REPORT FROM THE COMMISSION RESULTS OF THE FOURTH PHASE OF SLIM

REPORT FROM THE COMMISSION

RESULTS OF THE FOURTH PHASE OF SLIM

INTRODUCTION

The SLIM initiative - Simpler Legislation for the Internal Market - was launched by the Commission in May 1996 with the objective of identifying ways in which Single Market legislation could be simplified.

In October 1998, the Commission announced the launch of the fourth phase of SLIM [1]. This phase concentrated on three legislative areas: Company Law, the Dangerous Substances Directive and Directives on Pre-packaged products. These sectors were selected following consultations with Member States, the European Parliament, the Economic and Social Committee and representatives of business and industry.

[1] SEC(1998)1944, "Simpler Legislation for the Single Market (SLIM): Extension to a fourth phase.

SLIM PHASE IV

COMPANY LAW

Background

The Commission's Working paper on the extension of SLIM to a fourth phase highlighted the need to review the provisions of two Directives on Company Law: the First and Second Directives [2].

[2] First Council Directive 68/151/EEC of 9 March 1968 on co-ordination of safeguards which, for the protection of the interests of members and others, are required by Member States of companies within the meaning of the second paragraph of Article 58 of the Treaty, with a view to making such safeguards equivalent throughout the Community, OJ L 065, 14.3.1968, Second Council Directive 77/91/EEC of 13 December 1976 on co-ordination of safeguards which, for the protection of the interests of members and others, are required by Member States of companies within the meaning of the second paragraph of Article 58 of the Treaty, in respect of the formation of public limited liability companies and the maintenance and alteration of their capital, with a view to making such safeguards equivalent, OJ L 026, 30.1.1977.

The First Directive deals mainly with the compulsory disclosure of essential information on companies and its general availability to interested parties. Traditionally this information is published in national gazettes and is available in paper form from national registries. It was widely agreed that developments in information technology provided scope for simplifying and modernising the compilation and dissemination of this information.

The Second Directive, covering inter alia the formation of public limited companies, the maintenance or alteration of capital and equivalent protection for both shareholders and creditors, has been in operation since 1977. In applying the Directive, it has become apparent that some of its provisions, particularly those dealing with company capital, require modification in order to allow greater flexibility to companies and share holders. In addition, it was felt that other provisions dealing with the formation of companies represent an excessive administrative burden and should be replaced by less onerous rules.

Recommendations [3]

[3] The full list of recommendations pertaining to the two Company Law Directives is included in Annex 1.

First Council Directive

In its review of the First Directive, the SLIM team concluded that the new information technologies currently available should be harnessed in order to modernise and simplify registration and disclosure rules in operation under the directive since 1967. With that in mind, the team recommended that current procedures in Articles 2 to 6 of the Directive be replaced by a system based on :

- electronic registration of company documents leading in turn to better access to and dissemination of this information.

It was recognised that any move towards fully electronic company registers would require careful planning and preparation and that Member States should have an interim (provisional) period of up to five years to make the transition. During this period, Member States could opt for a continuation of their (non electronic) current filing system provided documents are converted into electronic format. Once the interim period has elapsed, pertinent company information should be filed and disseminated electronically and the contents (filed) should be in the same format;

- the filing of company documents in one or more Community languages (even in the absence of foreign establishment of a company) in accordance with the rules applicable to the home state of the company;

- the voluntary filing and dissemination of documents in other languages on condition that one language is identified as the authentic version and is accorded that status.

The team addressed related disclosure requirements fixed in the Eleventh Directive and relating to the cross-border establishment of companies within the European Community. With a view to removing existing requirements, the team recommended that the host state should no longer impose additional requirements but should rely on all (compulsory) information filed in and retrievable from the (proposed) electronic database held in the company register of the home state.

Team members also reviewed current procedures (Article 9.2.3.) on and levels of disclosure pertaining to powers of representation of company office holders and concluded that this should be extended to cover company representatives with general powers of representation and that in the event that these powers are limited, no disclosure would be required.

The Commission's position

-Electronic disclosure

The Commission supports these recommendations and will undertake to examine how best to amend the First Directive accordingly. In that context, it will give careful attention to the length of the transition period and accessibility to and the security of electronically managed information.

-Use of languages

The Commission agrees with the overall objective of this proposal and will examine it further in order to establish its viability in practice.

-Cross-border establishment (Eleventh Directive)

The Commission undertakes to examine to what extent existing disclosure requirements for branches can be simplified in the light of the recommendation.

