(Codecision procedure: first reading)

The European Parliament,

–   having regard to the Commission proposal to the European Parliament and the Council (COM(2004)0730)(1),

–   having regard to Article 251(2) and Article 44(1) of the EC Treaty, pursuant to which the Commission submitted the proposal to Parliament (C6-0169/2004),

–   having regard to Rule 51 of its Rules of Procedure,

–   having regard to the report of the Committee on Legal Affairs and the opinion of the Committee on Economic and Monetary Affairs (A6-0050/2006),

1.  Approves the Commission proposal as amended;

2.  Calls on the Commission to refer the matter to Parliament again if it intends to amend the proposal substantially or replace it with another text;

3.  Instructs its President to forward its position to the Council and Commission.

(1) Not yet published in OJ.

(Text with EEA relevance)

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article 44(1) thereof,

Having regard to the proposal from the Commission,

Having regard to the opinion of the European Economic and Social Committee(1),

Acting in accordance with the procedure referred to in Article 251 of the Treaty(2),

Whereas:

(1)  The Second Council Directive 77/91/EEC of 13 December 1976 on coordination of safeguards which, for the protection of the interests of members and others, are required by Member States of companies within the meaning of the second paragraph of Article 58 of the Treaty, in respect of the formation of public limited liability companies and the maintenance and alteration of their capital, with a view to making such safeguards equivalent(3), sets out the requirements for several capital-related measures taken by those companies.

(2)  In its Communication to the Council and the European Parliament entitled "Modernising Company Law and Enhancing Corporate Governance in the European Union – A Plan to Move Forward" of 21 May 2003(4) the Commission draws the conclusion that a simplification and modernisation of Directive 77/91/EEC would significantly contribute to the promotion of business efficiency and competitiveness without reducing the protection offered to shareholders and creditors. Those objectives have first priority but do not affect the need to proceed without delay to a general examination of the feasibility of alternatives to the capital maintenance regime which would adequately protect the interests of creditors and of shareholders of a public limited liability company.

(3)  It should be open to Member States to permit public limited liability companies to attract considerations other than in cash to their capital without them having to resort to a special expert valuation in cases in which there is a clear point of reference for the valuation of such consideration. None the less, the right of minority shareholders to require such valuation should be guaranteed.

(4)  Public limited liability companies should be allowed to acquire their own shares up to the limit of the company's distributable reserves and the period for which such an acquisition may be authorised by the general meeting should be increased so as to enhance flexibility and reduce the administrative burden for companies which have to react promptly to market developments affecting their share price.

(5)  It should be open to Member States to permit public limited liability companies to grant financial assistance with a view to the acquisition of their shares by a third party up to the limit of the company's distributable reserves so as to increase flexibility with regard to changes in the ownership structure of the share capital of companies. This possibility should be subject to the appropriate safeguards, having regard to this Directive's objective of protecting both shareholders and third parties.

(6)  In order to enhance standardised creditor protection in all Member States, creditors should be able to resort, under certain conditions, to judicial or administrative proceedings where their claims are at stake as a consequence of a reduction in the capital of a public limited liability company.

(7)  In order to ensure that market abuse is prevented, the Member States should take into account, for the purpose of implementation of this Directive, the provisions of Directive 2003/6/EC of the European Parliament and of the Council of 28 January 2003 on insider dealing and market manipulation (market abuse)(5), of Commission Directive 2004/72/EC of 29 April 2004 implementing Directive 2003/6/EC of the European Parliament and of the Council as regards accepted market practices, the definition of inside information in relation to derivatives on commodities, the drawing up of lists of insiders, the notification of managers" transactions and the notification of suspicious transactions(6), and of Commission Regulation (EC) No 2273/2003 of 22 December 2003 implementing Directive 2003/6/EC of the European Parliament and of the Council as regards exemptions for buy-back programmes and stabilisation of financial instruments(7).

(8)  Directive 77/91/EEC should be therefore amended accordingly.

(9)  Member States are encouraged, in accordance with paragraph 34 of the Interinstitutional Agreement on better law-making(8), to draw up, for themselves and in the interest of the Community, their own tables illustrating, as far as possible, the correlation between this Directive and the transposition measures, and to make them public,

HAVE ADOPTED THIS DIRECTIVE:

Article 1

Directive 77/91/EEC is hereby amended as follows:

(1)  In Article 1(1), the 21st indent shall be replaced by the following:

(2)  The following Articles 10a and 10b shall be inserted:

Article 10a

1.  Member States may decide not to apply Article 10(1), (2) and (3) where, upon a decision of the administrative or the management body, transferable securities as defined in Article 4(1)(18) of Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments* or money-market instruments as defined in Article 4(1)(19) of that Directive are contributed as consideration other than in cash, and those securities or money-market instruments are valued at the weighted average price at which they have been traded on one or more regulated market(s) as defined in Article 4(1)(14) of that Directive during a sufficient period, to be determined by national law, preceding the effectuation of the respective consideration other than in cash.

