Brussels, 10/05/2002 (Agence Europe) - The European Commission has launched a second and final round of consultations on updating current regulations concerning information that publicly traded companies must provide on a regular basis regarding their financial situation and their shareholders. The Commission is to present a legislative proposal before the end of the year on the basis of the results of this consultation and of recommendations presented in July 2002 by the high level group of experts, chaired by Jaap Winter. The parties concerned have until 5 July to give their views, on the basis of documents published on the website: http: //europa.eu.int/comm/internal_market/en/finances/mobil/transparency/index.htm
"The collapse of Enron has underlined the need to improve the quality, regularity and comparability of financial statements by publicly traded companies", stressed Internal Market Commissioner Frits Bolkestein, in a press release. The future directive will modernise the rules defined in the eighties concerning information that companies whose securities are traded on regulated markets must provide: 1) periodic financial information every year, twice a year and quarterly; 2) information on changes in the capital structure and voting rights, as well as changes to companies' internal rules on matters such as employee share schemes and managers holding shares and stock operations, etc. In some respects, the text will complete the "prospectus" directive on the table for adoption, which this time specifies the information that must be provided by the issuer of securities when they are quoted on the stock markets or when calls for tenders are made.
Consultation covers four issues: 1) Financial reporting: the new consultation paper suggests a more differentiated approach based on the size of the companies issuing equity. Those whose annual turnover exceeds EUR 25 million would have to provide, on a quarterly basis, a condensed set of financial statements and a management report. Smaller equity issuers should publish quarterly declarations, but only on net turnover and profit or loss before and after tax deduction. Issuers of debt securities whose shares were not admitted to a regulated market could be subject only to half-yearly reporting requirements. 2) Treatment of security holders: To improve participation in shareholder meetings, the Commission services are considering reinforcing shareholders' existing rights to equal treatment. Shareholders could be allowed to vote by proxy. More importantly, the Commission services invite views on the possibility of introducing electronic voting. It is also awaiting comments on this from the High Level Group of Company Law Experts chaired by Jaap Winter in its next report due later in the summer. 3) Information on the structure of capital and voting rights: Commission services consider: - lowing the initial threshold for disclosure from 10% to 5% of the voting rights; - introducing further thresholds of 15%-30% of voting rights; - shortening to five calendar days the current time limits within which the owner and the issuer must disclose the relevant information; - requiring the disclosure of complete information on the contents of agreements amongst shareholders. 4) Basic means for disseminating information: Commission services are considering clarifying the issuer's direct legal obligation to provide information to the public, through Community rules on some basic ways information must be made available, such as on the issuer's website and in the press, the traditional means for this kind of publication.