Position

Summary:

EuropeanIssuers is very concerned about extending the scope of proposed regulation on a new Key Information Document for investment products to shares and bonds. There have been good and comprehensible reasons for excluding listed shares and bonds that are still valid. We fear that the extension would greatly hinder ability of companies to raise finance from regulated markets and MTFs, at a time when finance options are limited and growth and job creation in the European economy is needed and should be encouraged.

Our key points are:

• The KID requirements are not suitable for shares and bonds as they are different from packaged products and information related to listed companies cannot be summarized in a synthesis (or KID) because some relevant aspects would necessarily be left out;
• The performance and risks of shares and corporate bonds are linked to many factors that go well beyond the financial characteristics of the securities and therefore it is extremely difficult and potentially misleading, to summarise company’s risk and reward profile;
• If KID were to be treated as the only basis for an investment decision, it could be potentially harmful to retail investors, especially given the high level of financial illiteracy in society;
• KID requirement would make issuing shares and bonds more burdensome and less attractive to companies seeking to raise funding on the capital markets, in order to grow and create jobs;
• Much of the information sought is within the control of intermediaries rather than issuers;
• Given that the regulation was intended to cover packaged products, and that only very recently the European Parliament suggested extension of the regulation to shares and bonds, companies have not been properly consulted.

Position paper:

EI_POSITION_ON_THE_PROPOSAL_FOR_A_REGULATION_ON_A_NEW_KID_FOR_INVESTMENT_PRODUCTS.pdf

 

Position

Summary:

2012 has seen the first signs that the relentless focus on the financial crisis and regulating the banks is diminishing somewhat. Despite various conferences on financial stability and growth in Brussels, most of the debate has been on stability and the growth part has often only appeared in the title.

In the second half of 2012, however, policymakers finally started to debate where we are going next, instead of how to prevent a reoccurrence of the past. We still have a very long way to go in order to ensure that EU regulation and financial markets create an environment fit for our members, but for the first time in 2 ½ years, the debate in Brussels is at least starting. This gives us opportunities for influence in 2013. In the meantime, this Report, approved by the AGM on 9 April 2013, gives you the highlights from 2012.

Position paper:

Annual_Policy_Report_2012.pdf

 

Position

Summary:

EUROPEANISSUERS supports the introduction by the Commission of a draft directive governing cross-border transfers of registered office of companies. The Court of Justice has acknowledged the right to transfer the seat, in the context of the exercise of companies' right of establishment, distinguishing between a transfer of the seat without a change of the law applicable to the company and a transfer that results in a change in that law.

At present, several of our members see the need to introduce a specific harmonisation instrument for the cross-border transfer of a company's registered office with the change of the applicable law as all the problems linked to the transfer are not resolved by the rules concerning the right of establishment, including the need to protect shareholders, creditors and employees, and the allocation of duties between home and host Member states in controlling the legality of the transfer. As a result, they take the view that work on preparation of a 14th company law proposal should be resumed and take into account a number of aspects listed and described in the attached position.

Position paper:

EUROPEANISSUERS_POSITION_CROSS-BORDER_TRANSFER_OF_THE_REGISTERED_OFFICE_OF_COMPANIES.pdf

 

Position

Summary:

EuropeanIssuers has a strong interest in the protection of client assets, since the reduction of intermediary risk, inter alia through stronger and clearer obligations put on intermediaries to safeguard assets, contributes to increased trust in direct investment in shares and bonds, and thus to investment in our member companies. There is currently an adverse impact on end user confidence (both shareholders and companies) in markets, if cross-border votes and other forms of communication are not getting through the investment chain, due in part to problems with regulations regarding the protection of client assets. EuropeanIssuers has been involved in the negotiation of the Unidroit (Geneva) Securities Convention and has contributed to the debate on securities law in the European Union. The Consultation report touches upon several aspects that are also treated in those and other legislative international instruments. EuropeanIssuers would like to reiterate our previous position on securities law (see links below to our previous position paper, EU General Meeting standards and ECB Taskforce Report on shareholder transparency), i.e. that:

• Securities should always be treated as property, not as cash
• Investors should always have the option to hold securities in segregated accounts
• Intermediaries should contribute to facilitating the casting of votes in General Meetings and
• Shareholder identification is an important part of the proper functioning of markets from the company perspective and should be recognised in cross-border situations.

These elements contribute to reinforcing the direct relation between issuers and investors and therefore to the protection of investor’s assets.

 

Position paper:

251_EI_response_to_IOSCO_Asset_protection_consultation_25_03_2013.pdf

 

Position

Summary:

In preparation for the discussion on compromise amendments in the European Parliament’s Legal Affairs Committee, we would like to share with you the views of EuropeanIssuers that represent interest of European quoted companies on the amendments tabled in JURI Committee on the reform of Statutory Audit.

We are concerned that the audit market reform may add considerable costs to some 12,000 publicly quoted companies in Europe on whom the European economy relies for future growth. EuropeanIssuers maintains that there is an undue spill-over of regulation aimed at the financial industry and the banking sector to the end users of capital markets, which are listed companies that produce goods and services for the real economy.