However, where that price has been affected by exceptional occurrences that would significantly change the value of the asset at the effective date of its contribution, including situations where the market for such transferable securities or money-market instruments has become illiquid, a revaluation must be carried out on the initiative and under the responsibility of the administrative or management body. For the purposes of the aforementioned revaluation, Article 10(1), (2) and (3) shall apply.

2.  Member States may decide not to apply Article 10(1), (2) and (3) where, upon a decision of the administrative or the management body, assets other than the transferable securities and money-market instruments referred to in paragraph 1 are contributed as consideration other than in cash which have already been subject to a fair value opinion by a recognised independent expert and where the following conditions are fulfilled:

In the case of new qualifying circumstances that would significantly change the fair value of the asset at the effective date of its contribution, a revaluation has to be made on the initiative and under the responsibility of the administrative or management body. For the purposes of the aforementioned revaluation, Article 10(1), (2) and (3) shall apply.

In the absence of such a revaluation, one or more shareholders holding an aggregate percentage of at least 5% of the company's subscribed capital on the day the decision on the increase is taken may demand a valuation by an independent expert, in which case Article 10(1), (2) and (3) shall apply. Such shareholder(s) may submit a demand up until the effective date of the asset contribution, provided that, at the date of the demand, the shareholder(s) in question still hold(s) an aggregate percentage of at least 5% of the company's subscribed capital, as it was on the day the decision on the increase was taken.

3.  Member States may decide not to apply Article 10(1), (2) and (3) where, upon a decision of the administrative or the management body, assets other than the transferable securities and money-market instruments referred to in paragraph 1 are contributed as consideration other than in cash whose fair value is derived by individual asset from the statutory accounts of the previous financial year provided that the statutory accounts have been subject to an audit in accordance with Council Directive 84/253/EEC of 10 April 1984 on the approval of persons responsible for carrying out the statutory audits of accounting documents**.

The second and third subparagraphs of paragraph 2 shall apply mutatis mutandis.

Article 10b

1.  Where consideration other than in cash as referred to in Article 10a occurs without an expert's report as referred to in Article 10(1), (2) and (3), in addition to the requirements set out in Article 3(h) and within one month after the effective date of the asset contribution, a declaration containing the following shall be published:

That publication shall be effected in the manner laid down by the laws of each Member State in accordance with Article 3 of Directive 68/151/EEC.

2.  Where consideration other than in cash is proposed to be made without an expert's report as referred to in Article 10(1), (2) and (3) in relation to an increase in capital proposed to be made under Article 25(2), an announcement containing the date when the decision on the increase was taken and the information listed in paragraph 1 shall be published, in the manner laid down by the laws of each Member State in accordance with Article 3 of Directive 68/151/EEC, before the contribution of the asset as consideration other than in cash is to become effective. In that event, the declaration pursuant to paragraph 1 shall be limited to the statement that no new qualifying circumstances have occurred since the aforementioned announcement was published.

3.  Each Member State shall provide for adequate safeguards ensuring compliance with the procedure set out in Article 10a and in this Article where a contribution for a consideration other than in cash is made without an expert's report as referred to in Article 10(1), (2) and (3).

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* OJ L 145, 30.4.2004, p. 1.

** OJ L 126, 12.5.1984, p. 20.

(3)  In Article 11(1), the first subparagraph shall be amended as follows:

(a)  The words "Article 10" shall be replaced by "Article 10 (1), (2) and (3)".

(b)  The following sentence shall be added:

Articles 10a and 10b shall apply mutatis mutandis.

(4)  In Article 19, paragraph 1 shall be replaced by the following:

1.  Without prejudice to the principle of equal treatment of all shareholders who are in the same position, and to Directive 2003/6/EC of the European Parliament and of the Council of 28 January 2003 on insider dealing and market manipulation (market abuse)*, the laws of a Member State may permit a company to acquire its own shares, either itself or through a person acting in his own name but on the company's behalf. To the extent that the acquisitions are permitted, Member States shall make such acquisitions subject to the following conditions:

(5)  In Article 20(3) the words "Article 15(1)(a)" shall be replaced by the words "Article 15(1), points (a) and (b)".