-Powers of Representation

The Commission notes that this recommendation would introduce a new disclosure requirement for companies. Before undertaking to prepare a legislative proposal to amend the Directive, the Commission considers that further analysis and research is required.

Second Council Directive

In its review of the Second Directive, the team focused on the issues set out below.

-Contribution in kind (Articles 10, 11 and 27)

Under current rules expert valuations of possible contributions in kind to company capital on formation or subsequently is required by the Directive. In the team's opinion there is scope for reducing the need for expert valuations as these are not always strictly necessary on all occasions and recommends that these should not be sought in the following cases :

- assets (offered as a contribution) which have already been subject to an independent, recent and reliable valuation provided these assets have not undergone major changes;

- transferable securities provided these are valued at the price at which they are traded on a "regulated" market.

The team also drew attention to some problems regarding the definition of contribution in kind and in particular the valuation of claims against the company accepting them.

-Nominal Value of Shares (Article 8)

The application of Article 8 dealing with the issuing of shares with or without nominal value was reviewed by the team, which noted that there is some uncertainty as to whether that article applies on incorporation and/or to a new share issue. The team also considered whether the present notions of nominal value and accountable value as set out in the article should be retained or if simplification (of current rules) would result from the adoption of a system whereby shares merely represented a fraction of the overall value of the company.

-Withdrawal of Shares (Article 36)

Current rules only provide for the withdrawal of shares if withdrawal is authorised by the statute of the company or articles of incorporation at the moment the shares (which are the subject of withdrawal) were subscribed. The team considered that this does not provide sufficient flexibility and recommended changes to the current rule.

-Acquisition of Shares (Article 19)

In its review of current procedures governing the acquisition by a company of its own shares, the team noted that the limitation of 10 percent of outstanding shares can be evaded and recommended the adoption of new procedures.

-Financial Assistance (Article 23)

The team considered that current prohibitions on financial assistance should be reduced to a practical minimum, thereby allowing greater flexibility, and recommended a level equal to :

- the amount of the distributable net assets or,

- to the subscription of newly issued shares.

-Pre-emptive rights in listed companies (Article 29)

The team recommended two changes with respect to pre-emptive rights. First, the board of directors should be empowered, for period not exceeding five years, to issue additional shares against a contribution in cash without pre-emption rights, provided that these shares are issued at market prices or slightly below and second, no expert report (on the value of the shares) is required.

The Commission's position

-Contribution in kind

The Commission accepts both recommendations and will undertake work to present appropriate proposals amending the Directive accordingly. With respect to the definition of contribution in kind, the Commission agrees on the need to clarify the meaning of the term.

-Nominal Value

The Commission recognises the need to clarify the current application of Article 8 and conduct further research with respect to the possibility of introducing shares that merely represent a fraction of the company and which do not have any direct relationship between their value and the capital of the company.

-Withdrawal / Acquisition of Shares / Financial Assistance / Pre-emptive Rights

The Commission endorses the recommendations made with respect to these four issues and will undertake work to in order to present appropriate proposals.

Conclusions on Company Law

The SLIM Team have proposed a series of far reaching proposals covering two major areas of Company Law. These recommendations address the need for the introduction of a modernised and simplified and Europe wide Company Law registration system which could provide easier, less costly and greater access to company documents thus ensuring better legal protection and facilitating cross border establishment. Taken together, these recommendations represent an opportunity to bring about significant simplification and modernisation and a reduction in costs and procedures while at the same time safeguarding the interests of shareholders and creditors.

For its part, the Commission has indicated its broad agreement with all the recommendations presented while in some cases reserving the right to undertake further research, consultation and analysis prior to committing itself to presenting proposals to modify the two directives. Copies of the report of the SLIM team have been sent to Member States who have been asked to forward their observations on the recommendations. These observations will be reviewed by the Commission which will the publish a Communication next year outlining how it intends to proceed.

DANGEROUS SUBSTANCES DIRECTIVE (DSD)

Background

The SLIM Team reviewed the application of Directive 67/548/EEC [4] on the approximation of laws, regulations and administrative provisions relating to the classification, packaging and labelling of dangerous substances. The DSD is an important Single Market Directive and one of its key objectives is to ensure the operation of the European Single Market in chemicals while providing high standards of human health and environmental protection.

