COM(2003)284 - Modernising Company Law and Enhancing Corporate Governance in the EU - A Plan to Move Forward
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official title
Communication from the Commission to the Council and the European Parliament - Modernising Company Law and Enhancing Corporate Governance in the European Union - A Plan to Move ForwardLegal instrument | Communication |
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Decision making procedure | Own-initiative procedure (INI) |
reference by COM-number53 | COM(2003)284 ![]() |
Additional COM-numbers | COM(2003)284 |
procedure number55 | 2003/2150(INI) |
CELEX number56 | 52003DC0284 |
Document | 21-05-2003 |
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Online publication | 21-05-2003 |
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- 1.Financial Services: Implementing the Framework for financial markets - Action Plan, Communication of the Commission, COM (1999) 232, 11.05.99.
- 2.EU Financial Reporting Strategy: the way forward, Communication of the Commission, COM (2000) 359, 13.06.00.
- 3.Corporate Social Responsibility: A business contribution to Sustainable Development, Communication of the Commission, COM (2002) 347, 02.07.02. The European Multi-Stakeholder Forum on CSR brings together representative organisations of business, trade-unions and civil society. It will present in 2004 a report about its works to the Commission, which should then make an evaluation of its results, decide on its future and consider any other appropriate initiative.
- 4.Industrial Policy in an Enlarged Europe, Communication of the Commission, COM (2002) 714, 11.12.02.
- 5.When a legislative instrument is considered, this means that the action envisaged requires either the adoption of a new legislative proposal or the modification of one or several existing legislative instruments.
- 6.EU Financial Reporting Strategy: the way forward, Communication of the Commission, COM (2000) 359, 13.06.00.
- 7.See in Annex 2 the table of existing and proposed European legal instruments in the area of company law.
- 8.See 'Quantification of the Macro-Economic Impact of Integration of EU Financial Markets', Final Report to the European Commission - Directorate-General for the Internal Market by London Economics (in association with PricewaterhouseCoopers and Oxford Economic Forecasting), 12 November 2002, europa.eu.int/comm/internal_market/ en/finances/mobil/overview.htm
- 9.See in this respect the Proposal of June 2002 for a Directive amending the First Company Law Directive, as regards disclosure requirements in respect of certain types of companies, which introduces modern technologies in trade registers. The proposed modifications would allow full advantage to be taken of modern technologies: companies would be able to file their documents and particulars either by paper means or by electronic means, and interested parties would be able to obtain copies by either means.
- 10.The words 'listed companies' used in the present Communication cover the companies whose securities are admitted to trading on a regulated market within the meaning of Council Directive 93/22/EEC (OJ L 41, 11.06.1993, p. 27, as last amended by Directive 2000/64/EC of the European Parliament and of the Council (OJ L 290, 17.11.2000, p. 27)) in one or more Member States. The present Action Plan provides where necessary explicit information on the scope of the various actions proposed. In short, the actions presented in the Corporate Governance Section in principle cover listed companies, although some of them are considered to be usefully applicable also to non listed companies. The actions presented in the other sections are generally applicable to all companies, except for the section on pyramids which by nature covers listed companies only.
- 11.Cadbury Report, December 1992. For a more comprehensive definition, see for example the OECD Principles of 1999: "Corporate governance involves a set of relationships between a company's management, its board, its shareholders and other stakeholders. Corporate governance also provides the structure through which the objectives of the company are set, and the means of attaining those objectives and monitoring performance are determined." Corporate governance essentially focuses on the problems that result from the separation of ownership and control, and addresses in particular the principal-agent relationship between shareholders and directors.
- 12.Comparative Study of the Corporate Governance Codes relevant to the European Union and its Member States : europa.eu.int/comm/internal_market/ en/company/company/news/corp-gov-codes-rpt_en.htm
- 13.In developing its approach, the Commission has paid particular attention to the following needs: considering where possible a) the use of alternatives to legislation, and b) the preference to be given to disclosure requirements (because they are less intrusive in corporate life, and they can prove to be a highly effective market-led way of rapidly achieving results).
