Sélecteur de langues
Brussels, 15 July 2005
The European Commission has decided to refer Spain to the European Court of Justice over its national legislation which enables discrimination against shareholders by listed companies when they issue new shares and convertible bonds. The Commission believes this discriminatory treatment is an infringement of the principle of equal treatment of shareholders and of the “pre-emption” rights accorded to shareholders under the Second Company Law Directive (Article 42 and Article 29 respectively). Pre-emption rights aim to encourage investment by providing a guarantee that existing shareholders will have the first opportunity to buy newly issued shares. The referral of this case to the Court follows a reasoned opinion, which was communicated to Spain earlier this year as the second stage of the infringement procedure laid down in Article 226 of the Treaty. The Commission has also decided, under Article 228 of the EC Treaty, to send two letters of formal notice asking the Member States concerned for full information on their execution of previous European Court judgements: the first to Sweden relating to the Court judgement requiring it to write the Directive 2001/17/EC on the reorganisation and winding-up of insurance undertakings (“the Winding Up Directive”) into national law, and the second to Luxembourg relating to the Court judgement requiring it to implement EU law on legal protection of biotechnological inventions. The Commission has formally asked Ireland to amend its legislation on insurance cover for blameless drivers of uninsured vehicles. This request takes the form of a “reasoned opinion”, the second stage of the infringement procedure laid down in Article 226 of the EC Treaty. If there is no satisfactory reply within two months, the Commission may refer the matter to the Court. Finally, the Commission has sent a supplementary reasoned opinion to Greece with regard to Greek rules imposing a mandatory membership in the Greek National Association of Insurers for all undertakings providing motor insurance services in Greece.
Spain - discrimination against shareholders
According to Article 159 of the Spanish law on public limited liability companies, when a listed company increases its capital by issuing new shares to cash buyers, it can refuse the “pre-emption” right of existing shareholders. The same shares can subsequently be sold to other parties at a substantial discount from their market value.
This possibility applies as an exemption from the general principle set out in the same article of the Spanish legislation concerned, according to which the issue price of the new shares has to equal the fair value, which in the case of listed companies is deemed to be the market value, unless there is a good reason why not.
As a result of this exemption, the holdings of existing shareholders may be unduly “diluted” (reduced as a proportion of the company’s total shares), because shares may be offered to other parties at a discount, without existing shareholders having had a chance to buy them.
The Commission considers that this is discrimination against shareholders in Spanish listed companies in contravention of the EU’s Second Company Law Directive, which rules out undue dilution of shareholdings (Article 29) and which requires Member States’ legislation to ensure the equal treatment of shareholders (Article 42).
There appear to be other contraventions of the Second Company Law Directive in Spanish company law. In particular, Spanish law confers on existing holders of convertible bonds pre-emption rights on newly issued shares or on newly issued convertible bonds.
The Commission has therefore decided to refer the case to the European Court of Justice, so that the Court can make a final ruling about the compatibility of the pertinent provisions of Spanish national law, with the aim of ensuring that investors do not suddenly see their influence on a company diminished by the dilution of their shareholdings.
Sweden - failure to implement EU law on the winding up of insurance companies
The European Commission has decided to send a letter of formal notice asking Sweden for a full explanation of the measures it has taken to implement fully the European Court of Justice’s judgement (Case C-116/04, 18 November 2004) requiring Sweden to write the Directive 2001/17/EC on the reorganisation and winding-up of insurance undertakings (“the Winding Up Directive”) into national law. Sweden acknowledged that it had not at the time of the judgment informed the Commission of how the Directive had been written into national law. According to information provided by the Swedish authorities, the Directive has not yet been transposed but the relevant Swedish legislation is supposed to enter into force on 1 January 2006. Hence, as the Commission has received no complete information about the measures taken by the Swedish Government, the Commission must consider that Sweden has failed to implement the Directive. Should Sweden not inform the Commission of the enacted legislation, the Commission may decide to take the next step in the infringement proceedings (reasoned opinion) and if necessary after that to request the Court to impose a fine.
