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European Commissioner for Internal Market and
EP – JURI Committee
Mr Chairman, Honourable Members,
It's a great pleasure to come before you once again in the Legal Affairs Committee. It has become a tradition that we meet every year to discuss the Annual Policy Strategy. I propose to start by giving a short overview of our main achievements to date. I would then like to set out our initiatives for 2008 in the area of company law, accounting and auditing as well as in the area of intellectual property rights. I will conclude with a few words on initiatives specifically set out in the Annual Policy Strategy for 2009.
Company Law, Accounting & Auditing
Ladies and Gentlemen, together we have managed to improve considerably the regulatory landscape for companies in the Single Market. This applies to their mobility, the flexibility they enjoy and to their accountability.
You will recall the swift adoption of the Tenth Company Law Directive on cross border mergers. This Directive is a key measure for enhancing companies' mobility in the EU.
Our action directed at simplifying company law has also proved successful. Cutting red tape and reducing administrative burdens has been and remains a guiding principle in all my activities as Internal Market Commissioner. We have achieved this for example by reducing reporting requirements and giving companies more flexibility through changes in the Second, Third and Sixth Company Law Directives.
In 2007 we also adopted the Directive on shareholders' rights. Non-resident shareholders will be put in a better position to exercise their rights. They will get timely and complete information on general meetings and have better access to such meetings – without having to jump on a plane in order to be able to exercise their rights. Non-resident shareholders will dispose of simple and effective means to exercise their voting rights, such as the vote by proxy or by use of electronic means.
There are still a number of measures in the pipeline which I hope we will be able to reach agreement on namely the European Private Company (EPC) and the simplification of company law, accounting and auditing.
This Committee has been a strong advocate of the EPC Statute. In line with my commitment to you, we will present a legislative proposal for an EPC that is modern, flexible, as uniform as possible throughout the European Union, yet protective of creditors and minority shareholders.
The EPC should be accessible to single and multiple shareholders, without any cross-border requirement. I also believe that it should be capable of being set up from scratch, by merger or by transformation.
I am aware that some prefer an EPC which would be obliged to have its registered office and its headquarters in the same Member State. However, the rulings of Court of Justice recognise the right of company founders to register companies in any Member State irrespective of the location of their activities. Like the European (Public) Company, the EPC should be able to merge and transfer its registered office cross-border.
I believe that the EPC should not be subject to any significant legal capital requirement. This is by no means revolutionary. It would reflect a growing trend among Member States and a consensus among practitioners and academics. All of these people are of the view that creditors do not rely on minimum capital requirements for protection. I also share Parliament's view that the EPC shareholders should be free to decide on the internal organisation of the company.
Last October, I announced that a proposal would be put forward by mid-2008. I am glad to inform you that the timetable will be maintained, and the EPC will form part of the Small Business Act which the Commission aims to present in early July.
Our work on simplifying company law is also progressing further. This work includes the company law directives that apply in the accounting and auditing area. The Commission adopted, one month ago, two proposals.
With the first proposal, we want to make sure that companies will no longer need to publish business data in the national gazettes that are already available anyway in online companies registers. In addition, companies should also be able to use translations certified in one Member State when opening branches in other Member States.
With the second proposal we cover company law requirements in the accounting and auditing area. Here, we want to clarify that parent companies with no material subsidiaries no longer need to include those subsidiaries when preparing the consolidated accounts. And finally, we want to include medium-sized companies in the exemption from the obligation to provide certain detailed data relating to the breakdown of turnover in the annual accounts. This exemption currently applies to only to small enterprises. We would like to extend it to all SMEs.
These initiatives contribute to alleviating administrative burdens on companies. We should make sure that we continue to make fast progress on both these proposals.
Other work on simplification is also progressing well. Later this year, I plan to table a proposal addressing the rules on domestic mergers and divisions.
On accounting standards we aim to consolidate the standards and interpretations endorsed for use in the EU for listed companies this Autumn. This will involve regrouping all Regulations together into a single one. This will be a further important achievement in terms of simplifying the regulatory environment and enhancing legal clarity and transparency.
Finally, in the Company Law area I already set out my intention to you to prepare a Recommendation on auditors' liability. This Recommendation should be adopted by the College before the summer and will follow the line that I indicated before namely that MS are encouraged to put some form of cap on auditors' liability in place. The precise form of such a cap is left to Member States to decide.
The second key area in my portfolio of issues under the responsibility of this Committee is Intellectual Property Rights. IP is a central competitive asset in Europe's ability to compete in the global economy. There are perhaps many reasons for this, the main one though is that through innovation, high quality design, effective branding and top quality production, EU companies have the ability to remain at the top of the value chain. We are progressing well on the initiatives announced before.
Let me start by looking at copyright protection for performers. European performers do not enjoy sufficient term protection. 95% of them do not earn enough from their profession and have to take up parallel jobs. I want all performers, whether featured artists or session musicians, to be able to earn more from their work. This allows them to spend more time doing what they do best – namely performing.
