Written Ministerial Statements
Friday 26 January 2007
My written statement of 25 October 2006 concerning the Transparency Directive (2004/109/EC) undertook to publish the terms of reference for the “Davies Review”. The terms of reference now follow.
Section 1270 of the Companies Act 2006 establishes a new statutory regime for liability in damages to third parties in respect of disclosures under the Transparency Directive (2004/109/EC). The Government consulted last year on whether the statutory regime should be extended. Responses to the consultation confirmed that this was a complex area in which it is vital to get the policy right, but were not conclusive.
The Government want to strike the right balance between the interests of investors and issuers, providing appropriate incentives to make timely and accurate disclosures in compliance with statutory rules, and an appropriate—but limited—right to recover losses. Section 1270 of the Companies Act amends the Financial Services and Markets Act 2000, inserting a new section 90B that provides for a power to amend the statutory regime.
The Government appointed Professor Paul Davies, the Cassel Professor of Commercial Law at the London School of Economics in October 2006 to undertake a review of issuer liability. The Davies review will:
Consider the law relating to liability in damages of issuers of securities traded on a regulated market or alternative markets (such as AIM or Plus Markets) in respect of statements and publications made to the market and which are incorrect, false or misleading or have not been made promptly;
Consider how any such liability may be affected by regulatory obligations attaching to issuers and directors;
Consider the case for providing for a specific right to damages by those relying on such statements and publications in the context of securities market activities, in particular: the circumstances that might give rise to a right, against whom a right might be enforceable and the consistency with the effect of corporate governance and conventions, standards or rules affecting the information that issuers publish to shareholders and others and how they publish it;
Consider the impacts on:
issuers, markets, investors and others;
the quantity and quality of information disclosed;
the competitiveness of the UK as a good place to do business;
Take into account the liability of issuers and their managements in other centres of financial services in Europe or more widely including the USA;
Make recommendations to the Treasury on whether to exercise the section 1270 power and, if so, how.
In making recommendations to the Treasury, the review will advise on:
options for a new regime if recommended;
who might bring actions to sue for damages;
the kinds of damages that might be awarded and potential effects of paying those damages on issuers, including effects on their business and employees, directors or senior executives, and on the supply of qualified individuals willing to take on director and non-executive director roles in consequence;
and other related matters.
Environment, Food and Rural Affairs
I represented the United Kingdom at the Environment Council meeting in Brussels on 18 December.
The Council adopted a political agreement on the proposed marine strategy directive after the European Parliament adopted its opinion at First Reading on 13 November. Ideally, the UK would have liked to see the directive go further in some areas, particularly in relation to setting an objective for member states to achieve good environmental status of their marine waters, provided that the definition of good environmental status is challenging but achievable. However, the UK supports the agreement reached as it results in an ambitious but realistic directive that is consistent with the forthcoming Marine Bill, and which improves co-operation through Europe’s regional seas conventions. In particular, we welcome the inclusion of a definition of good environmental status which reflects an ecosystem approach to marine management and ensures that sustainable use is recognised. Related to this, we have successfully argued for a risk-based approach to ensure that the focus of the directive is on the greatest threats that the seas face and which focuses on taking proportionate and cost effective measures.
Council conclusions were agreed on climate change as a follow-up to this year’s COP/MOP in Nairobi in November. The UK was particularly supportive of those sections of the conclusions that provide a strong signal about a long-term future—and ambitious approach—for the EU emissions trading scheme. The presidency also held an exchange of views where member states were asked to consider what the EU’s leadership role should be in 2007 and beyond; what the EU should be doing now in the context of a future agreement and how the global context should be taken into account; and what general elements should the EU be focussing on when developing options for a post 2012 arrangement. The UK emphasised the need for the EU to continue to demonstrate real global leadership on climate change. The UK argued that the EU needed to show our commitment to securing a strong multilateral agreement for the post-2012 period. As a first step, the UK called for the EU to agree carbon reduction targets of 30 per cent. by 2020 and at least 60 per cent. by 2050. This should sit alongside four key elements of a future framework: a stabilisation goal; more work on adaptation; tools to incentivise emissions reductions; and technology transfer.
