Brussels, 11/10/2010 (Agence Europe) - On Monday 11 October 2010, the Competitiveness Council formally adopted two financial services directives.
The first item of legislation introduces the first European Union rules restricting the size of bonuses and pension entitlements as a proportion of normal salary (see EUROPE 10171). The new rules make the payment of bonuses dependent on a bank's medium-term performance. The payment of at least 40% of bonuses will be not be paid out until at least three years later. Cash bonuses cannot be more than 50% of salary. There are stricter rules for lending establishments that have received state aid, which will only be allowed to pay bonuses if they have met their capital requirements and paid back all the state aid received. The directive also increases risk capital requirements for the trading book, lays down rules for complex securities and boost security deal transparency.
The second item of legislation simplifies rules on company reports published when selling stocks and shares (see EUROPE 10161), setting out disclosure obligations for small companies, small lenders and state bonds and guarantees. For example, the threshold at which the sale of stocks and shares become exempt from the duty to publish a company report is doubled from €2.5 to 5 million. The €1000 threshold for a single stock or share, however, has been retained. Above this level, the seller can chose the country in which it registers the company report. (M.B. trans fl)