Changes from plenary report to adopted text

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ChangedANNEX TO THE MOTION FOR A RESOLUTION: RECOMMENDATIONS AS TO THE CONTENT OF THE PROPOSAL REQUESTED

1. General principles and legal basis

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ChangedParliament proposes to call the corporate form covered by the 28th regime ‘Societas Europaea Unificata’ (S.EU) (Unified European Company). The rules for the S.EU must be the same in all Member States, and, in order to overcome fragmentation of the internal market, the Member States may not maintain or introduce, in their national law, any provisions diverging from those rules. To ensure a robust, ambitious and comprehensive regulatory framework, Parliament insists on adopting the S.EU with a legal basis that provides for the ordinary legislative procedure with a qualified majority in the Council. Parliament therefore opposes the use of Article 352(1) TFEU as a legal basis. Parliament is critical of the use of enhanced cooperation since a 28th regime would then only be applicable in a subset of Member States, which, instead of overcoming fragmentation of the internal market, would further fragment it and which would undermine the attractiveness of S.EUs, which would not, in such a case, be recognised within the entire Union. The 28th regime establishing the S.EU might have to be adopted by means of several legallegislative acts, rather than by a single comprehensive legallegislative instrument. In that case, each separate legislative proposal should provide the same safeguards when it comes to the protection of public interests such as labour law and worker and trade union rights. The corporate law elements of the regime will need to be adopted under Articles 50 and 114(1) TFEU, which are the only legal bases available for legallegislative acts in the area of corporate law that provide for the ordinary legislative procedure with qualified majority voting in the Council; Article 50 TFEU, however, only allow for the adoption of directives. Against that background the S.EU would not be an autonomous corporate form, but a national corporate form in all Member States that must consist of a set of essential elements that are harmonised by Union law,law in order to avoid gold plating and divergent national S.EUs which would go against the objective of the 28th regime. The abbreviation S.EU should be added to existing national corporate form abbreviations.

The S.EU should build on corporate forms established under national law. The Member States should be free as to whether they choose to allow existing national corporate forms to convert into an S.EU or to create a new national corporate form. The founders or the owners of a national corporate form should be able to voluntarily opt in to the new regime, which would allow for the use of the company label ‘S.EU’.

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ChangedThe existence of anAn S.EU should be automatically recognised in the national legal orders of all the Member States as a limited liability company.

The law applicable to the creation of an S.EU should be the law of the Member State in which the company in question is registered. By way of derogation from that principle and for the purpose of protecting predefined public interests, it should be possible to determine the applicable law by means of an overriding connecting factor rather than the place of incorporation.

In order to achieve legal certainty as to the constitutive elements of the S.EU, the directive adopted under Articles 50 and 114(1) TFEU must be a maximum harmonisation directive.

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ChangedParliament is mindful of the risk that an automatically recognised S.EU could lead to the circumvention of mandatory domestic rules that protect workers, their representatives and trade unions, and other vulnerable parties as well as other public interests..interests. The S.EU corporate rules should therefore be without prejudice to Union and national law in the area of individual and collective labour law, including rules on employee participation in the affairs of the company, and should contain safeguards that effectively prevent the abusive use of the S.EU.

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2. Scope

The Member States should provide in their national legal orders a set of rules which, when complied with, allow a national corporate form to include the abbreviation S.EU in its company name. In order to be eligible to register as an S.EU, a national corporate form should comply with the following:

– it must be a legal entity with legal capacity that is automatically recognised in all Member States on the date of its registration;

– it must be a limited liability company in which the owners’ liability for the company’s debts is limited to the amount of their contributions;

– it must not be a listed company;

– it must have been established by one or more natural or legal persons that reside in or are established in a Member State;

– it must be possible for it to serve as an autonomous single company or as a subsidiary company of an S.EU parent company;

– its registered seat must be located in one of the Member States;

– it must be entitled to transfer its registered seat to another Member State without requiring dissolution or re-incorporation, in accordance with harmonised procedures ensuring continuity of legal personality;

To establish a company eligible to register as an S.EU, the immediately paid-in minimum capital requirement must, for the purpose of the registration of that company, be set at EUR 1, regardless of the minimum capital otherwise required under the national law in question.

In order to ensure the protection of creditors, the Commission should put forward a comprehensive legal framework which incorporates alternative mechanisms such as solvency tests. Such alternative mechanisms should be proportionate and transparent, with clear criteria for assessing the financial health of companies and mitigating risks to creditors.

In the interests of simplification, the possibility to register as an S.EU should not be limited to a new category of ‘innovative companies’ or to other limiting factors as that would create additional red tape and an unnecessary bureaucratic burden.

If an S.EU intends to list itself on the stock market, it should be required to convert into a public limited company under Union or national law in accordance with Union and national conversion rules.