[4] Council Directive 67/548/EEC of 27.6.1967 on the approximation of laws, regulations and administrative provisions relating to the classification packaging and labelling of dangerous substances, OJ L 96, 16.8.1967; Commission Directive 93/67/EEC of 20.7.1993 laying down the principles for assessment of risks to man and the environment of substances notified in accordance with Council Directive 67/548/EEC, OJ L 227, 8.9.1993; Commission Directive 91/155/EEC of 5.3.1991 defining and laying down the detailed arrangements for the system of specific information relating to dangerous preparations in implementation of Article 10 of Directive 88/379/EEC, OJ L 076, 22.3.1991; Council Regulation 793/93/EEC of 23.3.1993 on the evaluation and control of the risks of existing substances, OJ L 074, 5.4.1993; Council Directive 76/769/EEC of 27.7.1976 on the approximation of the laws, regulations and administrative provisions of the Member States relating to restrictions on the marketing and use of certain dangerous substances and preparations, OJ L 262, 27.09.1976; Council Directive 98/24/EC of 7.4.1998 on the protection of the health and safety of workers from the risks related to chemical agents at work, OJ 131, 5.5.1998; Council Directive 90/394/EEC of 28.6.1990 on the protection of workers from the risks related to exposure to carcinogens at work, OJ L 196 26.7.1990; Directive 99/45/EC of the European Parliament and Council of 31.5.1999 concerning the approximation of the laws, regulations and administrative procedures of the Member States relating to the classification, packaging and labelling of dangerous preparations, OJ L 200, 30.7.1999.

The Directive introduced harmonised provisions on the classification of dangerous substances into fifteen categories (of danger) and rules on the labelling, handling and use of these substances. The Directive, following its sixth amendment in 1979, also regulates the introduction, on to the Community market, of any new chemical substances. Since that date, some 2400 new substances have been placed on the market.

Since its adoption in 1967, the Directive has been amended on nine occasions and its nine annexes have been adapted 25 times to take account of the increase of scientific and technical knowledge in the field of dangerous chemical substances.

The Directive is closely linked to other Community legislation dealing with chemicals and dangerous substances such as : Directive 93/67/EEC on risk assessment for "new" substances, Directive 91/155/EEC on the safety data sheet, Regulation EEC 793/93 on the evaluation and control of the risks of "existing substances", Directive 76/769/EEC on the marketing and the use of dangerous substances, Directive 98/24/EC on the protection of the health and safety of workers from the risks related to chemical agents at work, Directive 90/394/EEC on the protection of workers from carcenogens and the more recent dangerous Preparations Directive 99/45/EC.

The review conducted by the SLIM team aimed at presenting proposals which would inter alia :

- rationalise the structure of the Directive : separate out policy and technical details so as to make the legislation more transparent and easier to modify;

- facilitate the introduction of quicker processes for classifying substances and making better use of available data on dangerous substances;

- simplify notification procedures for intermediates and modify the notification system for low volume substances;

- reallocate management and monitoring responsibilities (between the Commission, competent national authorities and producers) and streamline working procedures to enhance efficiency and make more effective use of existing resources and expertise.

The review took place in parallel with a broader evaluation of EU legislation and policy considerations in the field of chemical products and ongoing international efforts to develop a globally harmonised system for the classification and labelling of chemicals.

Recommendations [5]

[5] The full list of recommendations on Dangerous Substances is included in Annex 2.

The team presented some forty eight recommendations which inter alia address : structure of the Directive, the classification of substances, the notification of new substances and compliance with its provisions.

It is not proposed to examine in detail all of these recommendations, which are included in annex 2 of this Communication but rather highlight some of the more significant proposals and summarise the Commission's response to the team's report.

-Structure of the Directive (5 recommendations)

Given the importance of the Directive on the one hand and its complex procedures on the other, the team recommended that the legal basis (of the Directive) be re-examined in the context of a wider review of EU chemical policy, that policy and technical provisions be better delineated and that consideration be given to introducing separate legislation to cover classification and notification requirements. In addition, consideration should be given to codifying the Directive.

-Classification, packaging and labelling (13 recommendations)

The team noted international efforts, to which the Community is contributing, to develop a globally harmonised system for classification and labelling and underlined the need for the Commission to continue to evaluate these developments and their potential impact on the Directive and its possible adaptation in the future.

The team also drew attention to the need to revise classification criteria so as to take full account of the potency factor for classification and labelling purposes. In order to enhance the application of the Directive, the team recommended a thorough overhaul of Annex IV (dealing with safety instructions and warnings) with a view to its overall simplification.

On labelling in general, the team proposed a revision of articles 23-24 which are deemed excessively technical, the adoption of provisions, which could ensure that labels only carry relevant information and an overhaul of the labelling requirements for substances which are temporarily imported into the Community.

