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Implications of the European Company for Human Resource Management and Industrial Relations: New Challenges for Corporate Governance

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The SE is a tool, among many others, that aims to extend and expand Europe's open and competitive internal market. In this sense, the SE may drive entrepreneurship beyond national business systems by providing new challenges for corporate governance and its national practices, which, in the context of Europeanisation, are subject to both incremental and radical changes.

In theory, only the SE directive on employee involvement is required to accord with national legislation. The statute regulation concerning a European Company has been directly applied. In practice, however, most Member States have had to introduce new national legislation to take into account company law changes, allowing for European Companies to be established. These changes have dealt mainly with the introduction of monistic or dualistic corporate governance structures, with one- and two-tier boards, whose function is both supervisory and managerial.

The SE Directive covers 30 European states (the EU-27, and Iceland, Liechtenstein and Norway) and by August 2007 had been transposed in all of them. Enterprises in all the affected states can establish SEs. Throughout Europe, a new strand of EU-level corporate governance regulation of industrial relations can now begin to develop. This chapter presents aspects of this process, which address each country's concerns, and which have already been outlined for Greece (Ioannou, 2004).

The directive on employee involvement is a crucial aspect of the SE, which has its origins in the German model of co-determination (Mitbestimmung). Before the Regulation and Directive were adopted, many national corporate governance systems did not provide for board-level employee representation on their single- or two-tier boards. Indeed, their corporate governance traditions were devoid of any such board-level representation. Many observers consider this deficiency to be a complication or disincentive to moving towards forming an SE.

Some European countries (including the UK, France, Italy and Greece), whose national laws included minimal or no co-determination rights or employee representation in corporate governance, may therefore soon be able to exercise some such rights for the first time. With this in mind, the SE has to manage the diverse aspects of each country's industrial relations, not only after they have been established, but while in the process of being established. In fact, this is a prerequisite for registration and establishment.
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Document Type: Research Article

Publication date: 01 January 2009

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