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We reported on Jordans Law for Business earlier this year that a new corporate vehicle for single member companies was on the agenda both at EU level and in this country - see http://www.jordanslawforbusiness.co.uk/articles/single-member-companies-is-a-new-corporate-vehicle-on-the-way. We also suggested that, in the short term at least, the EU was more likely to take steps to reform the law in this area than the UK government.
As it happens, the European Commission has, indeed, been the first to act, with the publication last month of a consultation paper inviting views on a possible initiative to harmonise rules in Member States relating to single member companies.
The consultation paper
The consultation paper takes the form of a questionnaire which seeks views on two main issues:
The deadline for responding to the consultation paper is 15 September 2013.
It seems that the Commission is determined to take action of one kind or another to assist small businesses wishing to trade across the EU's internal borders. The introduction to the consultation paper repeats a statement of intent from the Commission's December 2012 action plan on European company law and corporate governance: "As regards company law in particular, the Commission believes that SMEs need simpler and less burdensome conditions for doing business across the EU and it remains a clear priority for the Commission to take concrete measures in this regard." The European Private Company having so far come to nothing, a project to reform the law governing single member companies is apparently regarded as the next best thing; at least such a project would, in the words of a recent ‘roadmap' document dealing with the Commission's work in this area, "partially achieve the objectives of the SPE Statute".
We do not yet know exactly what the Commission has in mind for single member companies. The consultation paper, particularly when read together with the ‘roadmap' document, seems to suggest that it is not seeking to devise a new EU corporate vehicle which would sit alongside Member States' existing vehicles in the way that the European Company (SE) does. Instead, the plan is merely to harmonise Member States' rules on certain key matters.
On the face of it, this is a relatively modest objective. Much will depend, though, on precisely which areas of the law the Commission seeks to harmonise. The danger of aiming for harmonisation across too many areas is that the project might stall in the same way as the European Private Company project has done. On the other hand, if only a handful of core areas are harmonised, the regimes governing single member companies in different Member States will continue to differ markedly. (The consultation paper raises the possibility that single member companies might be given a common label across the EU (and mentions Societas Europaea UniPersonam, or SEUP, as a rather unattractive option), but this would be nothing more than a cosmetic device, and would not alter the fact that, unless complete harmonisation were to be achieved, the regime governing the underlying corporate vehicle would differ from Member State to Member State.)
From the Commission's perspective, any increase in the level of harmonisation of domestic company law regimes would probably be regarded as a step in the right direction. It is possible, therefore, that if it decides to proceed with an initiative in this area, it will opt to focus only on a select few areas of the law. However, there will undoubtedly be some - especially in this country - who will feel that although measures designed to help SMEs are welcome in principle, minor reforms of that sort simply are not worth pursuing, on the basis that any benefits they may deliver will be outweighed by the time and effort involved in introducing them.
"This is an indispensable aid to the busy company secretary. The text is clear, the precedents...