-Notification of new substances (21 recommendations)

The team undertook an extensive review of the operation of procedures governing the system of notification and while concluding that it generally functioned satisfactorily, there was scope for greater flexibility in procedures and requirements. In effect, the right balance between notification requirements which ensure public safety and appropriate exemptions to encourage the development of new and safe substances to replace existing (more toxic) substances has to be achieved.

-Procedures and shared responsibility (4 recommendations)

The team concluded that much could be achieved by thoroughly reviewing the provisions (of the Directive) dealing with the duties of the Commission, the European Chemicals Bureau, competent national authorities and producers / notifiers. In addition, the team recommended that options be explored to enhance transparency, efficiency and flexibility in the discharging these roles.

The Commission's position

The Commission acknowledges the valuable contribution made by SLIM team report and will give it careful consideration. A preliminary analysis of the report indicates that the formal adoption of many of its recommendations (approximately 65 %) would require amendment of the Directive. As further suggestions on the possible modification of the Directive are likely to result from the current wider review of chemical policy which is expected to conclude in mid 2000, the Commission will consider specific legislative proposals based on the SLIM recommendations in the context of this wider review. In the interim, the Commission will commence a detailed review of a number of proposals it considers can be acted upon in the short term and invites Member States to undertake similar work with respect to those recommendations falling within the competence of national authorities.

Conclusions on Dangerous Substances

The report of the SLIM team on Dangerous Substances contains many pertinent recommendations which both address current deficiencies in the Directive and problems in its application by Member States and the Commission in the European Community and provide guidelines on the future adaptation of the Directive. The recommendations also constitute a substantial input into the current review of chemical policy.

Many of the recommendations identify where and the extent to which simplification and clarification are required and provide indications on how this might be best achieved.

PRE-PACKAGING LEGISLATION

Background

The SLIM team on pre-packaging reviewed the rules applying to products (liquid/non liquid, food/non food) which are packed in given quantities not in the presence of the purchaser. These rules are mainly stipulated in three directives which have been substantially amended since their adoption in the mid and late nineteen seventies.

Two Directives (75/106/EEC and 80/232/EEC) fix for liquids [6] (wine, mineral water, etc.) as well as non liquid products (food and non food), the volumes and quantities in which products are pre-packaged (ranges). Directives 75/106/EEC and 76/211/EEC [7] organise the checking of the respect of volumes or quantities by manufacturers or packaging fillers, by harmonising the metrological checking methods.

[6] Directive 75/106/EEC on the approximation of the laws of the Member States relating to the making-up by volume of certain pre-packaged liquids. OJ L 42/1 of 15.2.1975 as amended.

[7] Directive 76/211/EEC on the approximation of the laws of the Member States relating to the making-up by weight or by volume of certain pre-packaged products. OJ L 46/1 of 26.2.1976 as amended

These Directives were initially adopted because the divergence of existing national laws was creating an obstacle to trade and to the provision of correct information for consumers.

These Directives were reviewed by SLIM because of their complexity (some 40 targeted products, complexity of certain ranges of values, etc.), the evolution of consumer patterns and preferences over the interim period and reservations as to the appropriateness of maintaining this type of legislation. Moreover, successive amendments of the Directives and an enlargement of the scope of the nineteen seventy five directive have made the application of this body of legislation problematic.

As the SLIM team noted in its report, the application of the Directives has proved to be difficult, notably as a result of the variety of rules and practices applied to ranges : certain ranges were made mandatory (e.g. wine) whilst others remained optional. Moreover, Member States retained the right to fix ranges at national level because of the optional character of Community rules. The variety of rules in part led to compartmentalisation into different national markets within the European Community.

In addition, the arrival of new packaging formats and new products (on the market) and their classification in the existing ranges system tended to exacerbate an already confused situation.

With respect to the full and proper implementation by Member States of the metrological checks on volumes and quantities, the team report observed that the experience of national authorities in this field highlighted a potential for different interpretation and underlined the need for a common understanding of problems in this field.

Recommendations [8]

[8] Annex 3 contains the list of recommendations made by the SLIM team.

After an extensive review of the legislation, the team recognised that existing Community rules contained a number of deficiencies, and identified particular provisions that gave rise to problems which needed to be addressed.

In particular, the team agreed that simplification could be attained and improvements made in the areas of Community ranges of prescribed quantities for pre-packaged products and in the metrological requirements aimed at ensuring accuracy of quantity declarations.

-Ranges of prescribed quantities for pre-packaged products

The majority of the team concluded that as a principle, Community ranges of quantities should be retained as they offered viable guarantees of ensuring access to all national markets and enhanced the completion of the Single Market. In addition, it was noted that ranges still serve as consumer protection in particular situations notwithstanding the adoption of labelling requirements (price per kg/litre) introduced under Directive 98/6/EC.

