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Corporate Governance and Company Law News

Topics: Corporate Governance Forum, Corporate Governance Advisory Group, New Consultation Regarding Shareholders’ Rights, European Parliament Resolution on Corporate Social Responsibility, Implementation of the Takeover Directive (13th Company Law Directive), PES Paper in the Context of the Regulation of Alternative Investment Vehicles, Number of SEs, Books & Articles

Corporate Governance Forum

The European Corporate Governance Forum held its last meeting on 12 April. Agenda items included the issue of proportionality of capital and control (new term for ‘one share, one vote’), the implications of hedge funds and private equity for the current approach to corporate governance, and updates on several Commission initiatives, such as the report on the implementation of the Commission recommendations on independent directors and on directors’ remuneration.

Moreover, the Forum has published its annual report 2007. On page 5 (point 7.3) the report mentions the ETUC conference which took place in 2006 in Vienna and dealt with employee stakeholders in respect of corporate governance. It is also mentioned that the Forum will further consider how to approach this subject. The main items of the Forum’s work in 2007 will be the proportionality principle and intensifying contacts with the national bodies dealing with corporate governance questions. The proportionally principle is very much based on a capital market ideology which sees shareholders as “the kings” in company decision-making (Commissioner McCreevy). At the same time it ignores other stakeholders, such as employees.

Links: http://ec.europa.eu/internal_market/company/docs/ecgforum/agenda-12-04-07_en.pdf (agenda)

http://ec.europa.eu/internal_market/company/ecgforum/index_en.htm (Commission page regarding the Forum)

http://ec.europa.eu/internal_market/company/docs/ecgforum/ecgf-annual-report-2006_en.pdf (Annual Report 2006)

Corporate Governance Advisory Group

The Advisory Group last met on 8 March. The minutes of the meeting contain, besides other issues, some information on the 14th company law directive and on the European Private Company.

Links: http://ec.europa.eu/internal_market/company/docs/advisory-committee/minutes6_en.pdf (minutes)

http://ec.europa.eu/internal_market/company/advisory/index_en.htm (Commission page on the Advisory Group)

New Consultation Regarding Shareholders’ Rights

The Commission launched a new consultation in the context of shareholders’ rights. The objective of this third consultation is to assess the need for further measures in the field of shareholders’ rights to complement the future directive on the exercise of shareholders’ voting rights (see Newsletter 3). In the end that new step may result in a new Commission Recommendation.
The consultation document contains the following subjects: language of the meeting documents, depository receipts, stock lending, chains of intermediaries,
disclosure of investors, management companies of investment schemes.

link: http://ec.europa.eu/internal_market/company/docs/shareholders/consultation3_en.pdf (consultation document)

European Parliament Resolution on Corporate Social Responsibility

On 13 March the European Parliament adopted a resolution on Corporate Social Responsibility. In the resolution the Commission is reminded inter alia of the Parliament's invitation to put forward a proposal ‘to amend the Fourth Council Directive on the annual accounts of certain types of companies (the Fourth Company Law Directive) so that social and environmental reporting is included alongside financial reporting requirements’.

Links: http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//TEXT+TA+P6-TA-2007-0062+0+DOC+XML+V0//EN (resolution provisional edition)

Implementation of the Takeover Directive (13th Company Law Directive)

On 21 February the Commission published a Report on the implementation of the Directive on Takeover Bids. The whole report is driven by a capital market-orientated approach. The Commission comes to the conclusion that a large number of Member States have been implementing the directive in a protectionist way. Furthermore, the Commission thinks that there is a risk that the board neutrality rule, as implemented in Member States, will hold back the emergence of a European market for corporate control rather than facilitate it. The fact that the directive also contains rules on employee information does not arise in the Commission report, however. The Commission report was discussed by the JURI committee of the European Parliament at the beginning of May. The MEPs criticised the report because there is little sense coming up with a report at this stage: it would make more sense to wait for the outcome of implementation of the takeover directive. The upshot of the discussion was that the Commission should not come up with a revised draft of the takeover directive before 2011.
link: http://ec.europa.eu/internal_market/company/docs/takeoverbids/2007-02-report_en.pdf (Commission report)

PES Paper in the Context of the Regulation of Alternative Investment Vehicles

The Socialist group in the European Parliament has published, under the direction of Poul Nyrup Rasmussen, a detailed paper dealing with private equity and hedge funds, "Hedge Funds and Private Equity – A Critical Analysis " (ca.300 pages). The report mentions six main concerns of the MEPs arising from these investment vehicles: 1. risks to pensions; 2. viability of private companies; 3. security of service provision; 4. decent work and a say for the workforce in company affairs; 5. financial market stability; 6. ethics, including the fees charged by financiers and the low taxes they pay.

link: http://www.socialistgroup.eu/gpes/media/documents/33841_33839_hedge_funds_executive_summary_070329.pdf (executive summary)

Number of SEs

In the meantime, 71 SEs have been established according to the research of the SEEurope network. It would be very useful in transparency terms to set up an EU-level company register for SEs. This could be one topic for the future revision of the SE acquis. For more information on existing SEs please visit the SEEurope webpage.

link: information on established SEs on worker-participation.eu

Books & Articles

The Hans Böckler Foundation has published a book on Corporate Governance edited by Lionel Fulton, entitled The Forgotten Resource: Corporate Governance and Employee Board-Level Representation. The Situation in France, the Netherlands, Sweden and the UK. ISBN: 978-3-86593-070-5

In the German law magazine Neue Zeitschrift für Gesellschaftsrecht (NZG) an article was published which concluded that the direct transfer of the seat of an SE out of the EU is not in line with SE legislation; Heuschmid/Schmidt, NZG 2007, pp. 57ff.

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