The latest draft of the directive
At the end of May 2015, the Council announced that it had agreed a revised text of the directive. The revised draft differs from the April 2014 draft in a number of ways. Overall, and perhaps not surprisingly, the effect of the Council's amendments is to reduce the extent to which the directive would harmonise the law across the EU.
On the one hand, the Council's draft preserves a core feature of the original draft, namely the provision that it should be possible to form an SUP electronically, thus ensuring that a prospective shareholder would not need to travel to the country in question. (It does, however, extend the deadline for the completion of the registration process to five working days.)
On the other hand, whilst the revised draft also preserves the provision that the SUP's minimum capital would be €1 (or, in the case of a UK company, £1), it expressly allows Member States to require the company to build up reserves. Its approach to dividends is also less prescriptive; instead of requiring the company to satisfy a balance sheet test and its directors to make a solvency statement, it gives Member States a degree of discretion as to how best to protect creditors. A third important departure from the April 2014 draft is the removal of the provision stipulating that the Commission would produce model articles; it would, instead, be for individual Member States to devise their own form of model constitutional documents.
An ancillary, but nonetheless noteworthy, difference is that whereas the April 2014 draft provided for the SUP to be introduced two years after the directive was adopted, the revised draft provides for it to be introduced within three years of the entry into force of the directive.
The European Parliament is scheduled to consider the proposed directive in January 2016, and it remains to be seen whether it is duly adopted, and, if it is, what form it takes. Assuming, however, that the final text approximates to that of the Council's revised draft, is the SUP likely to be a success?
From the Commission's perspective, the introduction of the directive will in itself represent an achievement. Whilst it is probably fair to argue that the European Company (SE) has been a failure simply on the basis that so few SEs have been formed, the difference between the SUP and the SE is that the former has a harmonising function: whether or not the SUP proves to be a popular vehicle, the directive will have succeeded in bringing Member States' company law regimes a little closer together. The new directive builds upon the Twelfth Company Law Directive, which required Member States to permit private companies to have only one shareholder, and it is quite probably that it, in turn, will be built upon in the coming years or decades. No doubt the Commission would prefer to move more quickly towards the harmonisation of national regimes, but it may well be content to take a long view of the process. From its perspective, even a small step towards full harmonisation might well be regarded as a success.
Others, however, will judge the success of the directive by reference to the take-up rate for the new vehicle, and here, too, the Commission may have reason to feel cautiously optimistic. Businesses will no doubt welcome the introduction of the option to incorporate a single member company anywhere in the EU by electronic means. Small businesses, in particular, will also welcome the fact that the SUP's shareholder will not have to put more than €1 into the company at the outset, even if some Member States choose to require it to build up reserves thereafter. Certainly, it is conceivable that a small, one-man business operating in one Member State may find these incentives sufficient to encourage him to use the SUP when he decides to expand his business into a neighbouring country. Similarly, a larger company - whether based in the EU or not - which is seeking to establish a presence across a number of EU states may find the SUP an attractive alternative to the diverse domestic corporate forms with which it would otherwise have to work. Given that many of its features will not, in fact, be harmonised, the new vehicle might not reduce substantially the administrative costs of the exercise, but even relatively small savings are welcome in the present climate.
Of course, there will be those who will wonder whether the directive was worth the time and resources devoted to it, regardless of the take-up rate for the SUP. Most, though, will agree that this relatively modest initiative has at least been a more worthwhile exercise than the failed attempt to produce the European Private Company or even the project which eventually led to the European Company.