European Parliament resolution on the communication from the Commission to the Council and the European Parliament: Modernising company law and enhancing corporate governance in the European Union — A plan to move forward (COM(2003) 284 — C5-0378/2003 — 2003/2150(INI))
Date: 2004-04-21
Institutions: Committee on Legal Affairs, European Parliament
Subjects: European company, access to information, action programme, board of directors, business management, claim, company law, corporate governance, shareholder

C 104 E/714

Official Journal of the European Union

EN

30.4.2004

Wednesday 21 April 2004

74.
Notes that many official documents are still being distributed to Members on paper despite their
availability online; points out that in many cases, these documents are discarded without ever being used,
which results in a huge waste of money and paper; calls on the College of Quaestors to instruct the
Administration to cease the automatic and general distribution of the following types of document to the
extent that they are also available online and/or can be transmitted electronically:

(cid:1) Commission documents,

(cid:1) Council documents,

(cid:1) DG 2 and 3 working documents and research papers,

(cid:1) Session documents,

(cid:1) Notices from the Quaestors, the Bureau and other official notices;

Asks instead for limited but sufficient numbers of these documents to be available in paper form at

75.
the document counter;

Calls for a system of electronic signature to be introduced, whereby a Member’s signature can be
76.
applied to documents such as amendments and parliamentary questions without having to have recourse
to transmission of documents on paper.

P5_TA(2004)0346

Modernising company law and enhancing corporate governance

European Parliament resolution on the communication from the Commission to the Council and
the European Parliament: Modernising company law and enhancing corporate governance in the
European Union (cid:1) A plan to move forward (COM(2003) 284 (cid:1) C5-0378/2003 (cid:1) 2003/2150(INI))

The European Parliament,

(cid:1) having regard to the communication from the Commission to the Council and the European Parlia-

ment (COM(2003) 284 (cid:1) C5-0378/2003),

(cid:1) having regard to the communication from the Commission to the Council and the European Parlia-

ment: Reinforcing the statutory audit in the EU (COM(2003) 286),

(cid:1) having regard to its resolution of 12 February 2004 on corporate governance and supervision of

financial services (cid:1) the Parmalat case (1),

(cid:1) having regard to Rules 47(2) and 163 of its Rules of Procedure,

(cid:1) having regard to the report of the Committee on Legal Affairs and the Internal Market and the
opinions of the Committee on Economic and Monetary Affairs, the Committee on Industry, External
Trade, Research and Energy and the Committee on Employment and Social Affairs (A5-0253/2004),

A. whereas the Commission communication defines important objectives that should guide EU initiatives

to modernise European company law and strengthen corporate governance,

B. whereas the events which occurred recently, first in Japan and subsequently in the United States and
Europe, involving major industrial groups (in particular Parmalat), illustrate that the rules on trans-
parency that should provide a frame of reference for action by European companies need to be more
clearly defined; whereas in this connection the effects of such scandals are borne in particular by small
shareholders, savers investing in funds or trusts and other creditors as well as workers, who lose their
jobs and salaries,

(1) P5_TA(2004)0096.

30.4.2004

EN

Official Journal of the European Union

C 104 E/715

C. whereas,

in connection with the globalisation of the economy, a set of internationally recognised

principles and rules is needed to protect the interests of companies, investors and workers,

Wednesday 21 April 2004

D. whereas it was decided at the Lisbon European Council and subsequent Spring European Councils to
make the EU the most competitive knowledge-based economy in the world, based on investment in
human resources, full and quality employment and greater social cohesion in a framework of sustain-
able development,

E. whereas property rights are subject to restrictions and obligations for the benefit of society, and com-
panies have corporate social responsibility; whereas, especially in some industries, the issue of cor-
porate social responsibility is assuming a strategic dimension because, in their perceptions of com-
panies, citizens are no longer thinking merely as potential consumers, but are insisting on guarantees
as regards environmental protection, compliance with basic health and safety standards, and partici-
pation,

F. whereas, furthermore, the current restructuring process is leading to greater fragmentation, outsourc-
ing and delocalisation among companies, sometimes making it difficult to make out the actual com-
position of a company or where its real decision-making centres are, and often making it almost
impossible to understand holdings and cross-ownership of shares or the rules and contractual provi-
sions governing workers whose jobs have been dislocated to different parts of a pyramid or group
structure,

