30.6.2006 Official Journal of the European Union L 177201 DIRECTIVE 2006/49/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 14 June 2006 on the capital adequacy of investment firms and credit institutions (recast) THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, Having regard to the Treaty establishing the European Commu- nity, and in particular Article 47(2) thereof, Having regard to the proposal from the Commission, Having regard to the Opinion of the European Economic and Social Committee (%), Having regard to the Opinion of the European Central Bank (?), After consulting the Committee of the Regions, Acting in accordance with the procedure laid down in Article 251 of the Treaty (°), Whereas: (1) Council Directive 93/6/EEC of 15 March 1993 on the capital adequacy of investment firms and credit institu- tions (*) has been significantly amended on several occasions. Now that new amendments are being made to the said Directive, it is desirable, in order to clarify matters, that it should be recast. (2) One of the objectives of Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments (°) is to allow investment firms authorised by the competent authorities of their home Member State and supervised by the same authorities to establish branches and provide services freely in other Member States. That Directive accordingly provides for the coordination of the rules governing the authorisa- tion and pursuit of the business of investment firms. (3) Directive 2004/39/EC does not, however, establish com- mon standards for the own funds of investment firms nor indeed does it establish the amounts of the initial capital of such firms or a common framework for monitoring the risks incurred by them. () O] C 234, 22.9.2005, p. 8. () 0] C 52, 2.3.2005, p. 37. (*) Opinion of the European Parliament of 28 September 2005 (not yet published in the OJ) and Decision of the Council of 7 June 2006. (* OJ L 141, 11.6.1993, p. 1. Directive as last amended by Directive 2005/1/EC of the European Parliament and of the Council (O L 79, 24.3.2005, p. 9). () OJ L 145, 30.4.2004, p. 1. (4) It is appropriate to effect only the essential harmonisation that is necessary and sufficient to secure the mutual recognition of authorisation and of prudential supervision systems; in order to achieve mutual recognition within the framework of the internal financial market, measures should be laid down to coordinate the definition of the own funds of investment firms, the establishment of the amounts of their initial capital and the establishment of a common framework for monitoring the risks incurred by investment firms. Since the objectives of this Directive, namely the establish- ment of the capital adequacy requirements applying to investment firms and credit institutions, the rules for their calculation and the rules for their prudential supervision, cannot be sufficiently achieved by the Member States and can therefore, by reason of the scale and the effects of the proposed action, be better achieved at Community level, the Community may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty. In accordance with the principle of proportionality, as set out in that Article, this Directive does not go beyond what is necessary in order to achieve its objectives. It is appropriate to establish different amounts of initial capital depending on the range of activities that investment firms are authorised to undertake. Existing investment firms should be permitted, under certain conditions, to continue their business even if they do not comply with the minimum amount of initial capital fixed for new investment firms. Member States should be able to establish rules stricter than those provided for in this Directive. The smooth operation of the internal market requires not only legal rules but also close and regular cooperation and significantly enhanced convergence of regulatory and supervisory practices between the competent authorities of the Member States. The Commission Communication of 11 May 1999 entitled ‘Tmplementing the framework for financial markets: Action Plan’ listed a number of goals that need to be achieved in order to complete the internal market in financial services. The Lisbon European Council of 23 and 24 March 2000 set the goal of implementing the action plan by 2005. Recasting of the provisions on own funds is a key element of the action plan.