Speaking at a conference on corporate governance in the Hague, Ms Smith underlined the UK's support for the Commission's Company Law Action Plan but said that:
the focus should be on encouraging the development of national regimes within a flexible common framework;
action at EU level should tackle failures in the market created by cross-border problems and promote the objectives of the EU agenda for economic reform; and
legislation should only be brought forward where it promotes those objectives.
Jacqui Smith said:
"The challenge for all of us is to develop the Action Plan to promote convergence through partnership and dialogue among market participants at EU level.
"I believe the Commission has made an excellent start, using alternatives to legislation such as Recommendations to create a balanced approach. But because we all have different company law frameworks, the non-regulatory principle is even more important at EU level than it is at national level. The UK will support legislation where it is the only way to meet our objectives, but our natural inclination is to use other methods if they can deliver.
"When we do have to make legislation, it must comply with the EU's better regulation principles. There must be sound evidence that legislation will not impose excessive burdens, while helping business flourish."
Commenting on the announcement by the Commission earlier in the day of the new EU Corporate Governance Forum, the Minister also said:
"I believe the Forum will flourish and gain the respect of our national markets if it develops into a strong, independent voice of the EU. I hope it will work closely with EU and national authorities and regulators, but not be their servant. It is the key alternative to legislation and it is in all our interests to make it work. It is an opportunity we should not waste."
The Forum is designed to promote corporate governance through dialogue, partnership and best practice implemented through national codes.