- 14.In this respect, it is considered essential for the restoration of public confidence that proper information is given on the way in which the company has organised itself at the highest level to establish and maintain an effective internal control system.
- 15.See Directive 2001/34/EC of the European Parliament and of the Council of 28 May 2001 on the admission of securities to official stock exchange listing and on information to be published on securities (Title IV - Chapter III 'Obligations relating to the information to be published when a major holding in a listed company is acquired or disposed of').
- 16.The home Member State shall allow issuers the use of electronic means for the purposes of conveying information to shareholders, provided such a decision is taken in a general meeting and meets a series of conditions, including the individual consent of the shareholder concerned (See Article 13).
- 17.A host Member State may require issuers: a) to publish regulated information on their Internet sites, and b) to alert any interested person, without delay and free of charge, to any new disclosure or any change to regulated information which has already been published (See Article 17).
- 18.See the relevant statements, about disclosure (Capital structures and arrangements that enable certain shareholders to obtain a degree of control disproportionate to their equity ownership should be disclosed) and about exercise of rights (shareholders should have the opportunity to participate effectively and vote in general shareholder meetings).
- 19.In developing the minimum standards applicable to the audit committee, appropriate attention will be paid to a) the access it must have to the relevant information (there might be a scope for specific consideration of the need for greater legal protection for whistleblowers) and b) the extent to which transparency on its activities is desirable.
- 20.The topics covered by the SLIM Report were as follows: removal of the requirement for an expert opinion on contributions in kind in defined circumstances, introduction of no par value shares, simplification of the rules applicable to withdrawal of shares, simplification of the rules applicable to acquisition of own shares, reduction of the scope of the prohibition of financial assistance, simplification of the rules applicable to pre-emptive rights.
- 21.Such an alternative regime would notably be based on the requirement for a solvency test before any payment of dividend or other distribution can be made.
- 22.A draft 'Ninth Company Law Directive on the Conduct of Groups containing a Public Limited Company as a Subsidiary' was circulated by the Commission in December 1984 for consultation. According to its Explanatory Memorandum, the Directive was intended to provide a framework in which groups can be managed on a sound basis whilst ensuring that interests affected by group operations are adequately protected. Such a legal framework, adapted to the special circumstances of groups, was considered to be lacking in the legal system of most Member States. Apart from its provisions dealing with the notification and disclosure of shareholdings in PLCs, which covered all PLCs, the Directive otherwise applied only when a PLC was the subsidiary of another undertaking (which could itself be a PLC, but could also be a natural person or a legal person).
- 23.Although the laws of some Member States do not prohibit a company from one of those States from absorbing a company from another Member State or from taking part in the formation of a new company by merger with a company registered in another Member State, such an operation may be carried out only with companies from Member States where it is likewise not prohibited by law. The adoption of the European Company Statute offers one solution to these problems (a European Company may be created inter alia by merger of two or more public limited liability companies from different Member States). A proposal for a Tenth Company Law Directive is nevertheless desirable, since a) companies may wish to enter into a cross-border merger without creating a European Company, and b) other types of companies may wish to enter into a cross-border merger.
- 24.In the absence of legislation governing the cross-border transfer of seat, such an operation is currently impossible or at least contingent on complicated legal arrangements. This is because Member States laws do not provide the necessary means and, when a transfer is possible by virtue of simultaneously applying national laws, there are frequent conflicts between those laws because of the different connecting criteria applied in the Member States. A legislative effort is needed in this field in order to implement the freedom of establishment in the manner intended by the Treaty.
- 25.THE FIRST COMPANY LAW DIRECTIVE, WHICH CONTAINS ESSENTIAL DISCLOSURE REQUIREMENTS (COMPANIES MUST FILE A SERIES OF DOCUMENTS AND PARTICULARS WITH A REGISTER, AND INTERESTED PARTIES CAN OBTAIN A COPY THEREOF), APPLIES ONLY TO LIMITED LIABILITY COMPANIES, AND NOT TO A SERIES OF ALTERNATIVE FORMS OF ENTERPRISE. THE CREATION OF A FRAMEWORK FOR DISCLOSURE OF BASIC DATA ON CERTAIN OTHER LEGAL ENTITIES ENGAGED IN ECONOMIC ACTIVITIES IS THEREFORE PERCEIVED AS A USEFUL TOOL FOR TRADE AND COMPETITION WITHIN THE INTERNAL MARKET.
