EU Transparency Directive Increases Liability For Company Directors

by Robin Pilgrim, LawAndTax-News.com, London

18 February 2004

Business groups in the United Kingdom have expressed concerns over the European Union's planned Transparency Directive, which would substantially increase the liability of company directors in the event that investors take legal action against their company.

Under the terms of the directive, set to be introduced in 2006, investors will be able to sue company directors if they lose money as a result of errors, omissions, or misinformation contained in annual reports.

Under current UK law, company directors can be sued over errors in their firm's prospectus, but not over the company's annual report.

Speaking to the Times this week with regard to the planned directive, a spokesman for the Confederation of British Industry (CBI) announced that:

"This is an important issue and we are lobbying for amendments to this directive. We want to make clear that national governments remain responsible for deciding company liability."

Speaking on behalf of the Quoted Companies Alliance, John Pierce also expressed concern, telling the Times that:

"Directors are already being faced with more and more regulation and responsibility and this is one more thing that they do not need."

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