Call for creation of company law forum

Date: 18/06/1998

By Chris Johnstone

THE European Commission is seeking to keep company law issues on the boil in spite of the latest failure to find a formula for setting up pan-European firms.

A Commission reflection paper will be issued before the summer break calling for the creation of a company law forum staffed by national experts.

This forum could discuss upcoming issues, such as whether virtual voting by shareholders or board members could be part of Europe's corporate future, and consider whether EU laws should be proposed.

There are currently no national rules to cover this possibility, even though virtual conferences are increasingly common.

The forum could also discuss informally the latest company measures introduced nationally and consider whether there was room for them to be taken up at European level.

Company law, something of a Cinderella sector for the Commission and national governments, suffered a severe set-back earlier this month when ministers failed to agree the format for a European company.

Negotiations stalled again over the issue of workers' rights to representation on company boards, dashing hopes of clearing the legislative log-jam and making progress on two follow-up measures to give firms more freedom to set up or move around the EU.

Proposals allowing companies to cross borders and transfer their headquarters to a new country without the expense of winding up the existing business were ready to be tabled if ministers had agreed on the European Company Statute.

The proposed 14th Directive on Company Law would help firms whose business started in one country but whose expansion had resulted in their centre of gravity moving elsewhere.

Another proposal would smooth the way for cross-border mergers, a useful measure given the number of deals already under way, and likely to multiply, in anticipation of the single currency.

At the moment, mergers which straddle EU borders must meet two, or possibly even more sets of national regulations. The proposed 10th Directive on Company Law would offer a single set of harmonised rules.

Agreement on worker representation is the key to pushing all of these proposals forward.

Germany, and Nordic countries which allow high levels of employee consultation, will not agree to measures which could enable their businesses to transfer elsewhere in order to bypass local laws.

No fresh moves to find agreement on the European Company Statute are now expected before September's national elections in Germany, given that Bonn is highly unlikely to show any flexibility on such a sensitive domestic issue in the run-up to the vote.

Commission reflection paper to call for the creation of a company law forum staffed by national experts.