the
Applicability of EU Company Law Directives via Analogy? – A Study Based on the Example of Greek Sea
Trading Companies –’, 5 ECFR (2008), 353.
128
For example, the French SAS or the Dutch BV, before the enactment of Dir. 2003/58/EC, were not mentioned
in Dir. 68/151/EEC.
129
For example, Dir. 68/151/EEC did not mention the Dutch BV.
130
For the different positions, see Grundmann - Glasow (n 8), 149 f., in particular n 10 and 12. See also Mülbert Nienhaus
(n 127), 539 ff. and Tellis (n 127), 372 ff., both favorable to an extensive or an analogical
interpretation of the EU acquis. It is also worth noting that, when European company law was first introduced,
van Ommeslaghe (n 57), 522, argued that “[b]ien entendu, un Etat membre ne pourrait, à notre avis, sous
couleur de créer des « sociétés spéciales », multiplier les régimes particuliers qui permettraient en fait
d’échapper aux dispositions de la directive — et à celles des directive subséquentes en voie de préparation. En
cas de doute, il conviendrait d’examiner la question cas par cas”. However, see also Guyon, ‘La société par
actions simplifiée et le droit communautaire’, in Couret - Le Cannu (sous la direction de) Société par actions
simplifiée, Paris, 1994, 147 ff.; Id., ‘Die Société par Actions Simplifiée (SAS) – eine neue Gesellschaftsform in
Frankreich –’, ZGR (1994), 551, 558 f., who opposes an extensive or analogical interpretation of the EU acquis
to the French SAS.
131
ECJ, 20 September 1988, Case 136/87, Ubbink Isolatie / Dak- en Wandtechniek [1988] ECR 4665, n. 44;
Grundmann - Glasow (n 8), 149 f.
132
Grundmann - Glasow (n 8), 149 f., in particular n 11.
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68/151/EEC, by either implicitly or expressly including all forms of companies with limited
liability within the scope of this legislation.
Such a flexible approach to interpreting the EU acquis was developed at a time when
harmonisation by means of directives dominated European company law; currently, however, the
appropriateness of such a legislative strategy has been brought into question.133
Moreover, that
Art. 1(2) of the SUP Draft Directive introduces a delegated procedure to modify its Annex I,
which enumerates the types of companies governed by it, is more consistent with the notion that
the subjective scope of the SUP Draft Directive should be interpreted narrowly rather than
flexibly.134
The problem has also been recently examined by the ECJ in a case concerning tax law, which
had to determine whether the French Société par Actions Simplifiée fell within the scope of Dir.
90/435/EEC. In that case, the Court concluded that a form of company not expressly listed in the
annex of the directive did not fall within the scope of application of that directive135
, an approach
that, arguably, cannot be excluded also for company law directives.136
Nevertheless, even after taking all these problems into account, it seems that bringing the SUP
within the scope of existing harmonisation directives remains preferable. In brief, with the
exception of those parts of the original SUP Draft Directive that clearly diverge from existing
European law, it is not easy to conclude whether or not it is compatible with the existing EU
acquis. Indeed, the simple fact that it does not modify Dir. 2009/101/EC supports the idea that
the Commission did not clearly intend to exclude the application of the EU acquis to SUPs. An
approach that is confirmed also by the Proposal for a compromise presented by the Italian
presidency of the Council, which solves the problem by making an explicit reference to the
application of harmonization directives.
2. The legacy of Dir. 68/151/EEC
The First Company Law Directive, Dir. 68/151/EEC, was adopted almost fifty years ago and its
drafting began years before that. During that process, the drafters undertook an in-depth analysis
of the existing national company law of all six founding Member States of the European
133
For a critical assessment of the results achieved by harmonising European company law, see Enriques, ‘EC
Company Law Directives and Regulations: How Trivial Are They’, 27 U. Pa. J. Int’l Econ. L. (2008), 1; and cf.
Enriques ‘Company Law Harmonisation Reconsidered: What Role for the EC?’ in Bartman ed., European
Company Law in Accelerated Progress (2006), 59 ff.; Cheffins, Company Law: Theory, Structure, and
Operation (1997), 448.
134
In fact, a delegated procedure for amending the annexed list of the entities, to which the SUP Draft Directive
would apply, would be particularly important if any doubts arise as to the ability to apply this piece of
legislation to any new future limited liability company forms adopted by the Member States.
135
ECJ, 1 October 2009, C-247/08, Gaz de France v. Berliner Investissement [2009] ECR I-9225, n. 25 ff.;
Opinion of the Advocate General Mazák, 25 June 2009, C-247/08, Gaz de France v. Berliner Investissement
[2009] ECR I-9225, n. 27 ff. Boulogne - Geursen, ‘Gaz De France: Dividends to Companies Not Listed in the
Parent-Subsidiary Directive are Not Exempt’, 50 European Taxation (2010), 129; Hahn, ‘Von kleinen
Aktiengesellschaften, sociétés par actions simplifiées und anderen Raritäten – der Anwendungsbereich der
Mutter-Tochter-Richtlinie nach „Gaz de France“’, EWS (2010), 176.
