Activites

• 2004/04/21 Decision by Parliament, 1st reading/single reading
  • T5-0346/2004 summary

    The European Parliament adopted a resolution based on the own-initiative report drafted by Fiorella GHILARDOTTI (PES, I) on modernising company law. Parliament stated that the events which occurred recently, first in Japan and subsequently in the United States and Europe, involving major industrial groups (in particular Parmalat), illustrate that the rules on transparency that should provide a frame of reference for action by European companies need to be more clearly defined. The effects of such scandals are borne in particular by small shareholders, savers investing in funds or trusts and other creditors as well as workers, who lose their jobs and salaries. Furthermore, the current restructuring process is leading to greater fragmentation, outsourcing and delocalisation among companies, sometimes making it difficult to make out the actual composition of a company or where its real decision making centres are, and often making it almost impossible to understand holdings and cross-ownership of shares or the rules and contractual provisions governing workers whose jobs have been dislocated to different parts of a pyramid or group structure. Therefore Parliament felt that, whilst respecting the traditions in Member States' company law provisions in line with the principle of subsidiarity, it supported the need for urgent action to be taken on European company law. The enlargement process and subsequent consolidation of the internal market will make it necessary to harmonise or coordinate the different national laws so as to establish a general framework that will allow for mobility between European countries. Parliament put particular emphasis on the importance of paying attention to the fact that the aim of measures to harmonise EU company law is to help create a level playing field for companies and that a level playing field must be ensured in the case of all measures. Parliament supported the Commission's view that competition between national company rules is healthy, and therefore considered that competition under level playing field conditions may take the place of efforts to bring about maximum harmonization. On the question of stakeholders, Parliament felt that European corporate governance and company law must encompass substantial arrangements to inform and consult workers and that all directives concerning company law must lay down an obligation to inform and consult workers' representatives when it is necessary to take important decisions affecting the continued survival of companies and jobs. It is necessary in all cases to distinguish between large and small shareholders, mainly as regards the use of modern technology in the exercise of shareholders' voting rights, given that small shareholders are usually more at risk Parliament agreed with the Commission that there is no need to draw up a specific European code of corporate governance, but the EU should spell out a framework of international standards to be observed and determine procedures for these to be transposed, so as to supplement the existing regulatory provisions at national level. Priorities at EU level should be in genuine cross-border areas. Parliament warned of the emergence of a tendency to copy US solutions for US problems and to import US traditions and rules that would be counterproductive for proper corporate governancein Europe. On national codes, Parliament stated that is vital that the Member States' supervisory and monitoring bodies should meet three requirements: stability of the financial system, transparency of markets, corporate balance sheets and corporate behaviour, and safeguarding competition. In particular, it is vital to: - ensure the autonomy, independence and integrity of members of the management and supervisory boards, auditors and rating companies; - ensure that the authorities responsible for monitoring the stock exchange are able to function effectively, giving them the necessary resources and staff; - create framework conditions for the work of anti-trust authorities; - promote an effective system of cooperation between central banks. Parliament maintained that the basic principles of corporate social responsibility must be fully integrated into all spheres of Community activity, particularly company law, the internal market, competition policy, legislation on financial markets, commercial policy, the common foreign and security policy, and development cooperation policy. In order to attain these objectives, there must be a distinction drawn between those listed on the stock exchange, companies not listed on the stock exchange and particularly small and medium-sized businesses in this category. Parliament went on to regret that the Commission makes no mention of the consequences for corporate governance of certain practices resulting from differences in the financing of companies, especially between the Anglo-Saxon tradition - where share ownership spread through financial markets predominates - and the continental tradition where banks and majority shareholders play a more important role. Finally, Parliament insisted on the need to guarantee that, in the case of listed companies, the possibility of being audited and advised by the same firm is ruled out.�

