GERMANY- The Federation of German Industries (BDI) has criticised the forthcoming EU recommendation on requiring more onerous corporate governance standards.
New guidelines could come into being after the European Commission launched a consultation on company directors’ remuneration that has led to a proposal for guidelines to Member States.
But the recommendations in the guidelines have caused concern in Germany. Jan Wulfestange, the BDI’s expert on corporate governance, told IPE: “We think the European Union does not need any new regulations, especially not a European corporate governance code.
“We think competition among different single national codes is better than European regulations. These national codes, especially the German code [Deutscher_Corporate-Governance-Kodex], brings big advantages.
“They are flexible and they can be changed faster than any European code could be but of course, investors and institutional investors are safe. Worldwide, under_competition the best standards would be promoted and would progress.”
The Deutscher Corporate Governance Kodex, created two years ago, has split corporate management in two bodies: supervisory board and board of directors.
The new EU standards would limit the supervisory board to a maximum of 12 years in office. On top of this, chairmen of boards of directors would no longer be allowed to become head of supervisory boards soon after the end of their office. The new rules would impose an interval of five years between chairmanship of board of directors and chairmanship of supervisory board.
Frits Bolkestein, the EU commissioner for the internal market, in an interview with the daily Handelsblatt said he did not think Europe was ready for a European Code, although the five-year interval was necessary against opposition. He is expected to speak on the new guidelines at the forthcoming conference, Deutscher Corporate Governance Kodex.