HC Deb 26 October 1988 vol 139 cc295-6W
Mr. McCrindle

To ask the Chancellor of the Duchy of Lancaster if he will make a statement on proposals to enable a firm to incorporate itself as a European company and on his assessment of the implications of this for British companies; and whether United Kingdom tax and legal provisions would continue to apply to such a company.

Mr. Maude

The European Commission has invited comments from the Council of Ministers, the European Parliament and both sides of industry on an outline proposal for a European company statute. This would be a new set of laws to be applicable, if the companies concerned so wished, to companies formed by the joining together of two or more existing companies from different member states. The resultant "European company" would be governed partly by a new set of laws to be drafted and included in the statute and partly by the national laws of the relevant member states.

The Commission's memorandum suggests that a central feature of the statute should be a legal requirement that, subject to the agreement of the workers, a European company must have one of three alternative forms of employee participation described in the memorandum.

In order to assist the Government in forming a view on these proposals, the Department of Employment and the Department of Trade and Industry have jointly issued a consultation document.

Although all the responses to that consultation have not yet been received and analysed, the preliminary indications are that British companies do not in general see a need for such a statute; they do not appear to have problems in operating across borders which would be helped materially by the proposals and few would be likely to take up the option to use this new form of joining with other companies.

It is clear that the overwhelming majority of British companies also share the Government's view that it is wrong in principle to set out specific requirements in legislation for employee participation. The Government are committed to the concept of employers informing and consulting their employees but it must be for those employers and employees to determine the form of employee involvement which best suits their particular circumstances.

If the Commission's proposals were to go ahead, extensive discussions between all member states and the Commission would be necessary before the application of tax and legal provisions could be established. As I have already indicated, the outline proposal is that some aspects would be covered by provisions—yet to be drafted—in the statute and some by national law.