Davidson Review: Implementation of EU Legislation - ACT Response

This is an important and wide-ranging topic. However we have largely confined our comments to one or two examples drawn from company law and from financial market regulation – the main areas of concern of our members.

Underlying principles

At its simplest, we agree that normally domestic implementation of EU requirements in areas where there has been no prior domestic regulation (broadly defined) should not go beyond what is envisaged in the EU directive/regulation. It is important not to let people take the opportunity of changes required by EU level changes to ride old hobby horses all over the landscape.

However, it is more difficult where there has been prior regulation under domestic provisions. This is especially true where the UK has a long history of such regulation and in relation to activities where the UK has been a material, especially global, player.

In such cases it is necessary to ask:

• Does the EU requirement satisfactorily replace the previous UK regulation, i.e.
  • does it have similar requirements or

  • does it have different but equally appropriate or even superior requirements?

  or

• While it may represent status quo or an improvement in much of Europe, does it provides significantly inferior regulation to that previously applied in the UK?

Of course, the EU provisions do not come labelled with easy answers to these questions. Opinions may legitimately vary. We have attached (Appendix 1) an extract from our comments to the DTI on draft amendments to the Company Law Reform Bill earlier this month. In the extract we noted that among the major firms of solicitors in the City of London, opinion varies as to whether one provision is required by the Transparency Obligations Directive, or is not required and therefore constitutes “super-equivalence” or “gold plating” – in this case is of an undesirable kind.