The Confederation of British Industry has called upon British MEP's to oppose parts of the Alternative Investment Fund Managers Directive in the European Parliament, saying that some of the rules in Directive could harm companies just as they emerge from the recession and could damage employee relations.
According to the CBI, the Directive would require companies owned by private equity investors to reveal commercially sensitive information, such as research and development plans. The CBI said that such rules would stifle innovation, increase costs and bureaucracy and "prevent a level playing field" as other private companies would not be required to follow the rules.
The CBI also claimed that the relationship between employers and employees in private equity companies "would to an extent be replaced by relations between employees and the private equity firm". This, the CBI said, would discourage investment and put private equity owned firms at a disadvantage, with employees being treated differently according to the ownership of the company in what would be a "dangerous precedent".
Under the proposed legislation companies with 50 staff or more will be affected, leading to worries that it could severely impact small and medium businesses.
Almost 700 companies supported the CBI's call to oppose the AIFM Directive. The fears of the CBI were also backed up on the continent by BusinesseEurope.
John Cridland, Deputy Director-General of the CBI, said, "The proposed legislation would damage companies owned by private equity firms, and discourage investment. We are particularly concerned about the impact it would have on small and medium-sized companies.
"The additional bureaucracy and forced disclosure of commercially-sensitive information would be a real problem, and impede companies that should be encouraged in order to foster economic recovery."