3. Creation of the corporate form

The creation and registration of an S.EU should be fully digital and comply with the ‘once only’ principle whereby companies submitting a document in one Member State should not have to submit it again in another Member State. The setting up of an S.EU must be finalised within 48 hours.

Upon creation, an S.EU should receive a unified digital identity and company identifier to streamline registration, boost transparency and trust, facilitate company identity verification, and combat fraud, money laundering and tax evasion, while ensuring legal certainty.

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ChangedTo facilitate the achievement of those objectives, a uniform Union-level digital portal that serves as a direct entry point for S.EUs should be created or integrated into existing structures and operated by the Commission. That portal should complement and extend the existing Business Register Interconnection System (BRIS) by providing a harmonised, single-access interface for cross-border use, without creating a new separate or parallel register. The digital portal should not replace existing national incorporation rules but, rather, serve as a common platform on which all relevant information necessary for investors would be aggregated. Member States should therefore automatically transmit documents to the portal, ensuring recognition and seamless access for stakeholders. The platform should also provide information about national procedures and resources and give access to investor model documents for S.EUs, enable the verification of credentials, the e-signature of documents, the sale and allocation of shares, the creation and adoption of board resolutionsresolutions, and the provision of e-invoicing services. When using the digital portal to register an S.EU, a company must choose a Member State as the place of incorporation and, in so doing, the national law applicable to the incorporation.

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ChangedThe Union-level digital portal for companies should make it possible to register as an S.EU and to search for a company registered as an S.EU. Registration, fillings and updates should be administered via the digital portal only once and should be accessible across Member States on the basis of a multilingual interface and harmonised identification standards under theRegulation eIDAS(EU) Regulation.No 910/2014. The digital portal could make use of a permissioned distributed ledger (DLT) network that records key corporate events, such as registrations or share transfers, with immutable timestamps.

It should be possible for any cash contributions for the setting up of the company to be made to a public trust agency for the period before the opening of a bank account is finalised. After the opening of the bank account, the trust agency should transfer the cash contributions to that bank account.

4. Safeguards

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ChangedThe rules on S.EUs should be without prejudice to Union and national labour law including rules on the participation of employees, the employees’ representatives, or both, in the affairs of a company as defined in Article 2, point (k), of Directive 2001/86/EC. As a matter of principle, the S.EU should be treated by its home Member State in the same manner as the domestic limited liability company form that on which it is built and by any host Member State in the same manner as comparable Union foreign law companies, whilst ensuring that the artificial use of the S.EU with a view to circumvent current levels of employee participation protection in the law of the Member States is effectively prevented.

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ChangedThe law applicable to individual employment contracts continues to be determined exclusively under Article 8 of Regulation (EC) No 593/2008 and the jurisdiction over individual employment contracts continues to be determined under Section 5 of Chapter II of Regulation (EC)(EU) No 1215/2012, including the relevant case law of the Court of Justice of the European Union. Accordingly, the choice of the parties may not deprive employees of the protection afforded to them by mandatory provisions that cannot be derogated from by agreement.

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ChangedRegarding employee participation, the S.EU must be subject to the rules in force concerning employee participation, if any, in the Member State of the registered office. However, if an S.EU conducts an economic activity which entails employment in another Member State without setting up a branch, agency or subsidiary, the S.EU must be subject to the rules in force concerning employee participation, if any, in the Member State of the place of employment provided thatunless the legal order of the S.EU’s registered office does not provideprovides for at least the same level of board-level employee representation rights as required under the law of the place of employment. If necessary, the S.EU should adjust its Articlesarticles of Associationassociation accordingly.

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ChangedWhere the applicable law cannot be determined in accordance with the principles set out in the previous paragraph, as a fallback option,option a negotiation procedure equivalent to that provided for in Articles 3 to 7 of Directive 2001/86/EC must be initiated once the number of employees reaches in at least one Member State any threshold triggering board-level employee representation rights in that Member StateState, whereprovided that an S.EU has not yet introduced employee participation or whereprovided that reaching the threshold implies changes to the existing employee participation.

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ChangedIf an existing national company transforms into an S.EU, Articles 86l, 133 and 160l of Directive (EU) 2017/1132 must apply mutatis mutandis provided that already established employee participation rights are not circumvented.

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5. Encouraging long-term strategies and optional forms

With a view to stimulating European innovative companies, attracting investment and creating alternative paths for access to capital and financing models and preventing the relocation of innovation, the creation of which is often supported by European public research funds, outside of the Union, Member States should introduce rules that allow for companies to voluntarily and irrevocably opt in to additional legal protection schemes. The purpose of such additional legal protection schemes should be to help European companies that might want to protect themselves from ‘killer acquisitions’ and relocation. Those schemes can include:

 the separation of voting rights and economic rights through different classes of shares, including dual-class shares, veto shares and preferred shares;

 the qualification of voting rights as non-transferable and non-inheritable;

 profit distribution to investors or economic rights holders on the basis of a contractual agreement limited either in time or in amounts and which can be terminated by either party at any time;

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Changed the limitation of cross-border conversion into entities that have opted for the additional legal protection scheme, in particular for asset locks;locks.

