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I. Company Law and Trade in Securities

Published online by Cambridge University Press:  17 January 2008


In the last two years there has been significant legislative activity in the field of company law. The most important development in the field of securities law has been the adoption of a directive amending, inter alia, the Investment Services Directive1 and the directive on undertakings for collective investments in transferable securities2, with a view to reinforcing prudential supervision3. A number of initiatives have been taken with a view to preparing for economic and monetary union. In particular, the Commission has submitted a proposal for a directive on cross-border credit transfers within the European Union which, if adopted, will increase efficiency of cross-border payments4. The regulation of trade in financial services between the Community and third States is of increasing importance, following the conclusion of the General Agreement on Trade in Services5.

Current Developments: European Community Law
Copyright © British Institute of International and Comparative Law 1997

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1. Council Directive 93/22/EEC (1993) O.J. L141/27.Google Scholar

2. Council Directive 85/611/EEC (1985) O.J. L375/3 as amended.Google Scholar

3. European Parliament and Council Directive 95/26/EC (1995) O.J. L168/7. Minor amendments to the Investment Services Directive and the Capital Adequacy Directive are proposed by COM(96)292 (1996) O.J. C221/31, and COM(96)183 (1996) O.J. C208/8. See also amended proposal for a directive on investor compensation schemes COM(94)585 (1994) O.J. C382/27, and the Commission's Green Paper, “Financial Services: Meeting Consumers' Expectations” COM(96) 209, 05 1996.Google Scholar

4. See COM(95)264 (1995) O.J. C199/16 and, more recently, COM(96)172 adopted by the Commission on 19 04 1996. The Council has issued two recommendations on the broad guidelines of the economic policies of the member States and of the Community: Recommendation of 10 07 1995 (1995) O.J. L191/24; Recommendation of 8 07 (1996) O.J. L179/46.Google Scholar

5. See Council Decision of 25 June 1996 concerning the conclusion on behalf of the EC of the results of the WTO negotiations on financial services and on the movement of natural persons (1996) O.J. L167/23.

6. COM(95) 655 (1996) O.J. C162/5.Google Scholar

7. The Convention was adopted on the basis of Art.220 EC. It was opened for signature on 23 Nov 1996 and was intended to remain open for six months. See also Council Directive 94/45/EC on the establishment of a European Works Council or a procedure in Communityscale undertakings and Community-scale groups of undertakings for the purposes of informing and consulting employees (1994) O J. L254/64. The directive was adopted pursuant to the Agreement on Social Policy annexed to Protocol 14 annexed to the EC Treaty by the Treaty on European Union. See further, Commission Communication on employee information and consultation COM(95)547.

8. See, in particular. Commission Recommendation of 3 Apr. 1996 concerning the definition of small and medium-sized enterprises (1996) O.J. L107/4; Commission Recommendation of 7 Dec. 1994 on the transfer of SMEs (1994) O.J. L384/14 and (1994) O.J. C400/1.

9. Art.5. The general principles are exemplified by specific, minimum, requirements: see Arts.6–10.

10. Under Art.8(a) the board of the offeree company must abstain from action which may result in the frustration of the offer.

11. Art.3 provides that, where a person acquires effective control of a company, he must be required to make a mandatory bid or offer other equivalent means in order to protect the minority shareholders of the company.

12. See DTI, Consultative Document on the proposed thirteenth company law directive, 04 1996, p.10.Google Scholar

13. Art.4(1); see also Art.4(5). It is remarkable that the House of Lords Select Committee on the European Communities (13th Report, Session 1995–1996) has recommended that the proposal should not be adopted. The Committee's principal conclusion is that any gains in the form of harmonisation and improvement in the regulatory systems of other member States are outweighed by the risk of damage to the existing regulation in the UK which is fully adequate. The Committee also criticises the proposal on the following grounds: (a) it does not safeguard fully the self-regulatory position of the Panel on Take-overs and Mergers; (b) it does not guarantee a sufficient level of protection to minority shareholders; (c) it does not address the real barriers to take-overs.

14. The Convention provides for the opening of “main proceedings” in the State in which the centre of a debtor's main interests is situated (Art.3). There is only one set of “main proceedings”, which must be recognised by all member States. The Convention permits the opening of “secondary proceedings” in member States where the debtor has an establishment but those are restricted to assets situated in that State (Art.27). Thus, the Convention does not follow the principle of unity of the insolvency proceedings but introduces a principle of “attenuated universality”. See further the Report on the Convention of the House of Lords Select Committee on the European Communities, Session 1995–96, 7th Report.

15. Case C–384/93 Alpine Investments BVv. Minister van Financiën [1995] E.C.R. 1–1141.

16. Case C–267 and C–268/91 Criminal Proceedings against Keck and Mithouard [1993] E.C.R. 1–6097. In that case the Court held that national provisions restricting certain selling arrangements do not fall within the scope of Art.30 EC, provided that they apply in a non-discriminatory manner to domestic products and products from other member States.

17. The Court found that the banning of cold-calling satisfied the test of proportionality although less severe restrictions were imposed in other member States.

18. In Case C–441/93 Pafitis, judgment of 12 03 1996, the Court confirmed previous case law to the effect that Art.25 of the Second Company Law Directive precludes the increase of capital of a public company by an administrative measure without a resolution of the general meeting. In Case C–101/94 Commission v. Italy, judgment of 6 06 1996, the Court declared that, by restricting the activity of dealing in transferable securities to companies whose registered office is in the national territory, Italy infringed Arts.52 and 59 EC. See further Case C-234/94 Tomberger v. Gebriider von der Wettern GmbH, judgment of 27 06 1996, Case C-155/94 Welcome Trust Ltdv. Commissioners of Customs and Excise, judgment of 20 06 1996, and Case C–334/94 Commission v. France, judgment of 7 03 1996.Google Scholar

19. Case C–484/93 Svensson and Gustavsson v. Ministre du Logement et de l'Urbanisme [1995] E.C.R. 1–3955.

20. Joined Cases C–358 and C–416/93 Criminal Proceedings against Aldo Bordessa and Others [1995] E.C.R. 1–361.

21. The difference is that the requirement of authorisation makes the export subject to the discretion of the administrative authorities and has the effect of suspending it whereas the requirement of declaration does not. The judgment is based on Arts.1 and 4 of Council Directive 88/361 for the implementation of Art.67 EC ((1988) O.J. L178/5).

22. Joined Cases C–163, C–165 and C–250/94 Sanz de Lera and Others [1995] E.C.R. 1–4821.

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