Authors enjoy copyright protection that lasts for 70 years after their death. Performers on the other hand enjoy protection for 50 years from the time of their performance. This means that an increasing number of them are seeing their performances fall into the public domain during their lifetimes. Not only do they no longer have a say in how their performances are used, but also their royalty payments and their airplay remuneration dry up.
And it usually happens at a time in their lives when they are getting older and not working as much. The music business is not the type that comes with a pension scheme. The principal beneficiaries of our proposal are the thousands of anonymous session musicians who contributed to sound recordings at that time.
That is why I propose is to extend protection for performers and sound recordings from the current 50 to 95 years. I aim to present a proposal for an amendment to the Directive on term protection by this summer.
By doing this we will go some way towards solving a number of problems. Firstly, performers will be able to control how their performances are used. This will allow them to object to their work being abused or used in a way they do not agree with. Secondly, they will continue to receive royalties and airplay remuneration for their entire lifetime, and as for authors, their heirs will benefit a little after their death.
Extending the term is not enough in itself. I also propose that each record company set up a special fund specifically devoted to session musicians. The company will have to pay a percentage of its increased revenues in the extended period into this fund. This will mean that the thousands of session musicians will increase their earnings.
Another area of work at present in the Intellectual Property field is private copying levies. You will be aware I re-launched work some months back on this issue. Some have suggested that I want to trade off term extension with private copying levies. I want to clearly dispel this rumour. Both initiatives have their own independent merit.
I perceive a clear need for the societies that administer the levies, and the industry that have to pay them, to get together and find a way out of their current disagreements. The latest round of consultation took place between February and April of this year. This consultation yielded some 120 replies, primarily from collecting societies that administer levies and from the industry that has to pay them. This response rate shows that the issue is still very much alive.
I have decided to organise a public hearing on 27 May to discuss the results of this public consultation. I would like to see this public hearing leading to the setting up of a structured dialogue between the stakeholders in the search for common ground in addressing this complex issue.
My ultimate wish would be that everyone that is concerned with levies could be able to agree on some basic principles to apply to the calculation of the different levies.
A third area of work in the IP field is Community trade mark fees. The Commission is currently preparing a proposal for a further substantial reduction of these fees. The Community Trademark Office in Alicante is an agency financing itself, independently from the Community budget. The Office is financially very well off and is generating considerable cash every year. This is partly due to its attractiveness, as companies continue to submit more and more trade mark and design applications. However, the Agency has to balance its revenues and expenditure. I intend to present this proposal in the next months. We have also started working on the evaluation of the trademark systems in the EU with a view to identify potential needs for improvement and future developments.
Work continues on the patent litigation system and on the Community patent. Since the Commission adopted the Communication "Enhancing a patent system in Europe" in April 2007, we have been actively working towards a consensus on the key elements among Member States in the Council under the German, Portuguese and now the Slovenian Presidency. I hope the encouraging progress made over the past year continues and it is something we can come back to a little further down the line.
Work is also continuing on the Green Paper on Copyright in the Knowledge Economy. The purpose of this Green Paper is to encourage debate on how copyright legislation can continue to serve the objective of the dissemination of knowledge for research, science and education – particularly in the online environment. The Green Paper aims to set out a number of issues connected with the role of copyright in the "knowledge economy", relying as it does not on natural resources such as land or minerals, but on intellectual resources such as know-how and expertise. It could be adopted just before or just after the summer break and it is intended to launch a public consultation.
A last point on intellectual property rights is the fight against counterfeiting and piracy. This is a key priority for the Commission. Last week's high-level conference marked the starting point for our efforts in order to find practical solutions to combat counterfeiting and piracy. We need all stakeholders to engage in working on practical and concrete ways to fight off fakes rather than camping on positions of principle. More regulation is certainly not the answer. I am grateful to the Parliament's support on this issue and for your active participation at the conference.
Finally, I wish to say a few words on the Annual Policy Strategy for 2009.
The time has come to assess how the existing copyright legislation works. It has been in place for more than 10 years now. The issue is whether and how we need to adapt thee rules to new technological and market developments. We will launch a consultation process next year on these questions to arm my successor with the necessary elements for deciding on concrete initiatives.
All of our actions are part of our single market policy. A key element of last year's Single Market Review is to make the Internal Market rules function on the ground. Member States' actions are crucial in achieving this objective. In this context we will prepare an initiative in early 2009 to give guidance to Member States on how to improve the practical functioning of the Internal Market.
Ladies and gentlemen, let me conclude. It is crucial that the European regulatory framework responds to market needs. Where there is no proven need for EU intervention, I will not make proposals or add further layers of EU requirements. We are updating existing legislation in the area of company law and intellectual property rights to make it simpler, flexible and more dynamic. Your support and active engagement are essential if we are to deliver what EU business needs.