On the European private company statute (February 2006) (Sharon Bowles MEP)

Sharon Bowles MEP <info@sharonbowles.org.uk>

On the European private company statute (February 2006)

February 1, 2006 12:00 AM
By Sharon Bowles MEP in European Parliament

I broadly welcome the underlying idea in the proposal, but I have some concerns that I hope the Commission will investigate further during future work on this matter. Mr Lehne, you have said in your explanatory note to the report - and indeed the Commissioner has also said just now, and I agree - that the statute will need to focus on the needs of SMEs. But that of course covers just about all companies except multinationals. To me it is clear that if we follow all of the recommendations in the annex, those that are likely to benefit or choose this option are towards the medium rather than the small end of the spectrum of companies. They certainly would not be start-up companies. The suggested capital requirements ensure that is the case. I do not want people to say 'here you are standing there as a Brit not wanting any capital requirement'. I recognise that the capital does not necessarily have to be paid in and I welcome attempts to find a compromise on that, but it will still have an impact, especially on small businesses.

Smaller businesses, whether at the start-up or whether trying to expand, have enough cost and difficulty trying to give belt-and-braces guarantees to banks without there being an added tier of financial expectation. And, make no mistake, the fact that shareholders could potentially lose EUR 10 000, even if not paid in at the start, does add an extra tier of financial expectation.

Now, that may not matter at all since it is optional, and if you do not like the statute, you do not have to use it, but I would prefer that if you propose something, it would be liked and used and accessible to all companies.

While I have said that there may be little incentive in some quarters to choose this, that does not mean it is because small companies do not conduct cross-border business or do not aspire to do so. Many quite small companies do engage in significant cross-border business and European Court of Justice decisions make it clear that they can do so. But, as it is optional, maybe that is no matter. Or is that really the case? I would not like to see the situation where the new statute introduced a factor of discrimination where consumers were concerned that if you were not big enough to consider it worth being a European private company, you are not big enough to do business in Europe. That would run completely counter to the notion of a single market and the mutual importance of fostering and nurturing small businesses within that market. In a single market, size must not matter.