A Winter's tale: the European Commission's attempts to harmonise company law in the EU have been criticised before for being more concerned with political dogma than business needs, writes Stephen Copp. But recent developments--particularly the report of its legal expert group--suggest that harmonisation might be a positive force for reform.
| Author | Copp, Stephen |
| Position | EU Company Law |
A prominent legal academic called Len Shaw, writing in his 1984 book Company Law and Commercial Reality, recalled a conversation he'd once held with a politician who'd had considerable experience of European affairs.
"You don't understand that negotiations in Europe are a question of give and take, he was told, rather patronisingly. "You have to be prepared to make concessions on something unimportant and technical, such as a company directive, so that you can keep something in reserve. You need to save the big guns for topics that really matter: sheep-meat or UHT milk."
Nearly two decades later, it's clear that the tide has turned: now company law and corporate governance are seen as the topics that really matter in Europe, especially in the light of the Enron and WorldCom scandals in the US. There is growing evidence of a new approach to company law harmonisation that bodes well for businesses in the EU.
The origins of this new approach can be traced to the July 2001 defeat in the European Parliament of proposals for a thirteenth directive on takeovers, which had already undergone 12 years of drafting and redrafting. Two months later the European Commission established the High-Level Group of Company Law Experts. This body's immediate task was to prepare a new proposal for the directive. But, significantly, its wider remit was "to define new priorities for the broader future development of company law in the EU". It was also to "provide recommendations for a modern regulatory European company law framework designed to be sufficiently flexible and up to date to meet companies' needs, taking into account fully the impact of information technology".
The language used here was similar to that of the company law review launched by the UK government in 1998, which has enjoyed widespread support. It may be a coincidence, but it's interesting to note that the British representative on the group is Jonathan Rickford, a key figure in the company law review.
Later, in the light of the EC's initial analysis of the Enron scandal, the mandate of the group was extended further in April 2002 to cover additional corporate governance and auditing issues, such as the role of non-executive directors. (This development paralleled the creation of the Higgs committee in the UK in the same month.) The group's report--named after its chairman, Jaap Winter--was published in November 2002.
The Winter report covers not only companies but also co-operatives and other...
To continue reading
Request your trialCOPYRIGHT GALE, Cengage Learning. All rights reserved.
