COMPANY LAW AND CORPORATE GOVERNANCE (10041/03,
7677/04)
Letter from Rt Hon Ian McCartney MP, Minister
of State for Trade, Investment and Foreign Affairs, Department
of Trade and Industry/Foreign and Commonwealth Office to the Chairman
I am writing to update your Committee on the
European Commission's review of its Company Law and Corporate
Governance Action Plan.
In May 2003, the European Commission launched
its Action Plan in its Communication "Modernising Company
Law and Enhancing Corporate Governance in the European Union",
On 26 June 2003, the DTI submitted an Explanatory Memorandum (EM
10041/03). Your Committee cleared this EM, by a letter dated 3
July 2003. In December 2005, the Commission completed the short-term
phase of the Action Plan, and announced a review of its priorities
for the remaining 13 measures due for action in the medium or
long term. On 28 March 2006[84],
Gerry Sutcliffe wrote to your Committee giving details of the
Government's comments to the Commission on that review.
In particular, he noted that the Government
was questioning whether the case had been made for EU action in
relation to the majority of the 13 measures that had yet to be
brought forward. In the light of this, the House of Commons Scrutiny
Committee asked for information on any cases where measures were
dropped from the Action Plan as a result of the Government's representations.
The DTI promised to give this information once the review of the
Action Plan had been completed by the Commission.
The outcome of the review was announced by Commissioner
McCreevy during a speech at the European Parliament on 21 November.
I attach the extract from the speech that deals with the Action
Plan. You will see that, of the 13 measures outstanding, the Commissioner
has committed himself to legislation on only one—a Directive
to make it easier for companies to transfer their registered office
from one Member State to another. In addition, he is carrying
out studies on two other possible measures, and is reflecting
on a third. His statement also mentions two measures not included
in the original Action Plan. The first is a simplification scheme
to reduce administrative burdens imposed by existing EU companies
legislation. The second is the report on auditor liability that
the revised 8th company law directive requires the Commission
to issue by 1 January 2007. We understand that the Commission
will not formally be amending its Communication on the Action
Plan. This leaves open the possibility, in theory at least, that
other measures will resurface. However, our understanding is that
the Commissioner's statement represents his wish not impose further
regulatory burdens on EU companies.
The DTI, in partnership with UK business and
investor representatives, worked hard before and during the UK
Presidency both to promote a review of the Action Plan, and to
persuade the Commission and other Member States that EU measures
should be pursued only where necessary to further competitiveness
or better regulation principles. I believe that the Commissioner's
statement represents a successful outcome to that work.
12 December 2006
EXTRACT FROM
COMMISSIONER MCCREEVY'S
SPEECH TO
THE LEGAL
COMMITTEE OF
THE EUROPEAN
PARLIAMENT, 21 NOVEMBER
2006
COMPANY LAW
AND CORPORATE
GOVERNANCE
Company law exemplifies how this policy mix
can work. I am determined to give European firms a flexible regulatory
framework that serves their needs, rather than imposing unnecessary
regulatory burdens on them.
And I am committed to making company law a test
case of how we apply Better Regulation principles. All initiatives
on company law and corporate governance will build on public consultations
and be subject to in-depth regulatory impact assessments.
— Firstly, we need to make sure that
companies can fully reap the benefits of the Internal Market.
Companies should enjoy full mobility within the EU—which
is not the case today. For that reason, I have asked my services
to start assessing the impact of a Directive enabling companies
to move their registered office from one Member State to another.
On that basis, I envisage submitting a proposal for a 14th Company
Law Directive next spring.
— Secondly, many stakeholders expressed
strong support for a Statute for the European Private Company.
Your Committee has just voted on a report which also supports
this idea. I have asked my services to start work on a study of
the feasibility of a European Private Company Statute. We will
examine all options for a simple, user-friendly statute which
will also meet the needs of small firms.
— However, I am very cautious about
introducing a multiplicity of European corporate forms. And I
am not yet convinced about the ability of a European Foundation
Statute to respond to the specific needs of foundations. Nonetheless,
we will pursue our reflection.
— Beyond these individual initiatives,
we will launch a simplification scheme to make life easier for
companies. We need to simplify the environment in which they operate.
We know there still exist unnecessary administrative burdens.
We will measure the costs imposed by such burdens and then make
proposals on how to remove them. I intend to present a communication
on this crucial issue before next summer.
— As you are already aware, I also
intend to continue to provoke a lively debate on the issue of
proportionality between capital and control of companies.
— Last but not least, there is the
separate but linked question of auditor liability. This subject
came up last year when we agreed a new 8th Company Law Directive,
thanks in large part to the excellent work of Bert Doorn. The
Commission agreed to analyse insurability of audit firms and the
risk of loosing of one of the so-called Big Four audit firms.
I hope I can rely on your support in work on this issue.
Letter from Rt Hon Ian McCartney MP to
the Chairman
I am writing to inform you that I am publishing
today consultation documents on implementation of the Directives
listed above, following agreement with the Economic Affairs, Productivity
and Competitiveness (EAPC) Committee.
I will also be informing Parliament today of
the publication of these documents. Copies of them will be placed
in the House libraries and will be available on the DTI website.
With particular reference to your letter of
19 January 2006[85],
(Doc 14119/04), in which you asked for a copy of the consultation
document on the implementation of the proposed Directive amending
Directives 78/660/EC and 83/349/EC concerning the annual accounts
of certain types of companies and consolidated accounts (Amendments
to the EC Accounting Directives), I am enclosing copies of all
these documents for your committee (not printed).
5 March 2007
84 Correspondence with Ministers, 40th Report of Session
2006-07, HL Paper 187, pp 316-317 Back
85
Correspondence with Ministers, 45th Report of Session 2005-06,
HL Paper 243, p 385 Back
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