Why does European Union not seem to put pressure on all member countries to outlaw bearer shares?


Question

Rise Project has shown in this article that important companies having contracts with Romanian State use bearer shares, thus obscuring the real beneficiaries (the article mainly provides an example of a company that many speculate is connected to the in power party leader).

Searching EU infringements here, I could not find any case dealing with bearer share in spite of the problems related to this practice:

deficiencies were identified in respect of availability of information on bearer shares, availability of information on foreign companies with sufficient nexus with Romania and lack of enforcement measures regarding shareholder register’s maintenance requirements for public companies.
There seem to be an EU directive related to the subject:

Bearer shares. Under the Fourth AML Directive, Member States will be required to prohibit companies from issuing bearer shares (defined as an equity wholly owned by a person/entity that holds the physical stock certificate and where the issuing firm neither registers the owner of the stock, nor does it track transfers of ownership). Current bearer shareholders will be permitted a nine-month period to exchange their bearer shares for registered shares.
Several countries abolished bearer shares such as Switzerland, UK and Ireland.

Answer

Per your question, there's an EU directive on the topic. It already has tasked member states to abolish bearer shares, but the directive to that effect hasn't been transposed everywhere yet.

The EU has two main legislative tools at its disposal: regulations, which apply then and there, and directives, which merely contain guidelines; member states are then required to transpose the latter in their national law in such a way that their national law conforms to what's in the directive. Put another way, regulations enforce the same standard across the union with immediate effect, while directives enforce a minimum standard to be met within a certain timeframe.

One problem with directives is that member states sometimes drag their feet when it comes to transposing their content into their national law. They do so for all sorts of reasons. Typically it's because preexisting national laws are deemed good enough already (or stronger) except in a few edge cases; for instance France was dragging its feet at one point to transpose privacy-related legalese on grounds that they had stronger laws in place for it already. (I've no idea if they've complied since.) Other times it's because the topic is divisive enough that lobbyists or local interest groups are actively opposing it. (Think food standards, food safety, food labeling, etc.) If memory serves, the only thing the EU can do when a state drags its feet is sue it into compliance
Why does European Union not seem to put pressure on all member countries to outlaw bearer shares? Why does European Union not seem to put pressure on all member countries to outlaw bearer shares? Reviewed by Hamza Bashir Ahmad on 02:55:00 Rating: 5