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Corporate Governance and Company Law News

Topics: Summary Report on the Consultation and Public Hearing on Future Priorities for the Action Plan, European Parliament resolution on recent developments and prospects in relation to company law, Directive regarding the transfer of the registered office of a company (14th company law directive), European Private Company (EPC), Corporate Governance Forum, European Cooperative Society (ECS)

Summary Report on the Consultation and Public Hearing on Future Priorities for the Action Plan (published on 7 July 2006)

Follow up of the 2003 Action Plan in Company Law and Corporate Governance (COM(2003)284). The consultation period was from the beginning of 2006 until the end of March 2006. The Commission asked all stakeholders for their opinion on 14 questions (for example, SEs, the 14th company law directive, EPC, shareholder rights directive). The summary report provides an overview on the input of the 266 stakeholders who participated in the consultation, but does not lay down which proposals the Commission will launch next. The SEEurope network and several other linked institutions participated in the consultation, and the summary report contains a number of our statements: for example, ‘The trade unions considered that a social approach to corporate governance issues was missing’ (p. 7). Web link:

http://ec.europa.eu/internal_market/company/docs/consultation/final_report_en.pdf

European Parliament resolution on recent developments and prospects in relation to company law

(adopted on 4 July 2006, document: 2006/2051(INI)).

The document provides a good overview of what is going on in company law at the moment and presents the European Parliament’s opinion on these issues.

It contains a number of interesting statements in favour of participation, such as.: ‘a statutorily regulated system of employee participation at the level of undertakings, as found in a large number of Member States, should be seen as forming an integral part of European corporate governance’ (Point F; see also: 3,14,33,44).

Web link: http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//TEXT+TA+P6-TA-2006-0295+0+DOC+XML+V0//DE

Directive regarding the transfer of the registered office of a company (14th company law directive)

The 14th directive was also part of the recent Commission consultation. The Commission noted in its summary report: ‘Several stakeholders took a position on employee participation, calling for a satisfactory standard of employee participation’ (p. 18). The European Parliament supported the participation issue in the abovementioned resolution as well (point 33). The Commissioner has not yet decided to launch the proposal, but it seems quite probable that he will do so. A first proposal will most likely be launched by the end of 2006. Before publication regulatory impact assessments must be carried out.

European Private Company (EPC)

The EPC statute should provide a legal form for SMEs. A feasibility study was presented to the public on 13 December 2005. The study found great interest in this legal form. The same conclusion could be drawn from a public hearing of the EP legal committee on 22 June 2006. It is probable that the Commission will come out with a proposal. In the context of the EPC the participation issue will also be on the agenda. In its summary report on the recent consultation the Commission noted: ‘About 10% of those who responded to the question suggested the inclusion of the rules on employee participation in the proposed regulation. Among the respondents who referred to that issue there were proposals to either follow the rules of the SE in that respect, limit the application of the Statute to companies with fewer than 500 employees or seek a compromise’ (p. 25).

Web link to contributions for the EP public hearing: http://www.europarl.europa.eu/comparl/juri/hearings/default_en.htm

Web link to the feasibility study on the EPC:
http://ec.europa.eu/enterprise/entrepreneurship/craft/craft-priorities/craft_spe_event.htm

Corporate Governance Forum

The European Commission has set up the European Corporate Governance Forum to examine best practices in Member States with a view to enhancing the convergence of national corporate governance codes and providing advice to the Commission. The Forum comprises fifteen senior experts from various professional backgrounds. At its last meeting in June the role of employees as stakeholders in Corporate Governance was on the agenda. A report should be published fairly soon.

Web link: http://ec.europa.eu/internal_market/company/ecgforum/index_en.htm

European Cooperative Society (ECS)

The European Court of Justice (ECJ) has taken a decision on the legal basis of the ECS on the 2nd of May. The ECJ concluded that Art. 308 EC was the right legal basis for the regulation on the ECS. In contrast, the EP and the Commission argued that the legal basis is Art. 95 EC. That would mean that the the co-decision-making procedure would be applied under Art. 251 EC (more influence of the European Parliament). In the context of the SE the same problem occurred, but under an informal compromise the EP did not take the issue before the ECJ (Case number: C-436/03). It is probable that the Commission will in future take Art. 308 EC as the legal basis for the EPC.

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