European Company Law Directives

My Department is today launching three consultations on implementation of European Company Law Directives. The first of these is the consultation on the implementation of the Statutory Audit of Annual and Consolidated Accounts Directive (Directive 2006/43/EC). This directive is in part a response at EU level to the corporate scandals of earlier in the decade. It updates the provision on auditor qualification, ethics and registration as well as providing for external quality assurance, public oversight and investigations. There are also provisions for co-operation between audit regulators, both within the EU and with third countries. In respect of listed companies, there are new provisions on audit committees, and the oversight of third country auditors. Existing UK law already provides for many of the requirements of the directive, and only minor adjustments will be required in these areas. There are, however, some areas, such as audit committees and the provisions for third country auditors where new provision will be needed. The Government propose to build on the existing UK audit framework in its implementation of these provisions, and options are set out in the consultation document. This directive must be implemented in the UK by 29 June 2008. The second consultation document concerns implementation of a directive which amends EC Accounting Directives, (the fourth and seventh Company Law Directives, Bank Accounts and Insurance Company Accounts Directive) (Directive 2006/46/EC). This directive was part of the EU company law action plan, produced by the Commission in 2003, reflecting issues arising from the post-Enron environment. The overall objective of this directive was to ““further enhance confidence in the financial statements and annual reports published by European companies’ (EU Commission) by improving access to reliable and complete information. This directive must be implemented in the UK by 5 September 2008. And finally, the third consultation being published today is looking at the implementation of the cross-border mergers directive in the UK (Directive 2005/56/EC). This directive aims to establish for the first time, a legal facilitative framework enabling cross-border mergers between companies within the European Economic Area (EEA). This directive also deals with employee participation issues where participation rights exist in any of the merging companies or under the law of the member state in which the company resulting from the merger will be registered. This directive must be implemented by 15 December 2007. These consultative documents will be placed in the Libraries of both Houses and will be available on the DTI website. These consultations ask a wide range of questions about the scope of the directives concerned and suitability of the implementing measures proposed. We welcome views from all stakeholders with an interest in these areas.