RE-EXAMINED PROPOSAL FOR A COUNCIL DIRECTIVE ON COMPANY LAW CONCERNING DISCLOSURE REQUIREMENTS IN RESPECT OF BRANCHES OPENED IN A MEMBER STATE BY CERTAIN TYPES OF COMPANIES GOVERNED BY THE LAW OF ANOTHER STATE
Date: 1989-11-16
Institutions: European Commission
Subjects: branch, business management, company law, organisation, publication of accounts

COMMISSION  OF  THE  EUROPEAN  COMMUNITIES 

COM  (89) 528 final  - SYN 63 

Brussel, 16 November  1989 

Re-examined  proposal  for a 

COUNCIL  DIRECTIVE 

on company  law concerning 
disclosure  requirements  In respect  of 
branches opened  In a Member  State by 
certain  types of  companies  governed 
by  the  law of  another  State 

(presented  by the  Commission  pursuant  to Article  149.2(d) 
of the EEC  Treaty) 

-  2 -

LVvw ïi8,i 

Revised  proposal  for a 
CounclI  Direct !ve 
on company  law concerning 
disclosure  requirements  in respect  of 
branches opened  In a Member  State by 
certain  types of companies  governed 
by  the  iaw of another  State 

(Submitted  by  the Commission  to the Council 
on  the basis of Article  149  (2d) 
of  the EEC Treaty) 

Explanatory  memorandum 

1.  On  29  July  1986  the  Commission  transmitted  to  the  Council  the 

abovementloned  proposal  for a Direct Ive.<1) 

2. 

The  European  Parliament  and  the  Economic  and  Social  Committee 
delivered  their  opinions  on  18  November  1987<2)  and  24 
September  1987( 3)  respectively. 

3.  On  5  April  1988  the  Commission  transmitted  an  amended 
proposal(4)  to  the  Council,  incorporating  the  substance  of  the 
changes  requested  by  Parliament.  The  Council's  Working  Party  on 
Economic  Questions  (establishments  and  services)  examined  that 
proposal  in three readings  from November  1988. 

4. 

5. 

The  Council  adopted  a  Common  Position  on  16  May  1989,(5)  for 
which  it  Indicated  Its  grounds/6)  and  on  which  the  Commission 
formulated  its observât Ions.*7* 

In  accordance  with  the  coopération  procedure,  the  European 
Parliament  gave  the  proposal  a  second  reading  eft  13  September 
Parliament  gave  the  proposal  a  second  read 
1989 and voted  in favour of eight  amendments 

I 

(1) OJ  No. C 20$, 12.8.1986, p.  t2. 
(2) OJ  No C 345,  21.12.1987, p.  1* 
(3) OJ  NO C 319, 3t.11.1987, p. 61. 
(4) OJ  No C  105, 2t.4.1988, p. f. 
(5) Council  Document  6346/89, 11 May  f989L 
(6) Council  Document  6346/89 Add.  1, 11 May  1989 
(7) SEC(89)739 SYN 63, 18 May  1989. 
(8) EP Doc.  133.773, 13 September  198Ô. 

| 
ir 

3  -

6. 

The  Commission  has  been  able  to  accept  the  following  amendments 
Involving  improvements  to  the  wording: 
(a)  the  first  amendment,  which  adds  the words  "not  ieast"  to  the 
fifth  recital; 

(b)  the  second  amendment,  which,  in  the  sixth  recital,  stresses 
the  possibility  of  comparing  the  economic  and  social  influence 
of  a branch  with  that  of  a subsidiary  company; 

(c)  the  fourth  amendment,  which  refers  in Article  3  not  only  to 
the  auditing  and  disclosure  of  accounting  documents,  but  also  to 
their  being  drawn  up  In  accordance  with  the  various  accounting 
direct ives. 

(d)  the  third  and  the  fifth  amendments  which  refer  to  the 
existence  of  other  branches  In the same Member  State. 

7. 

The  Commission  has  rejected  the  sixth,  seventh  and  eighth 

amendments. 

As  for  the  branches  of  third-country  companies,  the  Member 
information  since  the 
States  may  still  request  additional 
Directive's  provision  on  that  matter  is  of  a  minimal  nature. 
This  is  the  reason  for  the  rejection  of  the  sixth  amendment, 
which  would  allow  the  Member  State  to  demand  the  signature  of 
certain  persons  having  power  of  representation. 