Council unanimously agreed conclusions on the Commission’s Communication on halting the loss of biodiversity by 2010. These welcomed the Commission Communication which set out priority actions for member states such as integrating biodiversity in all relevant policies, ensuring adequate funding for biodiversity protection, and increasing the knowledge base to ensure evidence-based decisions. The UK supports the conclusions as it reflects the approach already adopted by the UK.
The Council opposed—by qualified majority—two proposed decisions concerning the provisional prohibition of the use and sale of certain genetically modified strains of maize by one of the EU’s member states. The UK voted in favour of the proposed Council decisions based on the opinions of various scientific bodies (including the European Food Safety Authority and the UK’s Advisory Committee on Releases to the Environment) which have concluded that there is no new relevant scientific evidence in support of the safeguard actions.
Under “Any Other Business”, the UK raised the United Nations General Assembly discussion on the Sustainable Fisheries Resolution in order to raise awareness of the issue of bottom fisheries, notably bottom trawling, and their impacts on vulnerable marine ecosystems. The UK would have liked a more ambitious UN Resolution. The UK also urged other member states to oppose any moves to reduce the level of protection afforded to the fin-whale under CITES.
Updates on European action on water scarcity and drought, phosphate in detergents, the mercury strategy and the Paris conference on the environment were also provided by member states. The presidency updated member states on progress made on the revision of the waste framework directive, the thematic strategy on the sustainable use of pesticides (and the associated proposals for a directive and a regulation) and the proposed directive on priority substances in water. The Commission updated Ministers on the Basel Convention. The presidency and the Commission updated Ministers on EU/third country meetings with: the USA, Ukraine, Russia and the Euro-Mediterranean ministerial conference on the environment.
Foreign and Commonwealth Office
General Affairs and External Relations Council
My right hon. Friend the Foreign Secretary , Sir John Grant (UK permanent representative to the EU) and I represented the UK at the General Affairs and External Relations Council (GAERC) in Brussels.
The agenda items covered were as follows:
Lisbon annual progress report
The Council took note of a Commission presentation by Vice-President Margot Wallstrom on the annual progress report on implementation of the Lisbon strategy for jobs and growth.
The Council exchanged views on the basis of the report which included country-specific recommendations on the implementation of economic and employment policies at national level.
AOB: The Constitutional Treaty
The presidency briefed the Council on preparations for a declaration to mark the 50th anniversary of the Treaties of Rome and on preparations for a report on institutional reform to be discussed at the European Council on 21 and 22 June.
The Council adopted a mandate for a new enhanced agreement between the EU and Ukraine. Negotiations will be launched at an EU-Ukraine Foreign Ministers’ meeting in Kiev on 6 February.
The Council also adopted conclusions acknowledging Ukraine’s European aspirations and welcoming progress made while supporting further economic and political reforms for strengthening democracy, stability and prosperity in the country.
European Neighbourhood Policy
The Council exchanged views on the basis of a Communication presented by External Relations Commissioner, Benita Ferrero-Waldner, on ways of strengthening the European Neighbourhood Policy (ENP).
The Commission’s ideas for strengthening the policy include: creating an economic community through trade integration; facilitating mobility; strengthening political cooperation and enhancing regional cooperation in the East, including the Black Sea.
In an exchange of views on funding for the African Union Mission in Sudan (AMIS), the UK announced its decision to provide an additional £15 million this financial year.
The Council adopted conclusions: expressing concern about the security and humanitarian situation in Darfur; condemning the continuing ceasefire violations and calling for an immediate cessation to hostilities; and urging the parties and non-signatories to the Darfur peace agreement to take part in the negotiations.
The conclusions express readiness to consider further measures, including through the UN, against any party which obstructs implementation of UN support for AMIS. The conclusions reaffirmed the EU’s commitment to continue support for AMIS in the transition period leading to the agreed hybrid force in Darfur and confirmed the extension of the EU civilian/military supporting action to AMIS for a period of up to six months, from 1 January 2007. They also highlighted the EU’s concern over the destabilising effects of the Darfur conflict on Chad and the Central African Republic and called all parties to implement the comprehensive peace agreement.