Our key concerns are:

• mandatory rotation of firms, the excessive reduction of the maximum duration of the audit engagement, and the introduction of a cooling-off period of 4 years would excessively constrain the selection of statutory auditors for large companies which already have a limited audit services offering
• large audit firms should not be prohibited from providing non-audit services as this could lead to loss of quality of services provided, reduced competition and an increase of costs
• the ceiling of 10 % of the statutory audit fees for the provision of certain related financial audit related services is problematic and the definitions should be changed
• independence rules applicable to certain services should take into account the role of the audit committee and the time constraints of corporate financial transactions
• the change in certain provisions relating to the audit committee (Articles 31 and 34 of the Regulation) would be contrary to the allocation of competences between the board and the senior management in company law
• potential excessive specialisation of committee members would contradict the principles of collegiality and collective responsibility of the board
• involving the statutory auditor in assessing the company’s internal control led to significantly increased costs for US companies under Sarbanes-Oxley – Europe should not make the same mistakes
• the role of the auditor should not be extended to functions under the competence of the company and / or other third parties
• granting powers to ESMA in the field of audit supervision – we believe that it would be more appropriate to confer them to EGAOB
• lack of amendment to the Regulation ensuring that the legislation follows “Think Small First” principle, whereby EU small and mid-cap quoted companies (which we define as those under €1 billion market capitalisation) should not be subject to the legislation in the first 2 years, until a review has been carried out of the effects of the proposals on the largest companies

Please find our more detailed position paper pointing out which amendments we support and which ones we oppose.

Position paper:

Audit_Amendments_Summary_EI_FINAL_210213.pdf

 

Position

Summary:

In the context of trilogues concerning the proposal for a Regulation on insider dealing and market manipulation (COM (2011) 651), EuropeanIssuers would like to draw the attention of the Commission, the European Parliament and the Council on the following remaining concerns:
- maintaining accepted market practices (pg. 2),
- providing a clear definition of inside information (pg. 7),
- providing more clarity and flexibility as regards delayed information (pg. 11),
- exemption of issuers on SME Growth Markets from obligation to maintain insider lists (pg. 15),
- maintaining the original purpose of insider lists to ease investigation as opposed to report on suspicious transactions (pg. 15),
- avoiding unnecessary burdens as regards managers’ transactions (pg. 17).

Position paper:

MAR_EI_Position_for_trilogues__FINAL.pdf

 

Position

Summary:

EuropeanIssuers has put together a note setting out issuers' views on the possible content of the securities law regulation, which is expected to be published in 2013. Our main points are that:

• We support EU regulation in the area of securities law in principle
• We believe that securities should be treated as property, not cash
• We prefer segregated accounts as the default option, with omnibus accounts as an alternative option
• We see some progress in implementation of the general meeting standards, although we would like to see a review of the implementation of the shareholder rights directive (recently announced in the Company Law and Corporate Governance Action Plan)
• We would like to see recognition of the importance of shareholder identification, as highlighted in the report by the ECB Shareholder Transparency Taskforce, where we would like to see clarity that the national issuer law applies to intermediaries
• We are, however, sceptical of the harmonisation of conflict of laws and
• We see reconciliation of holdings as essential to the integrity of the market.

Position paper:

EuropeanIssuers_position_on_Securities_Law_Legislation_2012.pdf

 

Position

Summary:

EuropeanIssuers has prepared comments on the audit regulation and directive. We are concerned that the proposals may add considerable costs to companies, at a time when the European economy is in need of growth.

We suggest changes to the following areas:

- scope to reduce or delay implementation for smaller quoted companies, in line with "Think Small First" principles (Article 2)

- the role of audit committees (Articles 24, 31, 34, 46), where we do not share the Commission's vision of creating ever more detailed regulation which becomes further removed from companies, and thus ever more reliant on audit firms and other intermediaries

- audit report and Sarbanes-Oxley style provisions (Articles 22, 23), where we have serious concerns about the potential costs to companies

- the regulation of the audit firms themselves (Articles 9, 10, 33), where we remain unconvinced that competition concerns can or should be dealt with via detailed regulation.

Position paper:

EuropeanIssuers_Audit_Regulation_letter_wosign_FINAL.pdf

 

Position

Summary:

EuropeanIssuers has written to rapporteurs in the European Parliament to highlight some confusion on article 12 § 4 and § 5 of the ECON compromise amendments on market abuse. According to our understanding, the wording of these compromise amendments contains a editorial mistake which could lead to enormous compliance problems within listed companies seeking to delay the public disclosure of insider information. For more details, see attached comments.

Position paper:

Delayed_disclosure_position_October_2012.pdf

 

Position

Summary:

EuropeanIssuers has sent comments on the compromise amendments to the proposals on insider dealing and market manipulation to MEPs on the European Parliament’s Economic and Monetary Affairs Committee to express concerns about lack of clarity, timescales and feasibility of some of the proposals. For more details, see amendments.

Position paper:

EuropeanIssuers_Market_Abuse_ECON_October__2012.pdf