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II. Company Law and Trade in Securities

Published online by Cambridge University Press:  17 January 2008


In the last two years, there has been a dearth of legislative initiatives in the field of company law.1 This may be attributed to several reasons. Whilst the company law harmonisation programme is now largely complete, the principle of subsidiarity has to some extent hampered moves toward further harmonisation. Disagreement still reigns over certain crucial issues such as employee participation in corporate management. Also, in the light of the objective to advance EMU, there has been a shift in the Community's priorities. The search for consensus continues in relation to the proposal for a thirteenth company law directive on take-overs and the proposed European Company Statute, although, currently, the national delegations seem to be closer to agreement in relation to the latter than in relation to the former.2

Current Developments: European Community Law
Copyright © British Institute of International and Comparative Law 1999

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1. Not much progress has been made in relation to the Proposed Fifth Company Law Directive. Work is under way in relation to the proposed Tenth Directive on cross-border mergers. The Commission's plans for 1996 also announced a new proposal for a Fourteenth Company Law Directive on the inter-State transfer of a corporate seat. In 1997 the Commission initiated a consultation process seeking to determine the suitability of the current regulatory framework for the needs of the internal market and to identify opportunities for simplification or deregulation. See Commission Consultation Paper on Company Law, 1997.

2. The UK continues to oppose the proposed thirteenth directive mainly on the grounds that it would lead to an increase in tactical litigation and would jeopardise the successful system of self-regulation operating in the UK. There is also disagreement regarding the rules pertaining to conflicts of jurisdiction in inter-state take-overs.

3. (1997) O.J. L84/22.Google Scholar

4. (1998) O.J. L166/45.Google Scholar Note also Directive 97/5 on cross-border credit transfers ((1997) O.J. L43/25)Google Scholar and Council Decision of 14 Dec. 1998 concerning the conclusion on behalf of the EC, as regards matters within its competence, of the results of the World Trade Organization negotiations on financial services ((1999) O.J. L20/38).Google Scholar

5. Directive 93/22 on investment services in the securities field (1993) O.J. L141/27.Google Scholar

6. Certain types of investor may be excluded. They include institutional and professional investors, government bodies and large corporations.

7. Directive 97/9, Art.4. The compensation scheme to which a firm belongs covers also investors in branches of the firm located in other member States. However, to avoid the level of protection becoming an element of competition, until 31 Dec. 1999 the level of the cover provided for by the home State may not exceed the maximum level of cover offered by the corresponding compensation scheme of the State where the branch is located. See Art.7.

8. These proposals include, inter alia, a proposed directive on certain legal aspects of electronic commerce in the internal market (COM(1998) 586 (1999) O.J. C30/4)Google Scholar, proposed directives on the taking-up, pursuit and prudential supervision of the business of electronic money institutions, and a proposed electronic signatures directive.

9. COM(1998) 468 (1998) O.J. C385/10.Google Scholar Note also proposals for extending the scope of Directive 86/611 on collective investment undertakings: (1998) 5 Eu. Financial Services L.95Google Scholar, and see “Financial Services: Building a Framework for Action”, Commission Communication to the Council and Parliament, 1998.

10. Case C–212/97, Centros Ltd v. Erhvervs- og Selskabsstyrelsen, 9 Mar. 1999. For the application of Art.52 to companies, see also Case C–250/95, Futura Participations SA v. Administration des Contributions [1997] E.C.R. 12471Google Scholar, Case C–264/96, ICI [1998] E.C.R. 14695.Google ScholarSee further Case C–70/95, Sodemare [1997] E.C.R. 13395Google Scholar and Case C–122/96, Saldanha and MTS Securities Corporation v. Hiross Holdings AG [1997[ E.C.R. 15325.Google Scholar

11. Case 79/85 [1986] E.C.R. 2375.Google Scholar

12. Case C–222/95, Parodi v. Banque H. Albert de Bary [1997] E.C.R. 13899.Google Scholar

13. In Case C–57/95, France v. Commission [1997] E.C.R. 11627Google Scholar the Court annulled a Commission Communication on the internal market for pension funds. In Case C–118/96, Safir [1998] E.C.R. 11897Google Scholar, the Court found that Swedish legislation which provided a different tax regime for capital life assurance policies taken out with companies established in other member States from that applicable to those taken out with Swedish companies breached Art.59 EC. The legislation lacked transparency and was liable to dissuade inter-State trade in services. See also Case C–410/96, Ambry, judgment of 1 Dec. 1998; Case C–366/97, Romanelli, judgment of 11 Feb. 1999 (Second Directive on credit institutions); Case C–172/96, Commissioners of Customs and Excise v. First National Bank of Chicago, judgment of 14 July 1998 (Sixth VAT Directive on Foreign Transactions); Case C–233/94, Germany v. Council and Parliament [1997] E.C.R. 12405 (unsuccessful challenge against the validity of Directive 94/19 on deposit guarantee schemes).Google Scholar

14. See Case C–97/96, Daihatsu Deutschland [1997] E.C.R. 16843 (First Directive)Google Scholar; Case C–191/95, Commission v. Germany, judgment of 29 Sept. 1998; Case C–234/94, Tomberger v. Gebrüder von der Western GmbH [1996] E.C.R. 13133 (Fourth Directive on Annual AccountsGoogle Scholar); Case C–402/96, European Information Technology Observatory [1997] E.C.R. 17515 (EEIG Regulation)Google Scholar; Case C–28/95, Leur-Bloem [1997] E.C.R. 14161 (Directive 90/434 on the common system of taxation applicable to mergers).Google Scholar

15. Case C–104/96 [1997] E.C.R. 17211.Google Scholar

16. Case C–42/95 [1996] E.C.R. 16017.Google Scholar

17. Case C–367/96, Kefalas v. Greek State and OAE [1998] E.C.R. 12843.Google Scholar

18. Art.25(1) states that any increase in capital must be decided upon by the general meeting.

19. See e.g. Case C–441/93, Pafitis v. TKE and Others [1996] E.C.R. 11347Google Scholar; Case C–20/90, Karellas [1991] E.C.R. 12691.Google Scholar

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