9 Company law — amendments to disclosure
requirements for companies
| (29635)
8647/08
COM(08) 194
+ ADD 1
+ ADD 2
| Draft Directive amending Council Directives 68/151/EEC and 89/666/EEC as regards publication and translation obligations of certain types of companies
Commission Impact Assessment
Commission Executive Summary of Impact Assessment
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| Legal base | Article 44(2)(g) EC Treaty; QMV; co-decision
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| Document originated | 17 April 2008
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| Deposited in Parliament | 24 April 2008
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| Department | Business, Enterprise and Regulatory Reform
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| Basis of consideration | Minister's letter of 19 February
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| Previous Committee Report | HC 16-xxii (2007-08), chapter 14 (21 May 2008)
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| To be discussed in Council | No date fixed
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| Committee's assessment | Legally and politically important
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| Committee's decision | Cleared (decision reported on 21 May 2008)
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Background
9.1 The conclusions of the European Council of 8/9 March 2007
emphasised the importance of reducing administrative burdens in
boosting Europe's economy. This followed the adoption by the Commission
of a simplification programme in 2006, with the aim of measuring
administrative costs and reducing administrative burdens. An Action
Plan was adopted in January 2007. The programme identified company
law, accounting and auditing as priority areas.
The Document
9.2 This proposal forms part of a package of proposals by the
Commission to give effect to its simplification programme. The
proposed Directive amends two existing company law Directives.
The 1st Company Law Directive 68/151/EEC of 9 March
1968 (amended by Directive 2003/58/EC of 15 July 2003) requires,
among other things, companies to disclose certain information
by filing it with their national (or in, some Member States, local)
company registries. The 11th Company Law Directive
89/666/EEC of 21 December 1989 requires branches of companies
from another Member State to disclose certain information to the
registry of the host State of the branch. The proposal makes amendments
to each of these Directives to simplify two specific aspects of
them, with the aim of reducing administrative burdens and costs
for companies.
9.3 Under the 1st Directive, in addition
to disclosure in the national (or local) registry, companies are
required to publish in the national gazette at least a reference
to the document disclosed in the national registry, although the
gazette may be published electronically or replaced by a website
with disclosed information in chronological order. Some Member
States require companies to pay a fee for the cost of such publication.
The proposal amends the requirement of the 1st Directive
to remove the provision for publication in the national gazette,
even the electronic version, so that publication on a website
with disclosed information in chronological order becomes compulsory;
and it prohibits Member States from charging a specific fee for
such publication.
9.4 Under the 11th Directive, companies
registering information about a branch may be required by the
host State to provide translations of certain documents into the
language of the branch which comply with host State certification
requirements. Some Member States impose excessive requirements
for certification or notarisation of translations. The proposal
amends the certification requirement to allow for mutual recognition
of certification requirements, so the company may use the procedure
of its home State (or, indeed, any other State). It also adds
the certificate of incorporation to the documents covered by these
requirements about translation and certification.
9.5 We cleared the proposal on 21 May 2008.
The Government's view
9.6 In his original Explanatory Memorandum of last
May the then Parliamentary Under-Secretary of State for Trade
and Consumer Affairs at the Department for Business Enterprise
and Regulatory Reform (Gareth Thomas) expressed the Governments'
broad support for the proposal. The Minister went on to comment
as follows:
"The amendment to the 1st Directive
will have limited or no effect on UK companies since electronic
publication in the Gazettes is already carried out by the Registrar
of Companies for companies in England and Wales, and will be within
the next year for companies in Scotland and Northern Ireland.
The Government welcomes the opportunity that the amendment will
afford the Registrar to decide on the most appropriate and cost-effective
electronic platform for disclosure of company documents. The Government
also welcomes the prohibition of the levying of fees on companies,
but will consider carefully the views of other Member States on
the proposed removal of provision for gazette publication, which
might create practical problems for those States with multiple
registries.
"The amendment to the 11th Directive
is a welcome removal of unnecessary certification costs for UK
companies that set up branches in other Member States."
9.7 The Minister also commented that although "there
are only minimal benefits for business in the UK arising from
the UK legislation or action that will transpose the Directive
… [n]o costs will be imposed since the proposal would eliminate
two regulatory burdens." The Minister made clear, however,
that UK companies would, of course, benefit from the transposition
measures in those other Member States, where the requirements
of the proposal had not yet been anticipated by national law.
9.8 To update us on the negotiation process, the
Economics and Business Minister at the Department for Business
Enterprise and Regulatory Reform (Ian Pearson) has now written
with his comments on the European Parliament's first reading of
the proposal. The Minister writes that "the majority of amendments
[made by the European Parliament] are acceptable" but says
that there remain two amendments which would "allow Member
States to continue to allow publication of information in paper
form on a wide basis and to allow fees to be attached to such
publication." The Minister adds that the Commission, in line
with the Government and other Member States, is opposed to these
amendments, and that the latest compromise text by the Czech Presidency
rejects both of them. The Commission has likewise made clear that
it will not accept these amendments, and the Minister assures
us that the Government will work closely with the Commission and
other like minded Member States to ensure that the relevant parliamentary
amendments will not be allowed to undermine the original objective
of the proposal, which, in the Commission's programme on simplifying
the acquis, remains to reduce both unnecessary administrative
and financial burdens.
Conclusion
9.9 We thank the Minister for his helpful update
on this proposal. We agree with the Minister's general support
for the Commission's proposed simplification of existing disclosure
requirements for companies throughout the EU. We also support
the Minister's opposition to those two amendments by the European
Parliament which would undermine the original objective of the
proposed measure. We note the Minister's assurance that the Government
will not accept these amendments. We infer from this that the
Government will not shrink from opposing the two amendments if
necessary. On this basis we have no further questions to the Minister
but would expect him to send us further updates should the Government's
position change.
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