(6)  In Article 23, paragraph 1 shall be replaced by the following:

1.  Where the laws of a Member State permit a company to, either directly or indirectly, advance funds or make loans or provide security, with a view to the acquisition of its shares by a third party, they shall make such transactions subject to the conditions set out in the second to fifth subparagraphs.

The transactions must take place under the responsibility of the administrative or management body at fair market conditions, especially with regard to interest received by the company and with regard to security provided to the company for the loans and advances referred to in paragraph 1. The credit standing of the third party or, in the case of multiparty transactions, of each counterparty thereto must have been duly investigated.

The transactions must be submitted by the administrative or management body to the general meeting for prior approval, whereby the general meeting shall act in accordance with the rules for a quorum and a majority laid down in Article 40. The administrative or management body must present a written report to the general meeting, indicating the reasons for the transaction, the interest of the company in effectuating such a transaction, the conditions at which the transaction is effectuated, the risks involved in the transaction for the liquidity and solvency of the company and the price at which the third party is to acquire the shares. This report shall be submitted to the register for publication in accordance with Article 3 of Directive 68/151/EEC.

The aggregate financial assistance granted to third parties must at no time result in the reduction of the net assets below the amount specified in Article 15(1), points (a) and (b), taking into account also any reduction of the net assets that may have occurred through the acquisition, by the company or on behalf of the company, of own shares in accordance with Article 19(1). The company shall include among the liabilities in the balance sheet, a reserve, unavailable for distribution, of the amount of the aggregate financial assistance.

Where a third party by means of financial assistance from a company acquires that company's own shares within the meaning of Article 19(1) or subscribes for shares issued in the course of an increase in subscribed capital, that acquisition or subscription must be made at a fair price.

(7)  The following Article 23a shall be inserted:

Article 23a

In cases where individual members of the administrative or management body of the company being party to a transaction referred to in Article 23(1), or of the administrative or management body of a parent undertaking within the meaning of Article 1 of Council Directive 83/349/EEC of 13 June 1983 on consolidated accounts* or such parent undertaking itself, or individuals acting in their own name, but on behalf of the members of such bodies or on behalf of such undertaking, are counterparties to such a transaction, Member States shall ensure through adequate safeguards that such transaction does not conflict with the company's best interest.

__________

* OJ L 193, 18.7.1983, p. 1. Directive as last amended by Directive 2003/51/EC of the European Parliament and of the Council (OJ L 178, 17.7.2003, p. 16).

(8)  In Article 27(2), the second subparagraph shall be replaced by the following:

Article 10(2) and (3) and Articles 10a and 10b shall apply.

(9)  In Article 32, paragraph 1 shall be replaced by the following:

1.  In the event of a reduction in the subscribed capital, at least the creditors whose claims antedate the publication of the decision to make the reduction shall be entitled at least to have the right to obtain security for claims which have not fallen due by the date of that publication. Member States may not set aside such a right unless the creditor has adequate safeguards, or unless the latter is not necessary in view of the assets of the company.

Member States shall lay down the conditions for the exercise of the right provided for in the first subparagraph. In any event, Member States shall ensure that the creditors are authorised to apply to the appropriate administrative or judicial authority for adequate safeguards provided that they can credibly demonstrate that due to the reduction in subscribed capital the satisfaction of their claims is at stake, and that no adequate safeguards have been obtained from the company.

(10)  In Article 41 paragraph 1 shall be replaced by the following:

1.  Member States may derogate from Article 9(1), Article 19(1)(a), first sentence, and Articles 25, 26 and 29 to the extent that such derogations are necessary for the adoption or application of provisions designed to encourage the participation of employees, or other groups of persons defined by national law, in the capital of undertakings.

Article 2

1.  Member States shall bring into force the laws, regulations and administrative provisions necessary to comply with this Directive by ...(9) at the latest.

When Member States adopt those provisions, they shall contain a reference to this Directive or be accompanied by such a reference on the occasion of their official publication. Member States shall determine how such reference is to be made.

2.  Member States shall communicate to the Commission the texts of the main provisions of national law which they adopt in the field covered by this Directive.

Article 3

This Directive shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.

Article 4

This Directive is addressed to the Member States.

Done at ...,

For the European Parliament For the Council

The President The President

(1) OJ C 294, 25.11.2005, p. 1. (2) Position of the European Parliament of 14 March 2006. (3) OJ L 26, 31.1.1977, p. 1. Directive as last amended by the Act of Accession of 2003. (4) COM(2003)0284. (5) OJ L 96, 12.4.2003, p. 16. (6) OJ L 162, 30.4.2004, p. 70. (7) OJ L 336, 23.12.2003, p. 33. (8) OJ C 321, 31.12.2003, p. 1. (9) * Eighteen months after the entry into force of this Directive.