The European Commission will question a decision by MEPs to dilute its proposal to make listed firms set up audit committees to combat fraud, it said today.
"I am a believer in light regulation, but I find it hard to fathom that an audit committee for a public company listed on a stock exchange, requesting money from the public, is overly onerous," Internal Market and Services Commissioner Charlie McCreevy said.
On Tuesday, the European Parliament's legal affairs committee rejected a move that would have obliged all 8,000 listed firms in the European Union to appoint an audit committee.
Instead, the MEPs voted to let member states continue with national systems that are deemed "similar". Otherwise they can "opt in" and enforce mandatory audit committees.
The full parliament and member states will have a final say. The choice was introduced after heavy, last minute lobbying by industry representatives such as the Union of Issuers Quoted in Europe (Unique), who said audit committees were a corporate governance issue that should be handled by voluntary codes.
Some listed firms do not have an audit committee at present. The Commission, which made the original proposal, wanted audit committees to be mandatory across the 25-nation EU, with at least one of the committee members being "independent" and versed in accountancy.
Mr McCreevy told reporters on the sidelines of a financial industry conference that the Commission was asking the bill's sponsor in parliament, Dutch centre-right member Bert Doorn, to clarify the change.
"We have to clarify with him the intent of some of the amendments," Mr McCreevy said.
The Commission's draft rules have been available for some time and have been considered by members states and aired among industry groups, but the audit committee issue has emerged only this month, he said.
"I am willing to work with the parliament to see what is meant by some of these amendments as it's not too clear," Mr McCreevy said.
Unique and other campaigners said that deciding on who would be "independent" and thus eligible to join an audit committee would open up a legal can of worms and deter good candidates from coming forward.