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GAZETTE
DECEMBER 1980
Company Law Notes
EEC Council Directive of the European Communities of
5th March, 1979 to co-ordinate the Conditions for
Admission of Securities to Official Stock Exchange Listing.
The purposes of the Directive are:
(1) To co-ordinate the conditions for the admission of
securities to official listing on stock exchanges situated or
operating in the Member States;
(2) To facilitate the admission to official stock
exchange listing in each Member State of securities from
other Member States and the listing of any given security
on a number of stock exchanges in the community and
thereby make for greater interpretation of national
securities markets and therefore contributing to the
prospects of establishing a European capital market;
(3) To create the right to apply to the courts against
decisions by the competent national authorities in respect
of the application of the Directive.
In addition the Directive recognises the right of
competent national authorities to retain individual
discretion regulating their own particular security market
as each security market serves different needs which must
be facilitated. Accordingly the Directive will initially
establish minimum standards only.
The stock exchange in Dublin will be the relevant
national authority in respect of the Republic's security
market. The most novel concept set forth in the Directive
is contained in Article 15 which provides:
"Member States shall ensure that decisions of the
competent authorities refusing the admission of a
security to official listing or discontinuing such a
listing shall be subject to the right to apply to the
courts".
It may well be that the disciplines of merchant bankers
and stockbrokers in bringing a company successfully to
the market will ensure that undesirable applications to the
Stock Exchange will be most unlikely. However the
creation of the right to appeal to the Courts will force the
Stock Exchange to be more legalistic in its approach to
applications. Clearly the Stock Exchange will have to
take legal advice for discountinuing a listing of any
company in view of the right of appeal.
The other area in which the Directive introduces a new
concept is in Article 13, the publication of information by
a company. The article provides that:
"Where the protection of investors or the smooth
operation of the market so requires, a company
may be required by the competent authority to
publish certain information in such a form and
within such time limits as the national authority
consider appropriate. Should the Company fail to
comply with such requirement, the national
authority may itself publish such information after
having heard the company".
The innovating principle is the right of the national
authority to issue the information itself. If the national
authority is to exercise this right it will need to have very
wide powers to ensure that the information that it is
publishing is accurate, complete and not misleading. It
would seem therefore it will have to have power to inspect
documents and examine witnesses. How practical such
inspections and examinations of documents would be in
protecting investors must be open to doubt in view of the
length of time such investigations will take and the
undoubted unfavourable publicity that they will attract.
The Directive does not make it clear what is the legal
position of the Directors of a company who believe that
certain information should not be published or believe
that the information which the national authority insists
on publishing is misleading in form or content.
By removing from the Directors of the company the
ultimate responsibility for keeping shareholders informed
and placing on the Stock Exchange is in effect
undertaking to ensure that all information published by a
company is complete, accurate and not misleading.
EEC Third Council Directive Concerning Mergers of
Public Liability Companies (EEC 78/855 OJ L
295/20/78)
Scope
The directive is concerned with harmonisation of
national rules affecting domestic mergers of
public limited
liability companies,
where one company acquires all the
assets and liabilities of another, and the latter is dissolved
without liquidation.
Aim
The aim of the directive is to co-ordinate the
procedures for and effects of mergers and similar
operations in order to arrive at an equivalent degree of
protection throughout the Community for the members,
creditors and employees of companies involved in such
operations.
Provisions
The provisions of the directive, which must be
converted into national law prior to 12th October, 1981,
define what is meant by a merger, stipulate those
companies which may be merged, lay down minimum
requirements for the contents, publication and supervision
of the draft terms of mergers to be drawn up by
administrative or management bodies, and determine the
powers of general meetings and the rights of individual
shareholders and of minority shareholders.
Other Articles are concerned with the protection of
interests of creditors, particularly debenture holders.
The protection of employees in the event of mergers
and similar operations was dealt with in the specific
directive (Directive EEC 77/187 OJ L 61/26, 14/2/77)
adopted in 1977 on the maintenance of employees' rights
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