G. whereas the Stockholm European Council approved the setting up of a European Monitoring Centre
on Change (EMCC), which is an important European information source on the economic and social
changes resulting from developments and shifts in technologies, work organisation, production and
business models, legislation, and the labour market,

H. whereas good relations between management and workers and their representatives (cid:1) including
information and consultation, participation, bargaining and contractual agreements (cid:1) are an import-
ant factor in the effectiveness of the production and social functions of a company as well as a driving
force behind its success and competitiveness,

I. whereas, furthermore, the information supplied to and the consultation of workers’ representatives are
generally insufficient, as regards both quality and timescales, to enable workers to influence the out-
come of corporate decisions, especially when those decisions have serious employment implications,

1. Whilst respecting the traditions in Member States’ company law provisions in line with the principle
of subsidiarity, supports the need for urgent action to be taken in this context on European company law;
considers that the enlargement process and subsequent consolidation of the internal market will make it
necessary to harmonise or coordinate the different national laws so as to establish a general framework
that will allow for mobility between European countries;

2.
Puts particular emphasis on the importance of paying attention to the fact that the aim of measures
to harmonise EU company law is to help create a level playing field for companies and that a level playing
field must be ensured in the case of all measures;

3.
Supports the view of the Commission that competition between national company rules is healthy,
and therefore considers that competition under level playing field conditions may take the place of efforts
to bring about maximum harmonisation;

4.
Considers, however, that governance cannot be seen as a problem confined solely to relations
between shareholders and management; in this connection, points to the essential role to be played by
stakeholders within or close to the company;

C 104 E/716

Official Journal of the European Union

EN

30.4.2004

Wednesday 21 April 2004

5.
Takes the view that European corporate governance and company law must encompass substantial
arrangements and practices to inform and consult workers and that all directives concerning company law
must lay down an obligation to inform and consult workers’ representatives when it is necessary to take
important decisions affecting the continued survival of companies and jobs;

Draws attention to the importance of taking account of the work being carried out on corporate

6.
governance in the OECD;

7.
Takes a favourable view of the Commission’s proposals for modern corporate governance with the
aim of increasing businesses’ competitiveness as a crucial component of economic growth and job cre-
ation, improving protection for shareholders and creditors and enhancing the transparency of the way in
which businesses operate;

8.
Considers that it is necessary in all cases to distinguish between large and small shareholders, mainly
as regards the use of modern technology in the exercise of shareholders’ voting rights, given that small
shareholders are usually more at risk;

9.
Agrees with the Commission that there is no need to draw up a specific European code of corporate
governance, but considers that the EU should spell out a framework of international standards to be
observed and determine procedures for these to be transposed, so as to supplement the existing regulatory
provisions at national level;

10.
Remains convinced that priorities at EU level should be in genuine cross-border areas, and therefore
calls on the Commission to accelerate the drafting of the recommendations to Member States to review
national rules that hamper the establishment of undertakings across borders;

11.
Agrees with the Commission that ‘the EU must define its own European corporate governance
approach, tailored to its own cultural and business traditions’ and warns of the emergence of a tendency
to copy US solutions for US problems and to import US traditions and rules that would be counterpro-
ductive for proper corporate governance in Europe;

Endorses the general approach adopted by the Commission with a timescale matched to the one
12.
contained in the financial services action plan and which should be sufficiently flexible as regards the
balanced use of legal instruments, directives and recommendations; welcomes the intention of the Com-
mission to revise and prioritise the communication on company law and corporate governance in the
wake of recent corporate scandals in Europe; agrees with the Commission that measures to encourage
corporate governance must be dealt with at the same time, and with the same level of care and priority,
as measures relating to company law; with regard to the rules on corporate governance, calls on the
Commission to systematically take stock of the measures carried out in the Member States since the
adoption of the Winter report and to take them fully into account when framing its proposals for direc-
tives and recommendations; in this connection, considers that the solutions adopted by the United States
are not necessarily a suitable example for Europe and that it is vital that these rules should reflect the
specific characteristics of the situation in Europe; accordingly, welcomes the Commission’s efforts to
develop projects for the formation of a European company;

13.
Expresses doubts about the point of the setting up by the Commission of a European Corporate
Governance Forum, as harmonisation of corporate governance codes is not being proposed and coor-
dination of work on national codes already takes place at association level (for example, Unice);

