19 December 2007

JURI meeting 19 December

A simplified business environment for companies in the areas of company law, accounting and auditing

Rapporteur: Klaus-Heiner Lehne (EPP/DE)

Rapporteur Klaus Lehne renewed his intention to follow the Commission’s second, less far-reaching option focusing only on concrete, individual simplification measures in order to help EU companies.

He said that simplification does not necessarily mean deletion, and reminded that finding compromises on certain issues was often difficult.

He also said that one should concentrate particularly on those legislative measures arising from the Sarbanes-Oxley act in the US, such as the rules of the Transparency Directive and the Fourth and Seventh Companies Directives.

Manuel Medina (PSE/ES) underlined to take into account the differences of law in the anglo-saxon model and continental law which may lead to differences in the application and interpretation of the same legislation.

Sharon Bowles (ALDE/UK) generally supported the rapporteur’s view but reminded that it has to be important to know where the report is heading for. Experience shows that Sarbanes-Oxley and transparency do not necessarily, although well intended, lead to the desired outcome. She also reminded to the lessons to be learned from Northern Rock.

With regard to point 14 of the draft report Mrs Bowles noted that this might anticipate an initiative report on institutional investors currently under preparation.

Lidia Geringer (PSE/PL) noted that too much of a simplification might result into chaos. She underlined that changes have to go deeper (without specifying them).

Responding to the discussion Klaus Lehne reminded the Committee that the Commission will have to react on the report and concrete discussions on certain issues will start that after. Due to the assumed differences of the anglo-saxon/continental model he was optimistic to take the best elements of both systems on board. Difficulties do exist with regard to IFRS and standard setting, but these issues are currently under discussion in ECON and part of the Radwan report.

With regard to point 14 of the draft report and the initiative report he will accept amendments aimed to delete this point.

Timeline:

Deadline for amendments 21 January

Draft report

Insurance and reinsurance - Solvency II

Rapporteur: Sharon Bowles (ALDE/UK)

In a first exchange of views Rapporteur Sharon Bowles (ALDE/UK) said that one important area she will concentrate on is the aspect of group supervision. There is still a lack of certainty with regard to the treatment of subsidiaries and related compensation issues, she said.

Another aspect she wants to concentrate on is the ‘role of courts’ when it comes to the winding-up of institutions. Particularly with regard to the UK experience of ‘Equitable Life’ she called for better harmonisation of compensation rules.

Klaus-Heiner Lehne (EPP/DE) asked about the timing, particularly with regard to the expected publication of the recast version, which became necessary after the adoption of the Acquisitions Directive in September 2007. Karel van Hulle (DG Financial Institutions) made clear that this will be published in due course. However, the recast version does not affect the Solvency II part of the Directive.

Timeline:

Draft Opinion: 25 February

Deadline Amendments: 14 March

Vote in Committee: 8 April

Exchange of views with Mr Charlie McCreevy

Commissioner McCreevy announced a series of measures in the area of statutory audit. The directive on statutory audit comes into effect on 29 June 2008. “We need to introduce more competition in the audit profession”, McCreevy said. “I am thinking of generating an environment where market forces work better and competition thrives.”

The Audit Package the Commissioner proposed includes:

- a recommendation limiting Auditor Liability to be brought forward in 2008.

- a consultation on Ownership Restrictions in Audit Firms to be launched in the first quarter of 2008.

- a recommendation setting high standards on Audit Quality and Inspections also in the first quarter of 2008.

- a scoreboard to monitor the Implementation of the Statutory Audit Directive by Member States

- further work on International Standards on Auditing to decide whether or not to adopt them by the end of 2008.

- And in January 2008 transitional measures on certain third country audits until 2011.

With regard to make ISAs mandatory for the European Union it is too early to decide, McCreevy said. “Standard setter – the IAASB – has embarked on a so-called "Clarity Project" which the Commission is involved in. By the end of 2008, this project should produce its results”, McCreevy said. “I want to see how this work proceeds.”

In parallel, the Commission has also launched two studies which will be carried out by external consultants in the course of next year:

- on the costs and benefits of introducing ISAs in Europe, and

- on the potential differences between ISAs and US auditing standards.

Bert Doorn (EPP/NL) raised a question of the practical problems with regard to cross-border rules. There are also different surveillance systems existing in the Member States with some being independent, others not.

Mr McCreevy responded that he will therefore propose a recommendation only that gives Member States the possibility to discuss that issue.

Full speech

© Graham Bishop