SEEUROPE Council Directives in Company Law and Workers’ Participation Overview by Johannes Heuschmid (March 2006) The presentation provides an overview of the most important – both already adopted and upcoming – council directives in corporate law. The purpose of each directive is explained briefly, and a link to the legal text is provided. We focus on each directive’s impact on worker participation rights, as far as this is relevant. European Trade Union Institute for Research, Education and Health and Safety

SEEUROPE Overview I: Directives already adopted  First Council Directive – Disclosure (68/151/EEC)  Second Council Directive – Capital (77/91/EEC)  Third Council Directive – Domestic Mergers (78/855/EEC)  Fourth Council Directive – Annual Accounts (78/660/EEC)  Sixt Council Directive – Divison (82/891/EEC)  Seventh Council Directive – Consolidated Accounts (83/349/EEC)  Eighth Council Directive – Qualifications of Auditors (84/253/EEC)  Eleventh Council Directive – Branches (89/666/EEC)  Twelfth Council Directive – Single Member Limited Liability Companies (89/667/EEC)  SE Directive (2001/86/EC)  Thirteenth Council Directive – Takeover Bids (2004/25/EC)  Tenth Council Directive – Cross Border Mergers (2005/56/EC)

SEEUROPE Overview II: Directives coming up  Forteenth Directive – Cross-border Transfer of the Registered Offices of Limited Liability Companies (under consultation)  Board responsibilities, improvement of financial information and corporate governance directive proposal COM (2004) 725 COM (2004) 725  Company capital directive proposal COM (2004) 730COM (2004) 730  Shareholders’ rights directive proposal COM (2005) 685COM (2005) 685

SEEUROPE Overview III: Failed Directives  Fifth Directive (structure of public limited liability companies)  Ninth Directive (group law)

SEEUROPE Overview IV: Measures planned in the longer term  One share, one vote  Alternative system for minimum capital  Choice between one-tier and two-tier systems

SEEUROPE First Directive – Disclosure – of (68/151/EEC)68/151/EEC  Purpose  To coordinate the Regulations concerning disclosure, organs’ powers of representation and the nullity of companies with limited liability.  Legal basis  Art. 44 II lit.g EC (former Art. 54 III lit.g EEC)  Amendments  Directive 73/101/EEC  Directive 2003/58/EC

SEEUROPE Second Directive – Capital – of (77/91/EEC)77/91/EEC  Purpose  Harmonisation of public liability companies in the EC, as well as the maintenance and alteration of their capital.  Legal basis  Art. 44 II lit.g EC (former Art. 54 III lit.g EEC)  Amendments  Directive 92/101/EEC  Proposal COM (2004)730

SEEUROPE Third Directive – Domestic Mergers – of (78/855/EEC)78/855/EEC  Purpose  To lay down rules concerning mergers between public limited liability companies from the same Member State.  Legal basis  Art. 44 II lit.g EC (former Art. 54 III lit.g EEC)  Amendments  No

SEEUROPE Fourth Directive – Annual Accounts – of (78/660/EEC)78/660/EEC  Purpose  To coordinate Member States' provisions concerning the presentation and content of annual accounts and annual reports, the valuation methods used and their publication in respect of all companies with limited liability.  Legal basis  Art. 44 II lit.g EC (former Art. 54 III lit.g EEC)  Amendments  Directive 83/349/EEC  Directive 84/569/EEC  Directive 89/666/EEC  Directive 90/604/EEC  Directive 90/605/EEC  Directive 94/8/EC  Directive 2001/65/EC  Directive 2003/38/EC  Directive 2003/51/EC  Proposal COM (2004) 725

SEEUROPE Sixth Directive – Division – of (82/891/EEC)82/891/EEC  Purpose  To lay down rules concerning divisions of public limited liability companies from the same Member State.  Legal basis  Art. 44 II lit.g EC (former Art. 54 III lit.g EEC)  Amendments  No  Employee participation A division could have impact on the participation rights. This depends on the thresholds of the national participation laws.

SEEUROPE Seventh Directive – Consolidated Accounts – of (83/349/EEC)83/349/EEC  Purpose  To coordinate national laws on consolidated (i.e. group) accounts. Together with the Fourth Directive on the annual accounts of public limited liability companies, it belongs to the family of "accounting directives" formed by the Community legal acts on company accounts.  Legal basis  Art. 44 II lit.g EC (former Art. 54 III lit.g EEC)  Amendments  Directive 89/666/EEC  Directive 90/604/EEC  Directive 90/605/EEC  Directive 2001/65/EC  Directive 2003/51/EC  Proposal COM (2004)725

SEEUROPE Eighth Directive – Qualifications of Auditors – of (84/253/EEC)84/253/EEC  Purpose  To define the qualifications of persons responsible for carrying out the statutory audits of the accounting documents required by the fourth and seventh Directives.  Legal basis  Art. 44 II lit.g EC (former Art. 54 III lit.g EEC)  Amendments  Proposal COM (2004)177

SEEUROPE Eleventh Directive – Disclosure Requirements in Respect of Branches – of (89/666/EEC)89/666/EEC  Purpose  To lay down rules concerning the disclosure requirements imposed in a Member State in respect of branches of companies governed by the laws of another State in order to provide an equivalent level of protection for shareholders and third parties.  Legal basis  Art. 44 II lit.g EC (former Art. 54 III lit.g EEC)  Amendments  no

SEEUROPE Twelfth Directive – Single Member Limited Liability Companies – of (89/667/EEC)89/667/EEC  Purpose  To create a legal instrument allowing the limitation of the individual entrepreneur’s liability throughout the Community.  Legal basis  Art. 44 II lit.g EC (former Art. 54 III lit.g EEC)  Amendments  no

SEEUROPE SE Directive of (2001/86/EC)2001/86/EC  Purpose  To complement the Statute on the European Company with regard to the involvement (participation) of employees in the European company.  Legal basis  Art. 308 EC (this is the wrong basis: the right one would be Art. 137 I lit.f EC)  Amendments  no  Employee participation  Several models of participation by agreement are possible, the most important being the board-level representation of employees. If there is no satisfactory arrangement, a set of standard rules on participation becomes applicable.  Mandatory information and consultation standards.

SEEUROPE Thirteenth Directive – Takeover Bids – of (2004/25/EC)2004/25/EC  Purpose  To achieve greater legal certainty with regard to takeover bids, while protecting the interests of shareholders (and particularly minority shareholders), employees and any other interested parties.  Legal basis  Art. 44 I EC  Amendments  no  Employee participation  employees or their representatives of the offeree and the offeror company must be informed about the bid;  employees or their representatives have the right to draft an opinion relating to the takeover.

SEEUROPE Tenth Directive – Cross-border Mergers – of the (2005/56/EC)  Purpose  To create a legal instrument to facilitate cross-border mergers of commercial companies.  Legal basis  Art. 44 EC  Amendmnets  No.  Employee participation  Provisions pretty close to the SE. In cases in which participation rights are concerned the SE procedure will apply. That means, first negotiations, after which, if no agreement is reached, a set of standard rules apply.

SEEUROPE Forteenth Directive – Cross-border Transfer of the Registered Offices of Limited Companies  Purpose  To make it possible for a company to choose the national law which, in its view, best meets its requirements and to relieve companies of the obligation, when carrying out such a transfer, to go through liquidation proceedings.  Legal basis  Art. 44 EC (probably)  State of the art  Subject to a consultation.consultation  Employee participation  Provisions probably pretty close to the 10th. If the transfer results in a reduction or lost of participation rights the SE procedure will apply. That means, first negotiations, after which, if no agreement is reached, the participation rights of the previous company will apply.