The Effect of the EU on English Company Law

Abstract

The Member States of the European Community (EU) have agreed to move towards a ‘single European Market’. This means that as many as possible of the barriers to trading freely across national frontiers will be removed. One difficulty of trading internationally occurs when companies involved in trading are themselves subject to different rules. They are more likely to be suspicious of each other and require complicated legal safeguards in their contracts. These will have to be drawn up with reference to several systems of law. Because of this the EU has tried to harmonise a number of rules relating to companies. This has generally been done by ‘Directives’. These are laws which have been adopted by the Council of the European Community. After this adoption they become part of UK law by implementation. This is achieved by the relevant government department (in this case almost always the Department of Trade and Industry) drafting a statute which translates the provisions of the Directives into terms which will be understood in the United Kingdom. The statute is then dealt with by the UK Parliament in the ordinary way except that, because there is an obligation to implement the Directive, the scope for making amendments to the legislation is necessarily limited.

The author and publishers wish to thank the Commission of the European Communities for permission to reproduce copyright material in this chapter.