EU Commission's company law proposals provide grounds for progress – but clearly need improvement

Reacting to the European Commission’s proposals for new company law rules*, published today, European Trade Union Confederation (ETUC) Deputy General Secretary Peter Scherrer said:

“The proposals on cross-border conversions show a welcome change of direction in EU company law, which until now has facilitated deregulation and regime shopping. The Commission aims to ensure that a company has genuine economic activity in the Member State where it wants to relocate its registered office. The proposed Directive therefore offers a basis for discussion.

“However, some improvements are necessary. An effective ‘real seat’ principle must be in the final text. The definition of economic activity must be watertight from a tax and legal perspective. The Directive should not diminish companies' legal obligations or public authorities’ enforcement procedures.

“Furthermore, the proposals on information, consultation and participation rights need serious improvement to ensure that workers are able to anticipate and influence management decisions. It must be clearly stated that existing participation rights cannot be watered down, now or in the future. Company mobility needs to be accompanied by strong information, consultation and board-level representation rights.

“The safeguards in the cross-border conversion Directive must be reflected in all elements of EU law facilitating company mobility. The Commission forgot to include them in the cross-border merger Directive, leaving a serious loophole in European law. This gap must be addressed, and a serious check carried out on the need for a Directive on divisions.

“The ETUC calls on the European Parliament and the Member States to build on this proposal and to adopt a strong and legally watertight text before the next European elections.”

The ETUC will now analyse the proposal in detail and put forward suggestions for safeguarding and improving workers’ interests.


*Proposal for a Directive amending Directive (EU) 2017/1132 as regards cross-border conversions, mergers and divisions.