Against that background, the team proposed an extensive analysis of existing quantity ranges at both EC and national level. with a view to identifying the product sectors for which there is a need to have Community ranges and regrouping product categories that are comparable in the interest of greater market transparency.

The team considered that a future legislative framework for a reformed ranges system could be on the basis of "total harmonisation" provided that the necessary degree of flexibility is introduced into the system. The use of regulations rather than directives is recommended.

-Metrological requirements to ensure the accuracy of quantity declarations

In this area, the SLIM team suggested the following steps.

Simplification of current legislation :

- combine the metrological requirements laid down in Directives 75/106/EEC and 76/211/EEC in a single piece of legislation,

- retain the average system (in these Directives) and make current optional provisions mandatory,

- review other provisions of Community law on quantity indications for pre-packaged products with a view to integrating them into a new single directive.

Adapting the scope of the Directives :

- in recognition of emerging market patterns, the scope of existing legislation should be extended to include nominal quantities up to 25 kgs/litres and consequently, a number of questions relating to the implementation of metrological checks on these larger quantities should be addressed,

- extend metrological checks for determining net drained weight while recognising that an agreed Community method for determining net weight is needed,

- when reviewing the existing provisions, the opportunity should be taken to clarify definitions that give rise to problems of interpretation.

The Commission's position

The Commission will carefully review the various recommendations in the team's report and, where appropriate, propose the necessary measures in close co-operation with Member States and other concerned parties.

Conclusions on pre-packaging rules

The report of the SLIM team provides a useful overview of the difficulties encountered in applying current legislation and identifies those areas in need of clarification and improvement.

ANNEX 1

RECOMMENDATIONS OF THE SLIM TEAM ON COMPANY LAW

1. First Company Law Directive ( 68/151/EEC)

1.1. Electronic Disclosure - Articles 2 to 6

The team concluded that the traditional system of paper filing and publication of company information should be replaced by electronic data processing, with a view to Europe- wide access to data. The switch to electronic filing and dissemination of company data would take place gradually in line with the technical resources but should be finalised within a limited period of time, e.g. five years.

1.2. Use of Languages - Articles 2 to 6

In order to enhance international accessibility of company information, it is proposed, even in the absence of foreign establishment of a company, that :

- documents should be filed and disseminated in one or more Community languages according to the rules applicable to the home state of the company,

- the national legislator should allow the company to voluntarily file and disseminate documents in other languages, provided only one EU language version has legal value. In addition, Member States may also allow the use of other languages.

1.3. Electronic Disclosure of documents relating to cross-border establishments (Eleventh Company Law Directive ( 89/666/EEC))

In the case of cross-border establishment in the Community, it is proposed that a "home state" principle should be implemented. No additional filing requirements should exist in the host state. All necessary company information should be retrievable from the electronic database held in the company register in the company's home state.

A directive should specify the minimum data to be processed in the home state. Host states would not be able to impose additional disclosure requirements. If necessary, the information should be translated into the language of the host state.

1.4. Powers of Representation - Article 9(2), (3)

Clarification is needed with respect to the publication of powers of attorney of representatives of a company other than of its organs (board of directors or directors acting jointly or separately).

It is proposed that a directive require that representatives with general powers (other than organs) be listed in the register. A limited power of attorney need not be disclosed.

2. Second Company Law Directive (77/91/EEC)

2.1. Contribution in kind - Articles 10, 11 and 27

Expert opinions with regard to the valuation of contributions in kind are not always useful or necessary and should not be required when either :

- the assets have already been the subject of an independent expert valuation (provided that these valuation reports are sufficiently recent and reliable, have been established in the same perspective, and that no major changes have occurred with respect to the assets contributed), or, if

- transferable securities are contributed, these are valued at the price at which they are traded on a "regulated" market.

The team also draws attention to problems related to the definition of "contribution in kind" and in particular, the valuation of claims against the company itself.

2.2. Nominal value, accountable par - Article 8

Article 8 is applied by most Member States at the moment of incorporation and/or to new issues of shares. In the event that it is not applied in the latter case, it might be worth considering a third system in which the shares represent a percentage of the overall company. The team recommends that the question of retaining the notion of nominal value and accountable par be further evaluated and whether a third system could result in simplification.

2.3. Withdrawal of shares - Article 36

The team recommends that where Member States have not introduced squeeze-out remedies, it is proposed to allow the withdrawal of shares issued by a company. Withdrawal could be stipulated, whether upon the issue of the shares, or later by decision of the general meeting with respect to previously issued shares. This would only be allowed if one shareholder owns at least 90% of the shares of the company.