The  seventh  amendment  aims  to  enable  the  Member  States,  in  the 
case  of  the  non-compliance  or  non-equivalence  of  the  accounts  of 
a  third-country  company,  to  require  not  only  the  drawing  up  and 
disclosure  of  accounts  limited  to  the  branch's  activity  but  also 
their  audit.  However,  no  equivalent  requirement  exists  in  the 
comparable  rules  concerning  the  branches  of  third-country  credit 
institutions  (Directive  88/117/EEC,  Article  3 ).  It  would  seem 
indefensible  to  impose  stricter  requirements  on  the  branches  of 
industrial  and  commercial  companies. 

Under  the  eighth  amendment,  where  the  accounting  documents  of 
third-country  companies  do  not  fully  comply  in every  detail  with 
the  directives,  despite  being  equivalent  in  principle,  all 
differences  would  have  to  be  expressly  indicated  at  the  time  of 
disclosure.  Moreover,  the  fact  that  they  have  not  been  audited 
would  also  have  to  be  stated.  The  Commission  considers  that  the 
equivalence  criterion  was  introduced  specifically  to  avoid 
Insisting  on  absolute  conformity  with  the  accounting  directives. 
A  substantial  comparability  of  accounting  documents  was  more 
what  It  had  In mind.  As  for  the  question  of  auditing,  it  is easy 
to  tell  when  accounts  have  not  been  audited  by  the  mere  fact 
that  they  do not  bear  any  Indication  to  that  effect. 

4 -

Revised  proposai  for a 
CounclI  Direct ive 
on company  iaw concerning 
disclosure  requirements  in respect  of 
branches opened  in a Member  State by 
certain  types of  companies  governed 
by  the  law of another  State 

COMMON  POSITION OF THE COUNCIL 

REVISED PROPOSAL  OF THE  COMMISSION 

5th  recital 

5th  recital 

n 

this 
the 
field 
Vnereas 
the  laws  of  the 
difference  in 
may  interfere  with 
Member  States 
the  exercise 
of  the  right  of 
establishment; 
is 
therefore  necessary  to  eliminate 
such  differences  in  order  to 
safeguard  the  exercise  of  that 
right; 

whereas 

It 

in 

field 

Whereas 
the 
this 
difference  In  the  laws  of  the 
Member  States  may  interfere  wlxh 
the  exercise  of  the  right  of 
establishment; 
is 
therefore  necessary  to  eliminate 
such  differences,  not  least  in 
order  to safeguard  the exercise of 
that  right; 

whereas 

It 

6th  recital 

6th  recital 

the 

Intermediary 

Whereas  to  ensure  the  protection 
of persons who deal  with  companies 
through 
of 
branches,  measures  in  respect  of 
disclosure  are  required  in  the 
Member  State  in which  a branch  Is 
situated;  whereas  to  effect  such 
disclosure  it  Is necessary  to make 
use  of  the  procedure  already 
for  companies  with 
instituted 
share 
the 
within 
Community; 

capital 

the 

Intermediary 

Whereas  to  ensure  the  protection 
of  persons who deal  with  companies 
through 
of 
branches,  measures  in  respect  of 
disclosure  are  required  in  the 
Member  State  in which  a  branch  is 
situated; whereas  the economic and 
social  Influence  of  a  branch  may 
be  comparable  to  that  of  a 
subsidiary  company,  so  that  to 
that  extent  the public  interest  in 
disclosure  is  comparable;  whereas 
to  effect  such  disclosure  it  is 
necessary  to  make  use  of  the 
procedure  already  Instituted  for 
companies 
share  capital 
within  the  Community; 

with 

Article 2 

Article  2(1)(e#)(new) 

(ea)  the 
teranches In 

existence  of  other 
the same Member  State 

^ 

Article  3 

Article  3 

the 
the  company 

The compulsory  disclosure provided 
for  by  Article  2(1)(g)  shall  be 
accounting 
limited 
to 
documents  of 
as 
audited  and  disclosed  pursuant  to 
the  law  of  the  Member  State  by 
which  the  company  is  governed  in 
Directives 
accordance 
with 
and 
78/660/EEC, 
84/253/EEC. 

83/349/EEC 

to 

the 

The compulsory  disclosure provided 
for  by  Article  2(1)(g)  shall  be 
limited 
accounting 
documents  of  the  company  as  drawn 
up, audited and disclosed  pursuant 
to  the  law of  the Member  State  by 
which  the  company  is  governed  in 
Directives 
accordance 
with 
and 
78/660/EEC, 
84/253/EEC. 

83/349/EEC 

Article 8 

Article 8(da) (new) 

(da)  the  existence  of  other 
branches  in the same Member  State. 

The  other  recitals and articles remain unchanged. 

-t 

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ISSN 0254-1475 

COM(89) 528 final 

DOCUMENTS 

EN 

06 

Catalogue mapber : CB-CO-89-480-EN-C 

ESBN 92-77-53987-9 

~4 

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