In April 2011, the European Commission published a Green Paper launching a public consultation on improving the corporate governance framework in Europe.
The Green Paper addresses three main topics:
- The board of directors – focusing on the supervisory role of directors, and looking at board composition/diversity, availability and time commitment, board evaluation, directors’ remuneration, and risk management;
- The role of shareholders – discussing how to encourage shareholder engagement, whether any EU rules contribute to inappropriate short-termism, the relationship between institutional investors and asset managers, whether proxy advisors should be required to disclose more information, and whether there is a need for a European mechanism to help issuers identify their shareholders;
- How to apply the “comply or explain” approach which underpins the EU corporate governance framework. The Commission does not appear to intend to alter the fundamentals of the comply or explain approach, but it does refer to the possible need to reinforce certain requirements at EU level by including them in legislation rather than making recommendations.
The consultation period closed on 22 July 2011. The Commission will issue a feedback statement in autumn 2011. It will then decide whether legislative proposals are necessary.
The Green Paper can be found here