Experts Group recommends improved, more transparent corporate governance rules

Source: EU Commission, 6 November 2002

Chairman Jaap Winter of the High Level Group of Company
Law Experts today presented the Final Report of the Group on a Modern Regulatory
Framework for Company Law in Europe to EU Commissioner Frits Bolkestein.
After the Group had delivered its Report on Issues Related to Takeover Bids in January 2002, it
has turned to its original mandate to provide recommendations for a modern regulatory
European company law framework. This mandate was extended by the Commission following
the ECOFIN Council meeting in Oviedo on April 12 and 13, 2002, to review specifically a
number of issues related to corporate governance: the role of non-executive and supervisory
directors, management remuneration, the responsibility of management for financial statements,
and auditing practices. These and other corporate governance issues form a major part of the
Final Report. The Final Report also addresses a number of company law subjects, such as capital
formation and maintenance rules, group and pyramid structures, corporate restructuring and
mobility, the European Private Company and other European legal forms of enterprise, as well
as certain general themes for future development of company law in Europe. The Group has
identified what it believes to be the priorities for the EU on the short, medium and longer term
and advises the Commission to set up an EU company law action plan.
The Group recommends that the priorities on the short term for the EU should be to
· Improve the EU framework for corporate governance, specifically through:
· Enhanced corporate governance disclosure requirements
· Providing for a strong and effective role for independent non-executive or
supervisory directors, particularly in three areas where executive directors
have conflicts of interests, i.e. nomination and remuneration of directors
and supervision of the audit of the companys accounts
· An appropriate regime for directors’ remuneration, requiring disclosure of
the companys remuneration policy and individual directors’
remuneration, as well as prior shareholder approval of share and share
option schemes in which directors participate, and accounting for the
costs of those schemes to the company
· Confirming as a matter of EU law the collective responsibility of directors
for financial and key non-financial statements of the company
· An integrated legal framework to facilitate efficient shareholder
information, communication and decision-making on a cross-border basis,
using where possible modern technology, in particular the companys
· Setting up a structure to co-ordinate the corporate governance efforts of
Member States
· Offer efficient mechanisms for cross-border restructuring and mobility of
companies, specifically by adopting proposals for the 10 th and 14 th Company Law
Directives on cross-border mergers and transfers of seat
· Simplify the 2 nd Company Law Directive on capital formation and maintenance
rules on the basis of the SLIM Group recommendations as supplemented in the
Final Report of the Group

Download the complete report (pdf)