The Council adopted conclusions calling on all parties to build on the current momentum and reach a durable political settlement enabling Somalia to achieve lasting peace, development and prosperity and urging the resumption of fully functioning political institutions and civil society, as soon as possible.
The Council discussed implementation of UN Security Council Resolution (SCR) 1737.
Conclusions were adopted welcoming unanimous adoption of UNSCR 1737 and calling on all countries to implement the measures in full and without delay.
To ensure effective implementation of measures in UNSCR 1737 while remaining consistent with EU policy, and recalling the EU policy not to sell arms to Iran, Ministers agreed that the EU should prevent the export to and import from Iran of the goods on the Nuclear Suppliers Group and Missile Technology Control Regime lists; ban transactions with and freeze the assets of individuals and entities covered by the criteria in UNSCR 1737; ban travel to the EU of the individuals covered by these criteria; and take measures to prevent Iranian nationals from studying proliferation sensitive subjects within the EU.
Energy external relations
Commissioner Ferrero-Waldner briefed the Council on a Communication setting out priorities for energy policy for 2007-09: the diversification of energy supply; the EU’s energy partnership with Russia; the strengthening of energy relations with the EU’s neighbouring countries and the deepening of energy relations with the major consumer countries such as the United States, China and India on climate protection, energy efficiency and renewable energies.
My right hon. Friend the Foreign Secretary highlighted the linkage between climate and energy, emphasising the importance of a coherent EU approach to energy, to address dependency on external energy supplies through improved energy efficiency and to recognise the impact climate security and energy will increasingly have on the EU’s external relations. The EU stood to gain by leading the way. Other partners also underlined the clear links between energy and climate.
The Council discussed follow-up to the elections in Serbia and the need to support UN Status Envoy Martti Ahtisaari’s proposals on Kosovo, to be presented on 2 February.
The Council adopted conclusions on the European partnership with Montenegro and on Serbia, welcoming the conduct of the parliamentary elections on 21 January and calling for the speedy formation of a Government committed to Serbia’s European course.
Middle East Peace Process
The Council agreed conclusions expressing support for President Abbas and his continued efforts for national unity and calling on all parties to consolidate the cease-fire in Gaza. The conclusions also welcomed the extension of the temporary international mechanism for three months which is providing essential relief to a large part of the Palestinian population, in coordination with the office of the president.
The Council adopted conclusions welcoming the international conference in support of Lebanon in Paris on 25 January 2007 and reiterating the EU’s call for full implementation of UNSCR1701.
The Council adopted conclusions expressing grave concern at the verdict of the Criminal Court in Libya on 19 December 2006, convicting and sentencing to death in a re-trial five Bulgarian nurses and one Palestinian doctor in connection with the HIV/AIDS case at the Benghazi hospital in 1999. The conclusions also called on the Libyan authorities to find a positive, fair and prompt solution to this case leading to the swift release of the medical workers.
The Council exchanged views on possible further initiatives for a moratorium on the death penalty in international fora, including the United Nations.
The Council was briefed, under AOB, by Trade Commissioner Peter Mandelson on negotiations with the Gulf Cooperation Council (GCC) on the establishment of an EU-GCC free trade area.
Work and Pensions
European Court of Justice
The European Court of Justice has yesterday given its ruling in the case brought by former employees of the Allied Steel and Wire Company, who lost pension entitlements when the company became insolvent. We shall of course be studying the judgment of the Court carefully.
The Court considered whether UK legislation in place before the 2004 Pensions Act sufficiently implemented Article 8 of the Insolvency Directive. The UK’s position has always been that the directive does not oblige member states to ensure such pensions are guaranteed in full, nor does it require the taxpayer to underwrite them. The Court has supported the UK’s view.
On the question of damages, we note that the Court appears to have given a steer that damages may not be payable. But this is now a matter for the High Court to decide. It would be inappropriate for us to comment further on the case at this stage.
We have every sympathy for those who have lost their pensions and understand the distress this has caused to them and their families. It is in recognition of this that we introduced not only the pension protection fund, but also the financial assistance scheme, which we recently extended substantially.