2.4. Acquisition of own shares- Article 19

The team recommends that the acquisition of own shares be limited to the amount of distributable net assets; Member States are free to decide whether they want to restrict the acquisition of own shares to a certain quota of outstanding shares. The current period of authorisation should be extended to five years. Acquisition of own shares should be at market prices.

2.5. Financial assistance -Article 23

The prohibition on financial assistance should be reduced to a practical minimum by either limiting it to the amount of the distributable net assets, or for the subscription of newly issued shares.

2.6. Pre-emptive rights-Article 29

In derogation from Article 29 §4, it is proposed that, unless the articles (of the company) state otherwise, the general meeting may empower the board, for a period not exceeding five years, to issue additional shares without pre-emptive rights, provided that these additional shares are issued at least at market price (or slightly below) and no expert report would be necessary.

ANNEX 2

RECOMMENDATIONS OF THE SLIM TEAM ON DANGEROUS SUBSTANCES

LIST OF RECOMMENDATIONS

Structure of the Directive

1. The legal basis and form of instruments most appropriate for delivery of objectives for classification, packaging and labelling and for notification provisions within Member States need to be examined within the context of wider EU Chemical Policy.

2. The wording of the Directive should be updated to incorporate the current philosophy and principles that underpin sound chemical management in a holistic manner.

3. The architecture of the Directive should be rationalised to ensure that only matters of policy and principle are incorporated in the main text and that technical detail is dealt with through annexes.

4. The advantages and disadvantages of splitting the provisions for C&L and notification into two different legal instruments combining the provisions for C&L of dangerous substances and preparations in the same instrument and setting up a Regulation for C&L provisions or at least for those Annexes dealing with C&L (Annexes I to VI and IX) should be examined. These proposals should take into account the implication of the Directive in other pieces of related EU legislation.

5. The SLIM team stressed the need to publish a codified version of the Dangerous Substances Directive taking on board the recommendations presented in this report.

Objectives, scope and definitions

6. Article 1(1) of the Directive should be reviewed in order to bring the objectives into line with the current practice and to clarify the different elements.

7. The continued applicability of exemptions detailed in Article 1(2) should be re-examined taking into account developments within global harmonisation and the wider review of EU Chemical Policy.

8. The definitions used in the Directive and in particular those for "placing on the market" and "sole representative" should be re-examined as should the possibility of introducing a definition for "articles", "waste" in relation to recycled products.

9. In order to facilitate the updating of the definitions of dangerous substances and preparations included in Article 2(2), the possible incorporation of the technical and scientific details of those definitions in an Annex of the Directive should be explored.

Classification, packaging and labelling of dangerous substances

Classification, including globally harmonised classification

10. The Commission should take into account the work on a Globally Harmonised System (GHS) for the classification and labelling of chemicals developed in the OECD, ILO and other UN fora, and should evaluate the impact of the GHS on Directive 67/548/EEC and other related pieces of EU legislation.

11. With respect to classification criteria, it should be recognised that some endpoints on human health (e.g. sensitisation, carcinogenicity, mutagenicity and reproductive toxicity) should take into account the need to consider "potency" and/or the "biological mode of action" for C&L purposes.

12. Annex VI should be critically reviewed in order to make it more understandable, taking into account its application to substances and preparations.

13. Possible solutions for the problem of how to tackle non-classified substances in the absence of data should be explored.

14. The accessibility and availability of information to the general public about classification of substances should be improved, taking into account the Århus Convention on access to information, public participation in decision-making and access to justice in environmental matters, 23-25 June 1998. Options such us the publication on Internet of relevant information about the C&L activities carried out by the COM (ECB), the access to key data on the properties of substances and the publication of provisional C&L of substances in progress solely intended for information should be considered.

Hazard communication: labelling and safety data sheets

15. The labelling provisions in the Directive and the content of the label should be reviewed in order to improve the comprehensibility and usefulness and to eliminate redundant information. The revision should take into account available relevant studies on this subject.

16. The technical information included in the Articles dealing with labelling should be separated and transferred to an Annex of the Directive.

17. The labelling requirements for substances imported into the EU and stored before distribution should be reviewed in order to improve the efficiency and to avoid unnecessary burdens but ensuring that adequate information is provided to allow persons to take necessary measures to protect the health and safety of man and the environment during storage.