- 26.SEE IN THIS RESPECT THE STUDY 'TRANSPARENCY AND MONEY LAUNDERING: A STUDY OF THE REGULATION AND ITS IMPLEMENTATION, IN THE EU MEMBER STATES, THAT OBSTRUCT ANTI-MONEY LAUNDERING INTERNATIONAL CO-OPERATION (BANKING/FINANCIAL AND CORPORATE/COMPANY REGULATIVE FIELDS)', SUBMITTED TO THE COMMISSION IN OCTOBER 2001 BY THE TRANSCRIME INSTITUTE (UNIVERSITY OF TRENTO, ITALY). THIS STUDY, COMMISSIONED PURSUANT TO CONCLUSION N°58 OF THE TAMPERE SPECIAL EUROPEAN COUNCIL OF 1999 AND THE JOINT ECOFIN/JAI COUNCIL OF OCTOBER 2000, PRESENTS RECOMMENDATIONS TO INCREASE THE TRANSPARENCY OF LIMITED LIABILITY COMPANIES AS WELL AS OTHER VEHICLES (AS TRUSTS).
- 27.Financial Services: Implementing the Framework for financial markets - Action Plan, Communication of the Commission, COM (1999) 232, 11.05.99.
- 28.EU Financial Reporting Strategy: the way forward, Communication of the Commission, COM (2000) 359, 13.06.00.
- 29.Corporate Social Responsibility: A business contribution to Sustainable Development, Communication of the Commission, COM (2002) 347, 02.07.02. The European Multi-Stakeholder Forum on CSR brings together representative organisations of business, trade-unions and civil society. It will present in 2004 a report about its works to the Commission, which should then make an evaluation of its results, decide on its future and consider any other appropriate initiative.
- 30.Industrial Policy in an Enlarged Europe, Communication of the Commission, COM (2002) 714, 11.12.02.
- 31.When a legislative instrument is considered, this means that the action envisaged requires either the adoption of a new legislative proposal or the modification of one or several existing legislative instruments.
- 32.EU Financial Reporting Strategy: the way forward, Communication of the Commission, COM (2000) 359, 13.06.00.
- 33.See in Annex 2 the table of existing and proposed European legal instruments in the area of company law.
- 34.See 'Quantification of the Macro-Economic Impact of Integration of EU Financial Markets', Final Report to the European Commission - Directorate-General for the Internal Market by London Economics (in association with PricewaterhouseCoopers and Oxford Economic Forecasting), 12 November 2002, europa.eu.int/comm/internal_market/ en/finances/mobil/overview.htm
- 35.See in this respect the Proposal of June 2002 for a Directive amending the First Company Law Directive, as regards disclosure requirements in respect of certain types of companies, which introduces modern technologies in trade registers. The proposed modifications would allow full advantage to be taken of modern technologies: companies would be able to file their documents and particulars either by paper means or by electronic means, and interested parties would be able to obtain copies by either means.
- 36.The words 'listed companies' used in the present Communication cover the companies whose securities are admitted to trading on a regulated market within the meaning of Council Directive 93/22/EEC (OJ L 41, 11.06.1993, p. 27, as last amended by Directive 2000/64/EC of the European Parliament and of the Council (OJ L 290, 17.11.2000, p. 27)) in one or more Member States. The present Action Plan provides where necessary explicit information on the scope of the various actions proposed. In short, the actions presented in the Corporate Governance Section in principle cover listed companies, although some of them are considered to be usefully applicable also to non listed companies. The actions presented in the other sections are generally applicable to all companies, except for the section on pyramids which by nature covers listed companies only.
