EU unveils corporate governance action plan
EUROPE – The European Commission has unveiled an action plan on corporate governance – aimed at strengthening shareholders rights and protecting employees and creditors.
The new plan - "Modernising Company Law and Enhancing Corporate Governance in the EU" - is open to public consultation for three months.
It is a response to a series of corporate scandals such as Ahold and Enron. “Company law and corporate governance are right at the heart of the political agenda, on both sides of the Atlantic,” said internal market commissioner Frits Bolkestein.
The plan would “help deliver the integrated and modern company law and corporate governance framework which businesses, markets and the public are calling for”. The plan is the Commission’s response a report by a committee headed by law expert Jaap Winter.
“The Action Plan aims to be flexible in application, but firm on principles,” the Commission says.
It said European regulations and corporate governance need to be modernised because of the growth in cross-border operations. It saw a self-regulatory market approach to corporate governance, saying that though a European Corporate Governance Code would offer significant added value it would add red tape.
The plan’s key proposals:
- annual corporate governance statement for listed companies
- “legislative framework” to aid shareholders to exercise rights such as asking questions and electronic participation in AGMs
- promoting the role of independent non-executive or supervisory directors
- greater transparency in directors' pay - giving shareholders more influence
- creation of a European Corporate Governance Forum
The plan also seeks better information on the role of institutional investors in corporate governance. The Action Plan will now be considered by the European Parliament and the Council – with comments invited by August 31.