Annex I: structure and procedure for implementation

18. Mechanisms should be explored to make better use of existing data on classification and labelling (C&L), in particular the data available on the IUCLID database (International Uniform Chemical Information Database), and to speed up the incorporation of this data into Annex I to Directive 67/548/EEC.

19. Annex I or the database containing detailed information of substances listed in Annex I should include the "age" of the C&L data, such as reflected by the date of the meeting of the Commission Working Groups "Classification and Labelling" at which the C&L data was recommended, or the date of adoption of the C&L data by the Commission.

20. The publication of Annex I and its implementation at Member State level should be streamlined with a view to make it more user-friendly.

21. Possibilities to ease the linguistic versions of the chemical names of the substances should also be considered.

22. Procedures to speed up the incorporation of C&L proposals into Annex I should be explored, with a view to make the C&L data more speedily available for use. The integrity of the current system and the confidence between the Member States should be maintained.

Notification of new substances

The scheme for the notification of new substances

23. Possibilities to decrease the number of notifications such as covering a group of similar substances, e.g. salts of a substance, under a single notification should be considered, on the basis of scientific justification and the experience gained with existing substances.

24. It is recommended to consider the introduction of a limited administrative procedure for notifications of substances already notified and accepted under other recognised notification systems. Possibilities such as flexibility in time period and in recognition of assessments should be explored.

Specific requirements

25. The provisions for research and development exemptions should be reviewed with a view to introducing more flexibility concerning the quantity threshold for scientific research and development (R&D) and the time period limit for process-oriented R&D (PORD).

26. The criteria that determine whether a polymer constitutes a new substance should be revised provided that the criteria are based on sufficient scientific evidence. Particular consideration should be given to examining the testing requirements for polymers; they should be made more proportionate.

27. The notification requirements for intermediates placed on the market should be examined in order to make them more adapted to their limited exposure of man and the environment, but to keep them proportionate with respect to the volumes concerned and the safety requirements during normal handling and use of these intermediates.

28. An area to be considered in addition are site limited, isolated intermediates, which do not fall within the scope of the present Directive. It is recommended to explore options in order to ensure that adequate information for worker protection, environment protection and emergency response is available on site.

29. The reduced notification requirements for substances placed on the market in quantities of less than 1 tonne per annum and manufacturer should be reviewed. Replacement of the current notification requirements by responsible record keeping in industry combined with a monitoring and safeguard role of the competent authorities should be explored.

Working procedures, duties and responsibilities

30. Possible options to improve the current working procedures for the notification of new substances should be explored. Areas where the centralisation of information management could enhance the efficiency of the notification system should be identified.

31. Priority should be given to an independent review of all aspects of the notification procedures including the administration and the balance of responsibility between the Commission, the competent authorities and the notifier. The review should identify options to make the role of the parties more transparent; the process more efficient; and the use of expert resource more effective.

32. Flexibility should be given to the competent authority to handle the approval period for re-notifications (notifications submitted a second time after having brought the dossier into conformity with the requirements of the Directive) in appropriate time frames even shorter than 60 days.

33. The notifier should be informed of the outcome of the notification process and should be consulted in the case of diverging conclusions.

34. The extension of the Sole Representative facility to EU manufacturers and to non-EU companies not being the original manufacturers of the imported new substance in question should be explored in order to avoid unnecessary multiple notifications.

35. More effective mechanisms to promote the sharing of data should be developed in order to avoid repetition of animal testing in accordance with existing EU provisions on animal protection. The harmonisation of Member States' positions should be considered. Effective mechanisms to facilitate the exchange of information and to preserve the rights of the "first notifier", i.e. the company that provides the data, will have to be developed.

36. The possible obligation to notify new substances manufactured within the EU, solely intended for export to third countries should be explored, if the substance has not been notified under any other recognised system. Requirements should be consistent with Regulation (EEC) 2455/92 on export and import of certain dangerous chemicals and the Rotterdam Convention on the Prior Informed Consent procedure (PIC).

Testing methods

37. The Commission should explore ways to speed up the transposition of OECD Test Guidelines into testing methods for Directive 67/548/EEC.

38. Particular areas for which more appropriate testing methods should be developed, such as for the evaluation of enzymes, should be explored.

Risk assessment of new substances

39. The notifier of a new substance should take responsibility for the preparation of the initial risk assessment. The adequacy of technical guidance and available software to support this should be addressed as a matter of priority. This change should be without prejudice to the competent authorities' right to request additional information as part of their review of the risk assessment.

40. The requirement concerning the preparation of the risk assessment should be proportionate. In this respect consideration should be given to the need to establish appropriate triggers, such as tonnage levels or hazard.