According to the provisions of the “Winding Up Directive”, where an insurance undertaking with branches in other Member States fails, the winding up process must be subject to a single bankruptcy proceeding initiated in the Member State where it has its registered office. The Directive is designed to guarantee protection of policyholders in such instances.
Luxembourg - failure to implement EU law on the legal protection of biotechnological inventions
The European Commission has decided to send a letter of formal notice asking Luxembourg for a full explanation of the measures it has taken to implement fully the European Court of Justice’s judgement (Case C 450/03, 9 September 2004) requiring Luxembourg to write into national law Directive 1998/44/EC on the legal protection of biotechnological inventions. The Directive should have been written into national law by 30 July 2000.
It aims to clarify certain principles of patent law applied to
biotechnological inventions whilst ensuring that strict ethical rules are
respected. Such clarifications have proved essential in order to fully exploit
the medical, environmental and economic potential of biotechnology in line with
high ethical standards. To date only four Member States have not implemented the
Directive: Italy, Luxembourg, Latvia and Lithuania. Non-implementation creates
trade barriers and hampers the Internal Market, putting the European
biotechnology sector at a serious disadvantage.
Ireland - insurance cover for blameless drivers of uninsured vehicles
A reasoned opinion has been sent to Ireland in respect of Irish rules, which exclude – regardless of the circumstances - payment of any compensation from the Irish Insurance Bureau to drivers of vehicles in case all vehicles involved in a collision are uninsured. This means that payment of compensation will be automatically excluded also to a blameless driver of an uninsured vehicle. In the Commission’s view, the Irish rule is contrary to the principles contained in the Second Motor Insurance Directive 84/5/EEC, and in particular Article 1 (4) thereof. The Second Motor Insurance Directive clarifies that compensation regimes must also include victims of accidents caused by unidentified or uninsured vehicles.
One aim behind the European harmonisation of rules in the field of motor insurance is to ensure that victims of motor accidents get fast and adequate compensation, regardless of where in the European Union an accident takes place. Possible disputes regarding compensation or liability should not affect victims, but be settled between the insurer and the person responsible for the accident or injuries.
According to the Second Motor Insurance Directive, Member States may exclude payment of compensation for damage to property caused by unidentified vehicles in view of the danger of fraud. Moreover, clauses limiting compensation may be invoked against persons who voluntarily entered the vehicle which caused the damage or injury, when the insurer can prove that they knew the vehicle was stolen. However, in the Commission’s view, these limitations are exceptions to the general rule and must be interpreted strictly. Consequently, they can not - against their explicit wording – be considered to embrace also situations and categories of people not mentioned in the Directive. The Irish authorities, on the other hand, maintain that the Irish rule is compatible with Community law, since the Directive foresees certain possibilities to limit compensation. The Irish authorities are asked to submit their comments within two months from the receipt of the opinion.
Greece - mandatory membership of the Greek National Association of Insurers for all motor insurance companies
A supplementary reasoned opinion has been sent to Greece with regard to Greek rules imposing a mandatory membership in the Greek National Association of Insurers for all undertakings providing motor insurance services in Greece. In the Commission’s view, this mandatory membership is contrary to the rules of the Non-Life Insurance Directives (Directives 73/239/EEC, 88/357/EEC, 92/49/EEC), which have established the principle of home member state control in relation to insurance undertakings. Moreover, the Commission takes the view that the mandatory membership restricts the fundamental principles of freedom of establishment and free provision of services as regulated by Articles 43 and 49 EC.
This is so because the rules concerned impose an additional burden on
undertakings from other Member States that would wish to establish themselves in
Greece or use their right to provide motor insurance services on the Greek
market. According to the Greek authorities, imposing a mandatory membership is a
way to co-ordinate the market and assist the supervisory authorities in their
control of undertakings providing motor insurance. The Greek authorities have
also invoked consumer protective interests. In July 2004, the Commission sent a
letter of formal notice to Greece. A reasoned opinion was sent in October 2004.
In light of the fact that information was received from the Greek authorities
after the reasoned opinion had been sent, the Commission considers it necessary
to send a supplementary reasoned opinion to address the points raised by the
Greek authorities. The Greek authorities are asked to submit their comments
within two months from the receipt of the opinion.