EPRSLibrary By / March 12, 2013

Statute for a European mutual society

In the context of the economic crisis, mutual societies could have a positive impact in the Union’s economy by providing…

© DOC RABE Media / Fotolia

In the context of the economic crisis, mutual societies could have a positive impact in the Union’s economy by providing added social value to more than 160 million European citizens. Parliament is to vote to request the Commission to make a legislative proposal concerning a Statute for a European mutual society, including in particular democratic rules for governance.

Context and objectives

Non profit sign
© DOC RABE Media / Fotolia

According to a Commission Communication from 2011, a social enterprise is an operator in the economy which uses its profits primarily to achieve social objectives rather than profit for shareholders. Moreover the social economy enterprise applies the ‘one member, one vote’ principle instead of the ‘one share, one vote’ rule of profit-led companies. The social economy employs over 11 million people in the EU, accounting for 6% of total employment. It covers bodies with various specific legal statuses: cooperatives, foundations, associations and mutual societies.

Mutual societies can take the form of ‘mutual benefit’ (or ‘health providence’) societies or ‘mutual insurance’ societies. These play a major role, providing healthcare, social services and affordable insurance services to more than 160 million European citizens. They represent more than €180 billion in insurance premiums and employ over 350 000 people. However cross-border cooperation is hindered either by the lack of a legal framework in certain EU Member States (MS) or by different national legal structures, as well as varying operational and fiscal treatment.

EU and social economy

The EU is aware of the importance of social economy, and of the need to support both non-profit and profit-oriented enterprises. After the adoption in 2001 of the European Company Statute (SE), the EU adopted Regulation 1435/2003 on the Statute for a European Cooperative Society (SCE).

On the basis of the SCE experience, in 2012 the European Commission proposed a Statute for European Foundations (FE). The Commission is now also studying the feasibility of a third legislative proposal dealing with a Statute for a European Mutual Society. However it is facing opposition in some EU MS (Finland, United Kingdom, Sweden, Estonia, Germany and Denmark) each of whom could block a proposal drawn up under the currently preferred legal base of Article 352 TFEU which requires unanimity and EP consent. Stalemate in the Council led the Commission, in 2006, to withdraw an earlier proposal, dating back to 1991, in this domain.

Encouraging European mutuals

Since 2001, the EP has been advocating EU legislation for mutual societies, suggesting an internal market legal base. By this route, the EP would be fully involved under the ordinary legislative procedure and the Council would decide by qualified majority. A report from the EP’s Legal Affairs Committee calls on the Commission to submit a new legislative proposal defining a Statute for a European mutual society. The Rapporteur Luigi Berlinguer (S&D, Italy) considers, taking into account jurisprudence of the Court of Justice in this domain (case C-436/03), that the new statute would be applicable throughout the EU, leaving existing national legislation unchanged. Even such a voluntary scheme would have several advantages. It would strengthen the post-Lisbon European social model. It would allow mutual societies to operate freely in the European single market, avoiding distortions and paving the way for transnational mutual societies, for instance connected in a European mutual group.

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