14.
Considers it vital in this connection that the Member States’ supervisory and monitoring bodies
should meet three requirements: stability of the financial system, transparency of markets, corporate bal-
ance sheets and corporate behaviour, and safeguarding competition; in particular, it is vital to:

(a)

ensure the autonomy, independence and integrity of members of the management and supervisory
boards, auditors and rating companies;

(b) ensure that the authorities responsible for monitoring the stock exchange are able to function effec-

tively, giving them the necessary resources and staff;

30.4.2004

EN

Official Journal of the European Union

C 104 E/717

Wednesday 21 April 2004

(c)

create framework conditions for the work of anti-trust authorities;

(d) promote an effective system of cooperation between central banks;

15.
Urges the Member States effectively to fulfil the undertakings given in recent years as regards meet-
ing the Lisbon objectives, at national, regional and local level, so as to provide a regulatory, institutional,
political and participatory framework for all actors concerned, including companies;

16.
Stresses the need for companies to observe in their day-to-day conduct the principle whereby prop-
erty rights are subject to restrictions and obligations for the benefit of society, and to be aware of their
corporate social responsibility;

17.
Points to the need to draw up a comprehensive and more exact definition of corporate social
responsibility as a key aim for a forward-looking corporate policy and as a guiding principle for European
socio-economic policies; maintains also that the basic principles of corporate social responsibility must be
fully integrated into all spheres of Community activity, particularly company law, the internal market,
competition policy, legislation on financial markets, commercial policy, the common foreign and security
policy, and development cooperation policy;

18.
Regrets the fact that the High Level Group of Company Law Experts appointed by the Commission
in September 2001 takes the same approach to all businesses and shareholders and considers that in order
for these objectives to be achieved, instead of adopting a uniform approach to all businesses, a distinction
should be drawn between those listed on the stock exchange, companies not listed on the stock exchange
and particularly small and medium-sized businesses in this category;

19.
Endorses the proposal that companies listed on the stock exchange should make an annual state-
ment on corporate governance to provide investors with greater transparency and more information to
guide their choices; however, this statement cannot and must not prevent the competent supervisory auth-
orities from carrying out independent checks wherever they see fit;

20.
Repeats its request to the Commission, when dealing with the relevant directive (Fourth Company
Law Directive), also to submit a proposal providing for social and environmental information alongside the
financial information requirements;

21. Welcomes the business world’s initiative on greater openness and urges the Member States to
encourage greater openness and transparency with regard to corporate reporting on governance since
this will improve the flow of corporate capital and, in the long term, the confidence of market players;

22.
Supports the Commission in its intention to strengthen shareholders’ rights in particular through
extension of the rules on transparency, proxy voting rights, the possibility of participating in general meet-
ings via electronic means and ensuring that cross-border voting rights are able to be exercised;

23.
Expresses its regret that no mention is made of the consequences for corporate governance of
certain practices resulting from differences in the financing of companies, especially between the Anglo-
Saxon tradition (cid:1) where share ownership spread through financial markets predominates (cid:1) and the
continental tradition where banks and majority shareholders play a more important role; urges the Com-
mission to carry out such an analysis and to avoid conclusions and initiatives based simply on a unilateral
approach;

Calls for the Commission, as a matter of priority, and on the basis of suitable proposals, to help win
24.
acceptance for the principle of ‘one share one vote’ wherever it applies, in order to ensure equal treatment
for all shareholders;

Calls on the Commission as a matter of urgency to strengthen the rules on corporate controls,

25.
particularly as regards auditing and introducing stringent penalties for fraud;

Urges the Commission and Member States to ensure strict application of European legislation on

26.
market abuse, financial prospectuses and transparency;

C 104 E/718

Official Journal of the European Union

EN

30.4.2004

Wednesday 21 April 2004

Calls for the points related to simplification of the capital maintenance rules to be considered

27.
carefully and continues to support the principle of minimum capital;

Takes a positive view of the Commission’s interest in cross-border mergers and the corresponding
28.
mobility of companies; stresses, however, that this interest must be matched by measures to facilitate the
mobility of workers in the corresponding companies;