41. The accessibility and availability of information to the public about risk assessment should be improved. Options such as the publication of risk assessment and the setting-up of a centralised database containing risk assessment should be explored while adequately protecting confidential data of the notifier.

42. The decision criteria for additional testing of notification levels 1 and 2 should be harmonised. The results of the risk assessment performed with information at base-set level should be taken into account, rather than performing all tests of Annex VIII.

Confidentiality of data

43. Mechanisms to make available to the public meaningful generic information about risk assessment on substances while taking into account confidentiality and preserving the rights of the first notifier should be explored. The wording of Article 9 on the 10-year rule for substances already notified should be reviewed to make it clearer.

Other issues

Compliance

44. Effective compliance with the Directive in Member States should be encouraged. Consideration should be given to regular networks for Trans-boundary co-operation on inspection activities and the better use of existing networks of enforcement.

45. In the short term a consolidated version of the Directive should be prepared in order to make it easier to use and assist compliance.

Frequency of Adaptation to Technical Progress (ATP)

46. An examination should be undertaken of the impact of the frequency of adaptations on industry and the Member State authorities. The outcome of this examination should be used to balance the need to introduce scientific and technical changes rapidly with the need to reduce unnecessary burdens.

Advertisement

47. Article 26 on advertisement should be reviewed in order to make it consistent with the corresponding Article of the new Dangerous Preparations Directive.

Reporting

48. The frequency of the preparation of the report on the implementation of the Directive in the Member States should be reviewed.

ANNEX 3

RECOMMENDATIONS OF THE SLIM TEAM ON PRE-PACKAGING LEGISLATION

1. Ranges of prescribed quantities for pre-packaged products

The majority of the team considered that ranges new should be retained provided that the current legislation is adapted to make it more flexible and clearer.

1.1. Consideration should be given to reviewing the existing quantity ranges at both the EU and national levels (i.e. ranges established in EC Directives, additional ranges adopted by Member States for product categories covered by EC legislation and national ranges for products not covered by the Directives), with a view to selecting the products for which the ranges are to be retained and regrouping product categories that are comparable in the interest of greater market transparency. The revision exercise should lead to Community ranges only for those product sectors which require such ranges thus avoiding establishing ranges which do not facilitate trade.

1.2. A "total harmonisation" of quantity ranges at the European level (i.e. mandatory Community ranges in place of national ranges) is one option which could be considered on the grounds that it would ensure legal certainty and is more appropriate in the context of a Single European market.

New legislation should be in the form of a regulation rather than a directive as the former is directly applicable. Total harmonisation, however, should go together with flexibility to ensure free circulation with the necessary legal certainty. This implies rendering size sets sufficiently flexible to take account of market developments and changing needs (e.g. by adopting an incremental approach). It would also be possible to adapt the legislation to technical progress by using the Commission Committee procedure.

1.3. Community ranges for container capacities covered by current legislation be retained.

2. Metrological requirements to ensure the accuracy of quantity declarations

The SLIM team recommended that the following steps be considered in order to improve the quality of existing legislation.

2.1. Simplification of the legislation

It is deemed advisable to combine the metrological requirements laid down in Directives 75/106/EEC and 76/211/EEC concerning the indication of the quantity on pre-packaged products into one single piece of legislation.

The average system on which these Directives are based, should be retained and the current optional provisions be made mandatory (total application). Any review of current legislation should also consider other provisions of Community legislation regarding quantity indications for pre-packaged products and examine the possibility of integrating the relevant requirements into a single directive. The prospect of total application would offer the opportunity to examine the merits of retaining the "e" sign.

2.2. Adaptation of the scope of the Directives and metrological checks

Existing legislation on the indication of quantities on pre-packaged products should be extended to include pre-packages with nominal quantities of up to 25 kg/l to take account of current market trends where certain consumer products (cooking oil, fertilisers, vegetables, etc.) already exceed the existing 10 kg/l limit. In that context, the question of adapting metrological checks would arise, e.g. the number of samples to be taken, statistical methods, etc. and would have to be addressed.

2.3. Drained net weight

Existing provisions on metrological checks should be extended to include drained net weight. This would require a common definition of maximum tolerable errors as well as an agreed Community method for determining the drained weight. To this end, the relevant work (on this issue) at the international level could be considered.

2.4. Definitions

The opportunity should be taken when reviewing the legislation to clarify definitions and concepts that give rise to problems of interpretation and thereby ensure greater consistency in Community legislation (e.g. the definition of net weight, consistency with Directive 94/62/EC on packaging). The relevant work carried out at the international level (OML and WELMEC) could be of assistance.