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European Company Law: what way forward?
The European Commission has launched yesterday an in-depth consultation on the future of European company law. Europe needs a company law framework that is adapted to the needs of the society of yesterday and to the evolution of the economic environment. EU company law has played a central part in building the single market. It is now time to see whether yesterday's needs are still met by the existing legal framework. An on-line public consultation paper has therefore been launched to collect comments from all stakeholders. The deadline for sending contributions is 14 May 2012.
European company law provides a common set of rules that offers equivalent protection to shareholders, creditors and other stakeholders across the EU who are affected by companies' actions. Company law is crucial to ensure legal certainty and protect shareholders' rights. Whilst Member States different legal traditions and company structures must be respected, harmonisation of the basic rules makes it easier for companies to offer services and products to all customers in the Union. The growth of cross-border trade and the development of e-commerce present many opportunities for businesses and consumers but they also present challenges for the existing company law framework. That is why reflection on how to adapt the existing framework to the new landscape of the 21st century is necessary. Moreover, today's challenges require us to look at company law not only from a purely legal perspective but in the wider context of corporate governance, corporate social responsibility and businesses' key role for innovation and growth.
Internal Market and Services Commissioner Michel Barnier said: "Shaping EU policy on European Company law is a challenge that we have to meet. Getting company law right makes it easier for businesses to develop across the EU to the benefit of their shareholders and customers. The landscape for company law is changing and we need to think about how best to adapt our regulatory framework. That is why I invite stakeholders to respond to the public consultation launched today."
What does the public consultation cover?
Input is requested both on the general orientation of European company law and on more specific initiatives that could be envisaged in the future. The following issues are covered in the consultation:
Objectives and scope of European company law – What should be the main objectives of European company law? Are the current rules fit for today's challenges? In which areas is there need for further evolution? What relationship between company law and corporate governance?
Codification of European company law – should the existing company law Directives be merged in a single instrument in order to make the regulatory framework more accessible and user-friendly?
The future of company legal forms at European level – What are the advantages and shortcomings of European company forms? Do existing company forms need to be reviewed? Should alternative instruments be explored?
Cross-border mobility for companies – What can be done to facilitate the cross-border transfer of a company's seat? What if a company splits into different entities cross border? Should the rules on cross border mergers be reviewed?
Groups of companies – i.e. a set of companies under a single management or source of control – Is there need for EU policy action in this field?
Capital regime for European companies – Should the existing minimum legal capital requirements and rules on capital maintenance be modified and updated?
What are the next steps?
The consultation is open until 14 May 2012. The responses received will be analysed and a feedback statement summarising the results will be published. Follow-up actions would be taken afterwards.
The existing European level legislation on company law includes a large number of directives and regulations. The harmonisation of European company law covers the protection of interest of shareholders and others, the constitution and maintenance of public limited-liability companies' capital, takeover bids, branches disclosure, mergers and divisions, minimum rules for single-member private limited-liability companies, shareholders' rights and related areas such as financial reporting and accounting. It also includes different European legal forms such as the European Company (SE), the European Economic Interest Grouping (EEIG) and the European Cooperative Society (SCE).
In 2011, the Commission issued a similar public consultation in the field of corporate governance (see IP/11/404). Both policy fields are closely linked as some corporate governance rules are enshrined in company law, and company law deals to a large extent with corporate governance issues. Thus, for the sake of coherence, any possible follow-up initiatives in these two fields would be announced jointly in the second half of 2012.
The consultation is accessible at:
More information: MEMO/12/119
Chantal Hughes (+32 2 296 44 50)
Carmel Dunne (+32 2 299 88 94)