Insists on the need to guarantee that,

29.
audited and advised by the same firm is ruled out;

in the case of listed companies, the possibility of being

30. Welcomes the proposal for a directive on the statutory audit of annual accounts and consolidated
accounts (COM(2004) 177) submitted by the Commission and, in particular, supports the key principles on
the full responsibility of the statutory auditor with regard to the consolidated accounts of the audited
company and the need to set up an independent committee for the statutory audit of accounts in every
public interest entity; shares the Commission’s view that all listed companies (cid:1) especially banks, insurance
undertakings, hospitals and pension funds (cid:1) should be classified and regulated as public interest entities,
given their economic and social importance;

Stresses the need for listed companies and other public interest entities to have an Audit Commit-
31.
tee, whose functions should include overseeing the external auditor’s independence, objectivity and effec-
tiveness;

Stresses the need for corporate governance to include auditing rules designed to enhance the
32.
responsibility of audit groups and their independence from management, and to improve and harmonise
public supervision of auditors as regards problems relating to the scope and terms of reference of super-
vision, the composition of supervisory committees, the principles, quality and transparency of supervision
and the mechanisms and methods for sanctions;

33.
Agrees with the Commission proposal to set up a public electronic register of statutory audit firms
(cid:1) which have been approved by designated public authorities within the Member States (cid:1) clearly and
transparently listing the legal form, make-up and independence of the statutory audit groups; emphasises
the importance of creating a system of recognition based on a high level of competence, training and
professional ethics in statutory audit firms and the need to make information on the relations between
the audit firm and the audited firm public, accessible and transparent,
including information on fees
charged and payments made;

34.
Supports the establishment of a committee to regulate auditing in the EU that would include among
its fundamental principles protection of the public interest and of all parties concerned; stresses the need to
develop a common system of statutory auditing standards within the EU by means of a cooperation mech-
anism which is efficient and consistent with regard to the existing national systems; considers that the
setting up of a single authority responsible for accounting and financial supervision in Europe would be
a possible long-term solution;

Considers it vital to improve cooperation at Community level between the bodies supervising statu-
35.
tory auditing in the Member States with a view to developing a common system of requirements to
guarantee a high level of integrity and independence; considers the development of a cooperation model
with the regulatory and statutory audit bodies of non-EU countries (cid:1) based on the principle of reciprocity
(cid:1) to be vital for the sound and healthy operation of the financial markets;

36.
Calls for all international bodies (G-8 Financial Stability Forum, OCSE, FATF (cid:1) Financial Action
Task Force on Money Laundering) to speed up negotiations designed to develop a binding framework for
offshore centres and other tax havens;

37. Welcomes the Commission’s effort in its 2004 work programme to revise the rules on the transfer
of deficits and surpluses within a company operating in a number of Member States and urges the Com-
mission to expedite this work since it is of vital importance for many companies operating across Europe;

30.4.2004

EN

Official Journal of the European Union

C 104 E/719

38.
Invites the Commission, moreover, to consider integrating into the proposal on Eighth Council
Directive 84/253/EEC of 10 April 1984 based on Article 54(3)(g) of the Treaty on the approval of persons
responsible for carrying out the statutory audits of accounting documents (1) other provisions such as a
prohibition on the performance by the same auditors of all non-audit services to audit clients;

Wednesday 21 April 2004

39.
Calls on the Commission to promote cooperation between the bodies and institutions responsible
for supervision and control of relations between companies and banks, in order to protect the interests of
small shareholders and savers investing in funds or trusts;

40.
Points out that, if it is translated into reality and made transparent to the public, corporate govern-
ance enhances a company’s image and rating alike and hence its position on the capital and financial
markets, thus working, in the final analysis, in the company’s interest;

41.
Considers it vital, furthermore, that shareholders should be able to take part in discussions on the
remuneration of directors and supports the idea that a recommendation should be adopted introducing a
regime covering essential aspects of directors’ remuneration policy;

42.
Calls on the Commission to propose a legal framework laying down rules governing the activities
and structure of ‘institutional investors’, taking into consideration a requirement concerning participation
in shareholders’ meetings;

43. With regard to the Commission’s other proposals, considers it vital to maintain the proposal for a
directive requiring institutional shareholders to disclose information on their investment policy, given the
direct influence they wield over the shape and substance of corporate governance for companies in which
they invest; welcomes the more active role that some institutional investors and particularly pension funds
have already taken in corporate governance and urges the Commission to start an active consultation with
the sector on obligations to provide information on their investment policies and exercising of voting
rights in companies in which they invest;