- 37.Cadbury Report, December 1992. For a more comprehensive definition, see for example the OECD Principles of 1999: "Corporate governance involves a set of relationships between a company's management, its board, its shareholders and other stakeholders. Corporate governance also provides the structure through which the objectives of the company are set, and the means of attaining those objectives and monitoring performance are determined." Corporate governance essentially focuses on the problems that result from the separation of ownership and control, and addresses in particular the principal-agent relationship between shareholders and directors.
- 38.Comparative Study of the Corporate Governance Codes relevant to the European Union and its Member States : europa.eu.int/comm/internal_market/ en/company/company/news/corp-gov-codes-rpt_en.htm
- 39.In developing its approach, the Commission has paid particular attention to the following needs: considering where possible a) the use of alternatives to legislation, and b) the preference to be given to disclosure requirements (because they are less intrusive in corporate life, and they can prove to be a highly effective market-led way of rapidly achieving results).
- 40.In this respect, it is considered essential for the restoration of public confidence that proper information is given on the way in which the company has organised itself at the highest level to establish and maintain an effective internal control system.
- 41.See Directive 2001/34/EC of the European Parliament and of the Council of 28 May 2001 on the admission of securities to official stock exchange listing and on information to be published on securities (Title IV - Chapter III 'Obligations relating to the information to be published when a major holding in a listed company is acquired or disposed of').
- 42.The home Member State shall allow issuers the use of electronic means for the purposes of conveying information to shareholders, provided such a decision is taken in a general meeting and meets a series of conditions, including the individual consent of the shareholder concerned (See Article 13).
- 43.A host Member State may require issuers: a) to publish regulated information on their Internet sites, and b) to alert any interested person, without delay and free of charge, to any new disclosure or any change to regulated information which has already been published (See Article 17).
- 44.See the relevant statements, about disclosure (Capital structures and arrangements that enable certain shareholders to obtain a degree of control disproportionate to their equity ownership should be disclosed) and about exercise of rights (shareholders should have the opportunity to participate effectively and vote in general shareholder meetings).
- 45.In developing the minimum standards applicable to the audit committee, appropriate attention will be paid to a) the access it must have to the relevant information (there might be a scope for specific consideration of the need for greater legal protection for whistleblowers) and b) the extent to which transparency on its activities is desirable.
- 46.The topics covered by the SLIM Report were as follows: removal of the requirement for an expert opinion on contributions in kind in defined circumstances, introduction of no par value shares, simplification of the rules applicable to withdrawal of shares, simplification of the rules applicable to acquisition of own shares, reduction of the scope of the prohibition of financial assistance, simplification of the rules applicable to pre-emptive rights.
- 47.Such an alternative regime would notably be based on the requirement for a solvency test before any payment of dividend or other distribution can be made.
- 48.A draft 'Ninth Company Law Directive on the Conduct of Groups containing a Public Limited Company as a Subsidiary' was circulated by the Commission in December 1984 for consultation. According to its Explanatory Memorandum, the Directive was intended to provide a framework in which groups can be managed on a sound basis whilst ensuring that interests affected by group operations are adequately protected. Such a legal framework, adapted to the special circumstances of groups, was considered to be lacking in the legal system of most Member States. Apart from its provisions dealing with the notification and disclosure of shareholdings in PLCs, which covered all PLCs, the Directive otherwise applied only when a PLC was the subsidiary of another undertaking (which could itself be a PLC, but could also be a natural person or a legal person).
- 49.Although the laws of some Member States do not prohibit a company from one of those States from absorbing a company from another Member State or from taking part in the formation of a new company by merger with a company registered in another Member State, such an operation may be carried out only with companies from Member States where it is likewise not prohibited by law. The adoption of the European Company Statute offers one solution to these problems (a European Company may be created inter alia by merger of two or more public limited liability companies from different Member States). A proposal for a Tenth Company Law Directive is nevertheless desirable, since a) companies may wish to enter into a cross-border merger without creating a European Company, and b) other types of companies may wish to enter into a cross-border merger.