• 2004/04/19 Debate in Parliament
  • Debate in Parliament
• 2004/04/06 Vote in committee, 1st reading/single reading
  • A5-0253/2004
• #2525
• 2003/09/22 Council Meeting
• 2003/09/04 Committee referral announced in Parliament, 1st reading/single reading
• 2003/05/21 Non-legislative basic document published
  • COM(2003)0284 summary

    PURPOSE : to outline the approach that the Commission intends to follow in the area of company law and corporate governance. CONTENT : this document outlines the EU company law acquis and sets out the reasons why a fresh impetus to the harmonisation of company law is needed. These include the following: - making the most of the Internal Market: the growing trend of European companies to operate cross-border in the Internal Market calls for common European company law mechanisms, inter alia, to facilitate freedom of establishment and cross-border restructuring; - integration of capital markets: dynamic securities markets are vital to Europe's economic future. This requires giving both issuers and investors the opportunity to be far more active on other EU capital markets and to have confidence that the companies they invest in have equivalent corporate governance frameworks. Listed companies want a more coherent, dynamic and responsive European legislative framework; - to maximise the benefits of modern technologies : the rapid development of new information and communication technology is affecting the way company information is stored and disseminated, as well as the way corporate life is conducted; - the forthcoming enlargement will increase the diversity of the national regulatory frameworks in the EU, underlying further the importance of a principles-based approach able to maintain a high level of legal certainty in intra-Community operations; - recent financial scandals have prompted a new debate on corporate governance. Investors are demanding more transparency and better information on companies, and are seeking to gain more influence on the way the public companies they own operate. Shareholders own companies, not management - yet far too frequently their rights have been trampled on by greedy and occasionally fraudulent corporate behaviour. A new sense of proportion and fairness is necessary. The Commission identifies the following policy objectives: 1) Strengthening shareholders rights and third parties protection must be at the core of any company law policy. Protecting the savings and pensions of millions of people and strengthening the foundations of capital markets for the long term in a context of diversified shareholding within the EU, is essential if companies are to raise capital at the lowest cost. Reform should be organised along the following lines: - initiatives should be taken with a view to enhancing shareholder rights and clarifying management responsibilities and provisions related to the protection of creditors should be modernised with a view to maintaining a high quality framework (e.g.with respect to capital maintenance and alteration); - a proper distinction should be made between categories of companies. A more stringent framework is desirable for listed companies and companies which have publicly raised capital; - modern technologies can significantly help members and third parties to exercise their rights effectively; - a limited number of measures aimed at combating fraud and abuse of legal forms. 2) Fostering efficiency and competitiveness of business. This should be promoted along the following lines: - EU initiatives in the area of company law should address a number of specific cross-border issues (e.g. cross-border mergeror transfer of seat, crossborder impediments to the exercise of shareholders rights...), where Community action may be the only way to achieve the pursued objectives; - flexibility should be available to companies as much as possible: where systems are deemed to be equivalent, maximum room should be left open to the freedom of the parties involved. The Commission sets out an Action Plan, which identifies the nature and the scope of the actions, proposes the type of regulatory instrument which should be used, and establishes clear priorities for the short, medium and long term. It discusses the following issues: - enhancing corporate governance disclosure; - strengthening shareholders rights, especially with regard to access to information; - modernising the board of directors, and minimum standards applicable to the creation, composition and role of the nomination, remuneration and audit committees; - co-ordinating the corporate governance efforts of Member States; - capital maintenance and alteration; - groups of companies, with specific reference to financial and non financial information, the implementation of a group policy and pyramids; - corporate restricting and mobility; - the European private company, the European Co-operative Society and other forms of enterprise.�

  • DG [{'url': 'http://ec.europa.eu/dgs/internal_market/', 'title': 'Internal Market and Services'}],

Documents

• Non-legislative basic document published: COM(2003)0284
• Committee report tabled for plenary, single reading: A5-0253/2004
• Debate in Parliament: Debate in Parliament
• Decision by Parliament, 1st reading/single reading: T5-0346/2004

History

(these mark the time of scraping, not the official date of the change)