EU Proposes Simplifying Company Accounting Laws

by Ulrika Lomas, for LawAndTax-News.com, Brussels

16 July 2007

The European Commission last Thursday put forward measures which would simplify the business environment for EU companies in the areas of company law, accounting and auditing.

The proposed measures, which are set out in a Communication, would remove or reduce a range of administrative requirements that are considered outdated or excessive.

The key measures under consideration are:

• Repealing company law Directives that deal mainly with domestic situations (e.g. domestic mergers of companies, domestic divisions, capital of public limited companies and private single-member limited-liability companies) or removing certain information obligations in the company law Directives;
• Simplifying disclosure requirements for companies and for branches;
• Further reducing reporting and auditing requirements for small and medium-sized enterprises.

On the basis of discussions with Member States, the European Parliament and stakeholders, the Commission will carry out full and comprehensive impact assessments, which will also take account of administrative costs.

Internal Market and Services Commissioner Charlie McCreevy explained that:

"If we want to enable European businesses to compete in today's global market, we need to cut red tape. Many EU rules on company law and accounting are more than twenty years old and place unnecessary burdens on EU businesses. We now need to ask how they could be improved to meet today's requirements."

The European Council of March 2007 underlined the importance of reducing administrative burdens for EU businesses. The Commission has outlined a method of achieving this objective, via the adoption of a simplification programme.

European company law, accounting and auditing have been identified as priority areas within this initiative. First analyses carried out by a number of Member States have shown that administrative costs caused by EU rules in these areas are particularly high.

All interested parties are invited to comment on the proposals by mid-October 2007.

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