Brussels, 29/10/2015 (Agence Europe) - An initial round of inter-institutional negotiations was held on Tuesday 27 October, on the revision of the directive on shareholders' rights, during which the Luxembourg Presidency of the Council of the EU said that the question of the tax transparency of multinationals should be left to one side until the results of the Commission's impact study have been published.
The Commission proposed this revision of the directive on shareholders' rights in April 2014. It did not include any provisions on country-by-country reporting, which would oblige the companies to make public, on a country-by-country basis, certain accounting data such as turnover, amount of tax paid, etc. However, the EP introduced this provision in its negotiating position on the directive and the States have not exactly jumped for joy (see EUROPE 11398).
The Luxembourg Presidency therefore explained to the MEPs that the Council could not consider public reporting at this stage and that the member states were against it. It also takes the view that the work should be consistent with the development of talks at international level. The G20 has adopted the OECD plan, which provides for reporting to the public administrations. On Wednesday, France stated that this provision would indeed be included in its amending finance bill. The Commission is currently conducting an impact assessment into this level of transparency and the results are expected in 2016. The Presidency of the Council therefore takes the view that it is better to wait for the outcome. The Commission shares this opinion, but the EP is sticking to its guns: it is struggling to accept the package without this provision, as the states would prefer the issue to be dealt with from a taxation point of view, subject to the unanimity rule and with a purely consultative opinion for the EP.
It is also worth noting that there is an enormous difference between the OECD proposal and that of the EP on the net consolidated turnover threshold to identify the companies to which the rule would apply (the OECD puts it at €750 million and the EP at €100 million).
The parties therefore agreed to start their negotiations with three expert-level meetings, in order to separate out the political questions to be dealt with at a subsequent stage. The first expert-level meeting is expected to take place in mid-November. The EP and the Commission are also reported to be insisting on an identification of all shareholders, whilst the Council wants to keep a limit of just 0.5% of shares. The EP stresses that certain companies have dispersed ownership and that a threshold would limit the possibility to identify many of the shareholders.
Remuneration. On the question of the pay of the directors of the companies in question, the EP and the Commission are reported to have insisted that the shareholders vote on the remuneration report, which describes how the remuneration policy was applied over the course of the year ended. The EP wants the states to make sure that remuneration in shares does not represent the greatest proportion of the directors' variable remuneration, and also to ensure that the value of the shares is not a decisive factor in calculating this remuneration, to avoid unnecessary risk-taking.
However, the Presidency of the Council takes the view that it is important to leave the companies a measure of independence in structuring their remuneration. It also stressed that the market capitalisation threshold (€200 million) below which companies may hold discussions on the remuneration report, rather than a consultative vote, was the subject of a compromise between the member states. Countries such as France and Spain want to bring in an obligation of this kind for all companies floated on the stock exchange, whilst Denmark and Italy take the view that the opinion of the general shareholders' meeting should remain nothing more than a guideline. The Commission points out that under this threshold of 200 million, just 10% of listed companies would be covered.
Lastly, the EP believes that the technical work on transactions with related parties will be very important as it could have a considerable impact on the ground. The Council shares the objective of protecting shareholders, the Presidency stresses, but it will be necessary to see how this protection can be best assured. (Original version in French by Elodie Lamer)