- 50.In the absence of legislation governing the cross-border transfer of seat, such an operation is currently impossible or at least contingent on complicated legal arrangements. This is because Member States laws do not provide the necessary means and, when a transfer is possible by virtue of simultaneously applying national laws, there are frequent conflicts between those laws because of the different connecting criteria applied in the Member States. A legislative effort is needed in this field in order to implement the freedom of establishment in the manner intended by the Treaty.
- 51.THE FIRST COMPANY LAW DIRECTIVE, WHICH CONTAINS ESSENTIAL DISCLOSURE REQUIREMENTS (COMPANIES MUST FILE A SERIES OF DOCUMENTS AND PARTICULARS WITH A REGISTER, AND INTERESTED PARTIES CAN OBTAIN A COPY THEREOF), APPLIES ONLY TO LIMITED LIABILITY COMPANIES, AND NOT TO A SERIES OF ALTERNATIVE FORMS OF ENTERPRISE. THE CREATION OF A FRAMEWORK FOR DISCLOSURE OF BASIC DATA ON CERTAIN OTHER LEGAL ENTITIES ENGAGED IN ECONOMIC ACTIVITIES IS THEREFORE PERCEIVED AS A USEFUL TOOL FOR TRADE AND COMPETITION WITHIN THE INTERNAL MARKET.
- 52.SEE IN THIS RESPECT THE STUDY 'TRANSPARENCY AND MONEY LAUNDERING: A STUDY OF THE REGULATION AND ITS IMPLEMENTATION, IN THE EU MEMBER STATES, THAT OBSTRUCT ANTI-MONEY LAUNDERING INTERNATIONAL CO-OPERATION (BANKING/FINANCIAL AND CORPORATE/COMPANY REGULATIVE FIELDS)', SUBMITTED TO THE COMMISSION IN OCTOBER 2001 BY THE TRANSCRIME INSTITUTE (UNIVERSITY OF TRENTO, ITALY). THIS STUDY, COMMISSIONED PURSUANT TO CONCLUSION N°58 OF THE TAMPERE SPECIAL EUROPEAN COUNCIL OF 1999 AND THE JOINT ECOFIN/JAI COUNCIL OF OCTOBER 2000, PRESENTS RECOMMENDATIONS TO INCREASE THE TRANSPARENCY OF LIMITED LIABILITY COMPANIES AS WELL AS OTHER VEHICLES (AS TRUSTS).
- 53.De Europese Commissie kent nummers toe aan officiële documenten van de Europese Unie. De Commissie maakt onderscheid in een aantal typen documenten door middel van het toekennen van verschillende nummerseries. Het onderscheid is gebaseerd op het soort document en/of de instelling van de Unie van wie het document afkomstig is.
- 54.De Raad van de Europese Unie kent aan wetgevingsdossiers een uniek toe. Dit nummer bestaat uit een vijfcijferig volgnummer gevolgd door een schuine streep met de laatste twee cijfers van het jaartal, bijvoorbeeld 12345/00 - een document met nummer 12345 uit het jaar 2000.
- 55.Het interinstitutionele nummer is een nummerreeks die binnen de Europese Unie toegekend wordt aan voorstellen voor regelgeving van de Europese Commissie.
Binnen de Europese Unie worden nog een aantal andere nummerseries gebruikt. Iedere instelling heeft één of meerdere sets documenten met ieder een eigen nummering. Die reeksen komen niet overeen met elkaar of het interinstitutioneel nummer.
- 56.Deze databank van de Europese Unie biedt de mogelijkheid de actuele werkzaamheden (workflow) van de Europese instellingen (Europees Parlement, Raad, ESC, Comité van de Regio's, Europese Centrale Bank, Hof van Justitie enz.) te volgen. EURlex volgt alle voorstellen (zoals wetgevende en begrotingsdossiers) en mededelingen van de Commissie, vanaf het moment dat ze aan de Raad of het Europees Parlement worden voorgelegd.
- 57.Als dag van bekendmaking van een Europees besluit geldt de dag waarop het besluit in het Publicatieblad wordt bekendgemaakt, en daardoor in alle officiële talen van de Europese Unie bij het Publicatiebureau beschikbaar is.