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14th company law directive impact assessments

In December, the European Commission published its impact assessments on the Directive on the crossborder transfer of the registered office (14th company law directive).

On the basis of the document Commissioner McCreevy has decided there is no need for action at EU level on this issue. DG Internal Market and Services has therefore stopped work in this area. According to the Commission document, the main reason for this halt is the fact that the Commission would consider a legislative intervention as not proportionate since the main objectives of the 14th company law directive could already be met on the base of the existing law. (p.39).

The main objectives of the 14th company law directive would be, according to the document, to improve the efficiency and competitive position of existing European Companies, as well as to guarantee the effective protection of the interests of the main stakeholders ( see pp 5, 27, 51); it should be underlined that the Commission also counts company employees as stakeholders.

From the point of the Commission the abovementioned objectives are already addressed by the crossborder merger directive, the EU simplification programme, the SE and also by the coming statute on the European Private Company (p. 39). In addition, the Commission refers to the pending Cartesio case (C-210/06) which might soon clarify the question of the transfer of company seat. The 14th company law directive would also have to deal with employee rights.

One particularly important aspect would be the protection of existing employee board-level participation rights. In the Commission document, a number of possibilities are presented concerning how the directive could deal with employee board-level participation rights. The option favoured by the Commission would ensure that, in the event of seat transfer, employee participation rights would not be lost or diminished (p. 49).

This solution seems at first glance to be acceptable from the employee point of view. The critical point is the future development of ECJ case law. If the ECJ comes to the conclusion in the Cartesio case that the EC treaty also contains the freedom to transfer the company seat, existing employee participation rights could be affected.

If the Commission takes the abovementioned policy options seriously – namely the protection of employee stakeholders – it must undertake a legislative intervention in this case; there is no other way of guaranteeing legal certainty for employee stakeholders.

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