Companies that have opted in to such additional legal protection schemes should be able to include the label ‘steward-owned’ in their company name.

Directive (EU) 2017/1132 should be amended as regards cross-border conversions, mergers and divisions in order to allow Member States that have chosen to introduce their own national corporate form of steward ownership to limit the cross-border conversion of such a national corporate form to corporate forms of other Member States that also provide for similar forms of steward ownership.

6. Attracting and supporting talent

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ChangedAttracting skilled and innovative talent is crucial for driving economic growth, fostering innovation and maintaining competitiveness in a rapidly evolving global market. Productivity growth, innovation and social inclusion must go hand-in-hand. The S.EU framework should facilitate free movement within the Union, without the need for intermediaries in administrative processes, while respecting applicable Union and national rules on labour and social law. The S.EU should provide for optional harmonised rules across the Union on employee financial participation schemes, in particular on the structuring of employee stock ownership plans (‘ESOPs’), facilitated via a separate legal entityentity, and the creation of employee stock option plans (‘ESOs’). This will enable SMEs, start-ups and scale-ups not only to attract talent, incentivise long-term commitment and facilitate their operations across different national markets due to the design of existing distinct frameworks, but also to promote the full and fair participation of employees in the value they help create through their labour and intellectual capital. The harmonised rules on optional ESOPs and ESOs should focus on harmonising the key corporate law elements, framework and structural features of plans for employee financial participation, without affecting fiscal rules. The following principles must be taken into account when designing harmonised rules in the framework of the S.EU:

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 as a pre-condition, employee financial participation schemes should, under no circumstances, replace or diminish normal basic remuneration or any other form of contribution such as social security contributions, but should be a benefit complementary to all social and contractual rights;

 transparency and democratic governance must be key principles throughout the design and implementation of such schemes;

 participation in such schemes must be non-discriminatory, and be open and exclusive to all employees;

 participation in such schemes must remain voluntary for employees and the setting up of such schemes must remain optional for S.EUs;

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Changed such schemes must be accompanied by mechanisms to safeguard employees against unreasonable financial risks,risks.

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The Commission, in consultation with social partners and relevant stakeholders and based on best-practice, should design guidance for S.EUs to ease implementation, to improve awareness about employee financial participation and to ensure the convergence of employee financial participation schemes across Member States. The guidance should include information about associated financial risks for employees, specify employee buy-out options and democratic governance, and consider the impact on employees.

In addition, the Commission should address, as part of the 28th regime package, issues related to the tax treatment of employee financial participation to ensure legal coherence and cross-border applicability. Until Union-wide harmonisation is achieved, Member States should be strongly encouraged to proactively adopt supporting measures for employee financial participation, aligned with the S.EU’s objectives, in order to make it attractive for both employers and employees, fostering cross-border mobility and fairness.

To strengthen the innovative capacity of S.EUs and accelerate the commercialisation of research results, the legislative proposal should be accompanied by measures to promote and facilitate structured partnerships between S.EUs and universities, research institutes and technology transfer offices. The Commission should develop guidance and model cooperation agreements for such partnerships, ensuring they are simple, transparent and fair for all parties involved.

7. Attracting capital

Member States should introduce a harmonised equity-like debt instrument that allows for investors to invest in companies without acquiring rights of control over a company, such as profit participation rights, silent partnerships or profit-linked loans. Such equity-like debt instruments should:

 be created by concluding a contractual agreement between the company and the investor for a capital contribution; such an agreement must specify the invested principal amount, include a defined repayment date and provide for compensation which may take the form of fixed or variable interest, or profit participation;

 be subordinate to ordinary debt claims;

 be treated as equity or equity-replacing capital for regulatory and accounting purposes.

With a view to increasing legal certainty across the 27 national jurisdictions of the internal market and to reducing barriers to investing in S.EUs, the Commission should facilitate the development of standard multilingual model articles of association, shareholder agreements and all other relevant documents for S.EUs and establish a platform on which those model documents and practical information are made available in all official languages of the Union.

The Commission should appoint an expert group tasked with the elaboration of standardised high-quality model articles of association that correspond to the harmonised requirements for S.EUs. That expert group should include, amongst others, representatives of founders, investors and trade unions.

The Commission should appoint a further expert group tasked with the elaboration of standardised, fair and high-quality model shareholder agreements. Such model shareholder agreements should strike a balance between the interests of founders and investors. That expert group should include, amongst others, representatives of founders and venture capital investors.

The Commission should support and build upon existing initiatives concerning research into and information on European and comparative business law to establish open-access and comparable information on business regulation in the Member States in all official languages of the Union.