The Gazette 1982

JULY/AUGUST 1982

GAZETTE

undertakingwhich has one ormore subsidiaries in the same Member State (and to the management of the undertaking which has one or more establishments in the same Member State). The Commission proposed that an undertaking be regarded as dominant in relation to all the undertakings it controls (i.e. subsidiaries) where the former (a) holds the majority of votes relating to the shares issued by the latter, or (b) it has the power to appoint at least half of the mem- bers of the administrative, management or supervisory bodies of the latter where these members hold the majority of the voting rights. The explanatory memorandum to the Proposed Directive however makes it clear that the exist- ence of (a) or (b) only give rise taa presumption of domin- ance, so that important share holdings (even if they do not constitute majority holdings) may be taken into account for the purposes ofestablishing whether defacto control exists or not. This might give rise to difficulty in practice unless some agreement is reached on what constitutes de facto control. What criteria should be adopted to determine whether a shareholding of less than 50% should amount to defacto control? Itiswidely acceptedthat ablock holdingof say 30% of the shares in the company may constitute de facto control over that company where the other holdings are widely dispersed. For the purposes of the Mergers, Takeovers andMonopolies (Control) Act 1978 enterpris- es are deemed to be under common control where one ofthe enterprises has more than 30% of the voting rights in the shares of the other, or where it has the right to appoint or remove a majority of the Board or Committee of Manage- ment ofthe other. It could also be argued that a shareholder has defacto control over a company when he has more than a 26% shareholding in that company, having in effect, the power to block the carrying of a special resolution. There has been much discussion but as yet little agreement on the Commission's proposed definition of what should consti- tute "dominant undertaking". It will be interesting to see what definition will be eventually agreed upon. Control outside the EEC The Proposed Directive furthermore provides that the management ofa dominant undertakingwhich controls one or more subsidiaries in the EEC (or where control is exer- cised over one ormore establishments in the EEC, the man- agement ofthe undertaking concerned) and which does not have its decision-making centre within the EEC, must ensure that there is at least one person within the Com- munity who is capable of fulfilling the requisite disclosure and consultation obligations. In the absence ofthe manage- ment so providing, the Proposed Directive states that the management of the subsidiary that employs the largest number of employees within the E.E.C. (or in the case of establishments, the establishment employing the largest number ofemployees within the E. E .C.) will be responsible for fulfilling the said obligations. The information that central management must relay to the national management of its subsidiaries or establish- ments, in the context of transnational undertakings or that management must relay to each of its subsidiaries or estab- lishments, in the case ofcomplex structures whose decision making centre is located in the country in which the em- ployees work, must comprise ofrelevant information giving a clear picture of the activities of the undertaking and its subsidiaries or establishments taken as a whole. The man-

ployment and a statement to the effect that the new owner (the "transferee") would, in the near future, be making an offer to renew his contract of employment or to re-engage him under a new contract of employment. The employee was left in the dark as to the reasons for the transfer and the possible long-term implications resulting therefrom. The "Acquired Rights" Directive took cognisance of this and prescribed, as duly implemented by Regulation 7(1) and 7(3) of the 1980 Regulations, that employees on a transfer, whether they be the employees of the transferor or the transferee and whether they be represented by employees' representatives in thefirmor not, receive minimum items of information. There is in addition an obligation to consult with the employees' representatives, if any, in the event of there being any measures envisaged in relation to the em- ployees consequent on the transfer. While the obligations to inform and consult in a collective redundancy situation are only intended to operate where employees' representa- tives exist in the business, the 1980 Regulations make special provision for the communication of information where no such representatives exist. Inadequacy of existing arrangements Present information and consultation procedures have been criticised 10 on the grounds that when information is given it is often out of date, incomplete or insufficient, that the procedures only apply to particular situations (health and safety and welfare in factories and other specified premises, redundancy and transfer of a business) and fin- ally that where information is supplied to employees it only relates to the affairs of the local business entity so that employees do not get a clear picture of the corporate activities as a whole. The Proposal aims to give employees as complete a picture of the company's activities and performance as possible, and where a company has transnational opera- tions, this will include information on all its activities in the various countries in which it is established. It has been sug- gested that increased information will help to clarify issues for collective bargaining purposes 11 and may indeed pro- vide amore appropriatemethod for employee participation in the enterprise rather than having recourse to methods of employee participation on boards of companies. Disclosure of Information under the Proposal The Proposal requires, in the transnational context, the management of a dominant undertaking whose decision making centre is situate in a Member State of the EEC and which has one or more subsidiaries in at least one other Member State, to disclose, via the management of those subsidiaries, information to employees' representatives in all subsidiaries employing at least 100 employees in the EEC, and to consult with them on specified issues (Article 4). The management of an undertaking whose decision- making centre is located in aMember State ofthe EEC and which has one or more establishments in at least one other Member State shall have similar obligations in relation to information and consultation procedures towards the em- ployees' representatives in all of its establishments in the EEC employing at least 100 employees (Article 9). Similar obligations apply mutatis mutandis (leaving aside Article 8 for example) to the management of a dominant

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