The Societas Europaea (European Company) regulation (EC) No 2157/2001 paved the way to the creation of supranational companies. An SE can result from a merger; holding; subsidiary or conversion of companies operating in different member states. The regulation was transposed locally by L.N. 452 of 2004, entitled Employee Involvement (European Company) Regulations.
There are many advantages in a European company. For instance, an SE has more flexibility to move across borders since it holds commercial interests in more than one member state. SEs operate assuming a single set of rules and a unified management. There is no need for a composite set-up of subsidiaries conforming to various national laws. Thus it is a more cost-effective and less time-consuming solution. Besides, by transforming into a European company, a business can restructure faster and have better opportunities to compete in the internal market.
It is a challenge that cannot be excluded from local entrepreneurs’ plans. Merging with some European partners may widen possibilities to compete for tenders involving large projects, as in the construction industry. During an interesting seminar about the subject, organised recently by the centre for labour studies of the University of Malta and presented by Mr M. Stollt, it transpired that there is a lack of awareness among local industrialists about SEs.
This resulted from a survey that was conducted by the same centre in which 88 per cent of respondents declared that they were unaware of the possibility of forming a European company. When asked whether they think that their company will ever consider converting into an SE, just six per cent of the respondents replied yes while another six per cent replied no and 88 per cent were undecided.
The respondents consider that a reduction in operational cost and the ability to trade with other EU countries with less bureaucratic procedures are among the main incentives expected in converting into an SE. On the other hand, the difference between member states in legislative needs which may imply extra expenses and the impact of the conversion on local trading are among the concerns of employers.
The regulation is an important feat for the Europeanisation of worker involvement. In practice, there cannot be an SE without worker involvement. This idea proved to be a major hurdle for achieving consensus between member states. Finally it was agreed that the industrial relations culture of the particular member state should be considered when it comes to worker involvement.
The SE can either apply the two-tier or single-tier worker involvement. Those member states such as Germany who have a corporate style of industrial relations usually opt for the two-tier system, while others such as the UK and Malta normally go for the one-tier system. Two-tier worker participation involves employee representation in a management board and in a supervisory board. In the single tier system, employees are represented in the board of directors. The regulation provides guidelines about worker involvement.
The employees required in today’s harsh competitive global market must have ideal skills, motivation and be responsible, a task that is hardly achievable in a one-sided style of management. The survey conducted by the Centre for Labour Studies reflect positive results on employers’ view on workers participation. Seventy-six per cent of respondents replied that they would not be concerned about greater employee participation that shall eventually be brought about by converting into an SE.
About 31 SEs have been established since the regulation entry into force 18 months ago. In transforming into SEs, these organisations have among other things gained a European corporate identity, improving both market and customer perception. So far, there is not a single Maltese entrepreneurship taking part in any of these European companies.
Perhaps more awareness about the European company shall be of benefit for the local industry’s future.