Calls on the Commission to examine the possibility of conflicts of interest in connection with hold-

44.
ings in companies and banks and to propose rules to eliminate and prevent conflicts of interest;

Stresses the need for extensive transparency as regards remunerations, including both fixed and

45.
variable components, and any incentive or stock option schemes for management;

46.
Calls on the Commission substantially to improve information and transparency procedures for
groups and pyramid structures, since the formation of a company into groups and, in particular, pyramid
structures, can make its actual structure less transparent;

47.
Calls on the Commission to speed up work on information and disclosure with regard to a group’s
structure and intra-group relations by revision of Seventh Council Directive 83/349/EEC of 13 June 1983
based on the Article 54(3)(g) of the Treaty on consolidated accounts (2), in order to provide more trans-
parency, and in this connection asks that the Commission reflects on ways to make features such as special
purpose vehicles and tax-haven subsidiaries more transparent;

48.
Asks the Commission to examine to what extent certain particularly opaque pyramid structures,
whose primary purpose is to maintain control of a company, may be barred from being admitted to the
stock exchange;

49.

Supports the Commission’s proposal to produce a directive on corporate restructuring and mobility;

(1) OJ L 126, 12.5.1984, p. 20.
(2) OJ L 193, 18.7.1983, p. 1.

C 104 E/720

Official Journal of the European Union

EN

30.4.2004

Wednesday 21 April 2004

50.
Considers at the same time that the long-awaited amendment of the directive on European works
councils is now inevitable, necessary, and a matter of the utmost urgency; with this in view, calls on the
Commission immediately to initiate the consultation between management and labour provided for by the
Treaty, laying down clear guidelines as to the aim to be achieved, especially as regards the information and
consultation timescales and procedures, which must enable workers’ representatives to exert genuine
influence over processes under way;

51.
Supports the work on a European Private Company; maintains that any new company form (what
is termed the ‘European Private Company’) designed to simplify regulatory standards and procedures on a
Europe-wide basis should not conflict with the rights of participation defined in other existing company
models and that the relevant rights laid down in the directive on the European company statute should
accordingly be extended in a coherent manner to apply to the European Private Company;

52. Welcomes the Commission’s initiative in launching a feasibility study concerning the European
Private Company (EPC) which has broad support among the players concerned; calls on the Commission,
furthermore, to review in that feasibility study the minimum capital requirements for the establishment of
a European company (SE) in accordance with Council Regulation (EC) No 2157/2001 of 8 October 2001
on the Statute for a European company (SE) (1) or to put forward proposals for a new form of European
company adapted to small and medium-sized enterprises; considers that the minimum capital requirement
of EUR 120 000 makes it difficult for small and medium-sized enterprises to use the corporate structure of
the European company (SE);

53.

Considers that for small limited companies the second directive’s system is particularly strict;

Supports the Commission in its intention, on the basis of a directive, to give companies throughout

54.
the EU the choice between a one-tier and a two-tier board structure;

55.
Instructs its President to forward this resolution to the Council and the Commission, and to the
governments and regulatory and supervisory authorities of the Member States and the accession countries.

(1) OJ L 294, 10.11.2001, p. 1.

P5_TA(2004)0347

Cyprus

The European Parliament,

European Parliament resolution on Cyprus

(cid:1) having regard to its assent of 9 April 2003 to the application by the Republic of Cyprus to become a

Member of the European Union (1),

(cid:1) having regard to the Treaty on the Accession of the Republic of Cyprus, the Czech Republic, the
Republic of Estonia, the Republic of Hungary, the Republic of Latvia, the Republic of Lithuania, the
Republic of Malta, the Republic of Poland, the Slovak Republic and the Republic of Slovenia to the
European Union, and in particular Protocol 10 thereof,

(cid:1) having regard to its resolution of 11 March 2004 on the comprehensive monitoring report of the
European Commisison on the state of preparedness for EU membership of the Czech Republic, Esto-
nia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Slovenia and Slovakia (2),

(cid:1) having regard to Rule 37(2) of its Rules of Procedure,

(1) OJ C 64 E, 12.3.2004, p. 365.
(2) P5_TA(2004)0180.