The Societas Privata Europaea - Could it Promote the Internationalization of Small and Medium-Sized Enterprises?

Abstract

Small and medium-sized enterprises (SMEs) are important for employment, innovation and growth. However, due to their size, SMEs experience a number of restrictions which also lead to a low degree of internationalization. To promote their internationalization, the European Union plans to introduce a supranational private limited liability company (the European private Company, SPE). After an empirical overview of SMEs in the EU, we analyze whether the SPE draft regulation does indeed provide rules which result in (1) low transaction and coordination costs, (2) provide secure ownership rights and (3) reduce information asymmetries and thus mitigate agency relations among owners, management, employees and creditors of SMEs. As this can be agreed to, we ask whether an additional 28th EU-wide private legal form is necessary. We discuss the available empirical findings about the extent of horizontal and vertical competition in company law in the EU. Finally, we examine whether the theory of interjurisdictional competition provides normative arguments in favour or against of introducing the SPE. We conclude that there are no profound objections against the introduction of the SPE from the theory of regulatory competition.