Report on the Recognition of the Interest of the Group

Abstract

On 26 January 2015, the European Commission requested the Informal Group of Company Law Experts (ICLEG) to consider the issue of the recognition of group interest. In response to this call one member, Pierre-Henri Conac, was charged with producing a report on behalf of the Group. John Armour provided specific input in the preparation of this report.

This report sets out the opinion of the ICLEG as to issues that the European Commission may wish to consider. The recognition of the interest of the group has gained further acceptance in the Member States in recent years. However, at the EU level, a specific regime for groups is not developed. The report addresses problems which would be solved and presents advantages, including in relation to more effective group governance and risk management in the banking sector as well as the operation of the Banking Recovery and Resolution Directive (BRRD).

The report includes recommendations. Notably, the Commission could consult on whether there should be an action at the EU level recognizing the interest of the group for 100 % owned and non 100% owned subsidiaries. Such recognition could take the form of a safe harbour and could go along the lines of the “Rozenblum” formula. The consultation should also cover whether an action at the EU level should include, in 100% owned subsidiaries, the right of the parent company to give instructions to the subsidiary and whether this right as well as the recognition of the group interest should be an option for Member States or an option for companies themselves.

Keywords: European Commission, Company Law, Group Interest, Groups of companies

JEL Classification: G34, G38, H77, K22, K31