Companies Act under threat from European Commission

Out-Law News | 13 Jul 2007 | 8:23 am | 1 min. read

The European Commission has proposed simplifying the law governing businesses in Europe just months after large parts of the UK's new Companies Act came into force. The Companies Act was the longest law ever passed in the UK.

The Commission has published a proposal on how it wants to simplify company law, accounting and auditing. It hopes the measures would remove or reduce a range of administrative requirements that are considered outdated or excessive.

The consultation on the proposals will run until October 2007.

The Commission wants to interfere less in business conducted within borders and wants to reduce reporting and auditing burdens on small and medium-sized companies.

"If we want to enable European businesses to compete in today's global market, we need to cut red tape," said Charlie McCreevy, internal market and services Commissioner. "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."

Studies by the Commission have shown that costs in accounting and auditing and company law are particularly high and it had already marked those areas out for change. The Commission also intends a review of Europe's single market, which could impact on the same areas.

"In the general context of better regulation, the European Commission has decided to simplify the regulatory environment for European businesses, in co-operation with the European Parliament and the Member States," said the Commission's communication. "The objective is to ensure that Community legislation in the fields of company law, accounting and auditing corresponds to today's business needs and allows European businesses to compete more effectively and to be more successful in a highly competitive global environment."

"The initiative is linked to the on-going review of the single market initiated by the Commission as part of the citizens' agenda in May 2006. Furthermore, it forms part of the Commission initiative aiming at reducing administrative burdens, especially for SMEs," it said.

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