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MEMO/02/39

Brussels, 27th February 2002

Financial Services Policy Group considers political obstacles to Action Plan and takeover bids

The Financial Services Policy Group, comprising personal representatives of EU Finance Ministers, met on 26th February in Brussels under the chairmanship of Internal Market Commissioner Frits Bolkestein and Director General John Mogg. The Group concentrated on removing political obstacles to the adoption of the proposed Directives on prospectuses, pension funds and financial conglomerates. Jaap Winter, Chairman of the High Level Group of Company Law Experts, presented the main conclusions of the group's report on takeover bids. The Spanish Council Presidency reported on its intentions for the remainder of its term.

The FSPG meets regularly to forge consensus between national ministries involved in financial services regulation and to review progress on the implementation of the Financial Services Action Plan (FSAP). The FSAP was endorsed by the Cologne European Council in June 1999 and the Lisbon European Council in March 2000 set the deadline of 2005 for its implementation. The Stockholm European Council strongly reaffirmed the importance of implementing the Action Plan by 2005 and set a new deadline of 2003 for the full integration of the European Securities markets.

Prospectuses, pension funds and financial conglomerates

FSPG discussed political obstacles and sought orientations on the proposed Directives on prospectuses (see IP/01/759), pension funds (IP/00/1141) and financial conglomerates (IP/01/609). The aim of the discussions was to pave the way for political agreement in the Council by June 2002, with final adoption of all three Directives by December 2002.

The Commission reminded participants of the importance of the three Directives. As far as the prospectuses directive is concerned, European companies want to be able to raise capital across the Union without having to follow 15 different approval procedures, for 15 different prospectuses, drawn up according to 15 different legal systems.

The aim of the pension funds proposal is to ensure a high level of protection for the rights of future pensioners, while giving pension funds sufficient freedom to develop an effective investment policy across the EU and to benefit from the greater depth and liquidity of the capital markets since the introduction of the euro, thereby increasing the effectiveness and security of their investments. The proposal also seeks to enable an institution in one Member State to manage company pension schemes in other Member States.

The key objective of the proposal on financial conglomerates is to ensure that cross-sector financial groups are adequately capitalised and supervised, and to avoid artificial capital being created in a financial group that inflates its balance sheet, as happened in the case of Enron.

Follow-up to the Mid Term Review

Mr Bolkestein informed the FSPG of the main conclusions of the high level Mid- Term Review of the Financial Services Action Plan, which took place in Brussels on 22 February (see MEMO 02/36). The event underlined the importance of integrated capital markets for economic growth, job creation, financial stability, lower prices and for enabling consumers to reap the full benefits of the euro. Participants included Members of the European Parliament, representatives of the Member States, and leading players from the financial services sector.

The main conclusions were as follows:

  • the European Union must keep to its targets of implementing the Financial Services Action Plan in full by 2005 and integrating the securities and risk capital markets by 2003

  • the Lamfalussy proposals on the regulation of European securities markets (see IP 02/195) should be put into practice quickly. The legislation adopted as a result should be based on consultation of market participants and consumer groups

  • the implementation of legislation needs to be closely monitored

  • political agreement should be sought in the Council by June 2002 on the proposed Directives on Financial Conglomerates, Prospectuses and Pension Funds, with a view to their final adoption by December 2002

  • in order to meet these deadlines the closest co-operation between the Commission, the European Parliament and the EU's Council of Ministers will be essential. The institutions should try to agree, whenever possible, on a single reading or accelerated second readings. In particular, the International Accounting Standards Regulation and the proposed Directives on Collateral, Market Abuse, Insurance Intermediaries and Distance Marketing should be adopted by June 2002

  • there is a need to ensure that the EU's policy on financial services is in line with new realities, without neglecting the clear priorities and measures already in the FSAP. In the coming months the Commission will intensify its work on auditor independence and standards; corporate governance; clearing and settlement; financial stability; reinsurance; insurance solvency; money laundering; the integrity of the financial sector and the development of an integrated market for retail financial services

  • the benefits of financial reform must be effectively communicated to the public.

The Mid-Term Review was one of a series of steps in the approach to the March 2002 Barcelona European Council, where Heads of State and Government will discuss progress made in the EU economic reform process. Mr Bolkestein will report on the Mid-Term Review to the Council of Finance Ministers on 5 March.

Takeover Bids

Jaap Winter, Chairman of the High Level Group of Company Law Experts, presented the main conclusions of the Group's report on takeover bids (see IP/02/24). The report, which was published on 10 January, contains detailed recommendations on the three issues which had been identified by the European Parliament for further harmonisation:

  • how to ensure the existence of a level playing field in the EU concerning the equal treatment of shareholders across all Member State

  • the definition of the notion of an "equitable price" to be paid to minority shareholder

  • the right for a majority shareholder to buy out minority shareholders ("squeeze-out procedure").

The Commission said it would carefully examine the recommendations with a view to submitting a revised proposal for a Directive on Takeover Bids in April or May. The Commission will do its utmost to facilitate an early agreement by Council and Parliament on the revised proposal.

The expert group will now make further recommendations by mid-2002 on the requirements for a flexible and up-to-date European company law framework, taking fully account of the potential of information technology.

Report from the Spanish Council Presidency

The Spanish Council Presidency reported on its intentions for the remainder of its term. It stressed that the successful changeover to the new currency and the compromise on the Lamfalussy process are important factors driving towards a single market for financial services. The Mid-Term Review underlined the importance of financial integration. However, to deliver on time Member States need to be ready to compromise.

A final adoption of the Regulation on International Accounting Standards and the proposed Directives on Distance Marketing, Insurance Intermediaries, Collateral and Market Abuse is within reach before the end of the Spanish Presidency. On the proposed Directives on prospectuses, pension funds and financial conglomerates, the aim of the Spanish Presidency is to achieve a political breakthrough before the end of its term.


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