Consultation: plan reviewed to promote competition in the EU, corporate lawyers told

Better regulation and increased competition will be at the heart of the European Commission's revised company law action plan, the acting director of the directorate-general for internal market and services told a meeting of practitioners at the Law Society last week.


The commission published a consultation to review its action plan, Modernising company law and enhancing corporate governance in the European Union, at the end of last year.


Pierre Delsaux said the original plan, which was issued in May 2003 and followed the work of a high-level group of company law experts, was not necessarily appropriate now as 'the climate had changed'.


In the wake of Enron, Parmalat and other corporate collapses, the focus had been on avoiding further scandals and protecting investors, he said. But now that most of the original plan's short-term measures had been delivered, it needed to be reviewed to help foster greater competition in the EU.


Mr Delsaux said the commission is interested in hearing views on areas including the principle of one share one vote, the rules on the disclosure of investment policy by institutional investors, and the directive on the transfer of a company's registered seat from one member state to another. It is also looking at consolidating and simplifying existing company law directives.


Mr Delsaux also emphasised that the commission wanted to retain flexibility across the EU, and would only propose new legislation in this area as a last resort and when it was clearly necessary.


Vanessa Knapp, a partner at City firm Freshfields Bruckhaus Deringer and past chairwoman of the Law Society's company law committee, welcomed the consultation and the commission's shift in focus.


'The adoption of better regulation principles should result in less regulation and legislation and greater flexibility. In the past, there has been a tendency for the commission to think that legislation was a good thing in its own right,' she said.


However, Ms Knapp anticipated difficulties with some of the proposals. 'The issue of one share one vote is very complicated and means different things to different people. And on whether institutional investors should have to disclose their voting policies, it is not clear why this would be a good idea or to whom the disclosures should be.'


Ms Knapp also questioned whether the amount of money that would need to be allocated to the huge task of codification could not be better spent.


The consultation will run until 31 March 2006 and will be followed by a public hearing in Brussels in May.