136
Cf. Opinion of the Advocate General Trstenjak, 2 June 2010, C-81/09, Idrima Tipou A.E. v. Ipourgos Tipou Kai
Meson Mazikis Enimerosis [2010] ECR I-10161, n 54, n. 34 and accompanying text.
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Community. Although some have ultimately found the result unsatisfactory,137
that first attempt
at harmonisation demonstrated that, indeed, substantive harmonisation was possible and it still
informs European company law today.
The goal of that directive was to make shareholder and third-party safeguards equivalent
throughout the Community, by harmonising different aspects of European company law.
Existing national law affecting such aspects was approximated by its focus on achieving certain
objectives rather than forcing the same strategy on all jurisdictions to attain them.
In contrast, the Commission’s SUP Proposal takes a different path, one that focuses on the
manner in which its objectives – such as a standard minimum capital requirement, the need for a
uniform template for the articles of association, and on-line registration – are to be achieved.
Although this new approach will likely result in transpositions that are faithful to the letter of the
SUP Draft Directive, whether or not its adoption will ultimately result in an approximation of the
national company law of the Member States remains to be seen, but success in this regard
already appears doubtful.
3. For a policy-based harmonisation of European company law
As previously noted, the SUP Draft Directive typically adopts text-based solutions to achieve its
goals and avoids a direct confrontation with the policy choices underlying the SUP Initiative.
Good examples of the Commission’s non-confrontational strategy can be found in the SUP Draft
Directive’s failure to address employee participation and to establish any rules on the crossborder
transfer of an SUP’s seat. In the end, it is clear the Commission’s SUP Proposal reflects
its understanding of the various policy issues that ultimately forced it to abandon its SPE
Proposal, but it then tries to accommodate or avoid those same issues with questionable results
and, perhaps even more importantly, without openly disclosing their continuing existence in the
context of its SUP Initiative.
From this perspective, and in light of the need for further integration of the internal market, the
critical question that must be answered in the affirmative with respect to the SUP Proposal is:
does the proposed text-based harmonisation enhance the integration of the internal market and
increase legal certainty for single-member companies operating cross-border? If that question
cannot be definitively answered in the affirmative, the SUP Draft Directive, as currently
proposed, should be carefully revised. Moreover, the potential risks to enhanced integration and
legal certainty arising from a heterogeneous implementation of the SUP Draft Directive as
proposed should be carefully identified and considered prior to any such adoption.138
An alternative strategy that is far more likely to lead to an affirmative answer to the question
posed above is to adopt a policy-based harmonisation, more along the lines that the First
Company Law Directive adopted all those years ago. Allowing Member States to find, within
certain limits and a carefully defined framework, their individual way along the path toward
integration of European company law is not new and, frequently, EU directives give Member
137
See, for example, Cotiga (n 47), 97 ff.; Enriques, ‘EC Company Law’ (n 133), 11 and 22, argues that the scope
of European directives and regulations is limited and does not cover core company law issues. Similarly, see
Cheffins (n 133), 434, 448. However, it should be noted that, in the end, it is the harmonisation of laws in itself
that tends to be fragmentary.
138
Enriques, ‘EC Company Law’ (n 133), 12 ff.
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States a significant degree of freedom in their implementation.139
From this perspective, the clear
and succinct policy goals stated in the preamble of Dir. 68/151/EEC, in combination with the
different options it gave to Member States to achieve them, allowed the implementation of that
directive to substantially strengthen integration of the common market.140
If the SUP Proposal is
modified to adopt the same or a similar policy-based approach, it is far more likely to become a
successful piece of EU legislation and to demonstrate that an effective approximation of
European company law by means of directives, even if not easy to achieve, is still possible.
IV. Conclusion
This article examined some key features of the Commission’s SUP Proposal. As has been
shown, the current form of the SUP Draft Directive displays some peculiarities that can only be
understood in light of that debate and the history of EU company law, particularly the difficulties
faced by the Commission’s now-abandoned SPE Proposal. The Commission’s choice to use a
directive to introduce the SUP as a new national legal form was, in all likelihood, made in order
to ease legislative passage of the SUP Draft Directive rather than assure harmonisation or
approximation of national company law.
The unusual strategy – at least in the context of EU company law – to advance integration of the
internal market brings some unexpected consequences that risk an increase in uncertainty in the
legal context in which single-member companies will operate. More precisely, I note that a
crucial issue left unaddressed by the SUP Draft Directive is that of its relationship to and
coordination with the EU acquis on company law. Moreover, I suggested that the existing
harmonisation directives should be applied to SUPs, even if the nature of SUP Draft Directive is
different from any other existing European legislation on company law. From this perspective, I
also argued that, to strengthen integration of the internal market, it would probably have been
better to continue along the existing path of positive harmonisation of European company law.
139
Yet, in some cases, these options are the result of negotiations that may also threaten some of the initial goals of
the proposed legislation. For example, see the interplay between Recitals 16 and 21 Dir. 2004/25/EC. For some
interesting reflections on the role of optional rules in Dir. 2004/25/EC, see Enriques, ‘EC Company Law’ (n
133), 12 ff.
140
Cf Hansen (n 80), --, arguing that “harmonisation should be used to enable choices and not to reduce the
available plethora of options to a single standard”, but proposing other conclusions.