Parliament could delay transparency law

A key law in the European Commission's Financial Services Action Plan could be delayed until after the June European elections, EUpolitix.com has learned.

Hopes of an early deal may be scuppered by the European Parliament’s determination to scrutinise amendments to a compromise text agreed by EU governments.

The law will make sure all companies listed on EU stock markets have to provide the same business information to investors to boost confidence and investment levels within the EU.

After heavy debate, national governments finally reached a watered down compromise in November with less stringent rules on the information companies should provide to investors every three months.

The commission hoped parliament would simply vote for the council compromise so that the law could be adopted  before the European elections in June.

But Peter Skinner, the MEP in charge of drafting amendments to the council text, told EUPolitix that the parliament was intending to make several changes.

This could push the legislation to a second reading, which will not be possible during the current parliamentary term.

Although Skinner supports the council text on quarterly reporting, trading statements issued by listed companies roughly every three months should only include the most basic information, and not provide any value added information, he said.

"They can even just repeat the annual report if they want to", Skinner said. "It should be a statement, not a blow by blow account of everything that's happened."

The reporting issue caused controversy among governments, which wrangled over whether to force companies to publish detailed information including turnover and profit and loss every quarter, as required under the original commission text.

The commission, supported by countries that already require companies to report on a quarterly basis, insisted this would improve investor confidence.

But some member states, particularly the UK, claimed the requirement would be too costly.

Under the November compromise, companies would only have to publish quarterly reports with details of any events that could change the company's outlook, any changes in the makeup of the firm, or debt repayments.

Skinner said he will also try to make sure that the five year review included in the council draft does not give the commission carte blanche to re-introduce quarterly reporting.

Instead, under a "belt and braces approach", the MEP said the commission would have to consult member states and MEPs to be able to change the law.

Other parliament amendments include forcing all senior managers to declare their salaries and expenses and even shares they hold, even if they are not on the board of directors.

"We've taken an anti-corruption angle on the text", Skinner told this website.
Extractive industries such as oil and gas companies would also have to declare all payments to governments to avoid cash escaping into private pockets, he added.

MEPs are set to vote on the new draft in the parliament's economic and monetary affairs committee on Tuesday, and then the law will be passed back to EU governments.

If the parliament’s amendments are not automatically accepted by member states, a commission spokesman said the law would be delayed by at least six months.

The proposal is one of the key directives in the FSAP, which aims to create a single EU financial services market by 2005.

To date 36 of the 42 measures in the plan have been adopted.

 

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