The European Commission has published its long awaited Green Paper on the EU corporate governance framework.
The Green Paper, published in April 2011, explores issues relating to three key corporate governance topics:
- Board of directors – the issues considered and the questions posed on directors relate to board composition (including diversity, particularly gender diversity), availability and time commitment by non-executive directors, board evaluation, remuneration and risk management;
- Shareholders – the Green Paper's focus is on improving shareholder engagement and addressing short-termism; and
- Enforcement of corporate governance codes – the Green Paper considers the "comply or explain" model, in particular how the quality of explanations of non-compliance could be improved and how corporate governance disclosures could be better monitored. There does not appear at this stage to be a push at EU level for a move away from the "comply or explain" model, but rather a desire to improve how the system operates in practice.
The Green Paper is very much a discussion paper seeking views. It does not recommend or favour particular courses of action. However, it does consider some proposals which could lead to considerable change if implemented.
The deadline for responses is 22 July 2011. The Commission expects to publish a feedback statement in the autumn. The decision as to whether legislative proposals are required will be taken in the light of the responses received.
The Green Paper, along with a FAQ document on the consultation and the Commission's press release, is available on the Europa website.