European Commission adopts Action Plan to modernise European company law and corporate governance

12 / 11 / 2012

After completion of a consultation process over the last two years, the Commission has set out an Action Plan specifying a number of initiatives in the areas of company law and corporate governance that aim at putting in place modern legislation for sustainable and competitive companies.

The Commission’s initiatives include:

1. Increasing companies’ transparency as regards their board diversity and risk management policies.
2. Better identification of shareholders by issuers.
3. Improving corporate governance reporting and in particular the quality of explanations which should be provided by listed companies that depart from the corporate governance code provisions.
4. Strengthening transparency rules for institutional investors on their voting and engagement policies.
5. More transparency on remuneration policies and individual remuneration of directors, as well as shareholders’ right to vote on remuneration policy.
6. Better shareholders’ oversight on related party transactions (i.e. dealings between the company and its directors or controlling shareholders).
7. Improving the transparency and the conflict of interest frameworks applicable to proxy advisors.
8. Guidance to increase legal certainty as regards the relationship between investor cooperation on corporate governance issues and the rules on acting in concert.
9. Improved information on the European Company/European Cooperative Society Statute.
10. Follow-up of the European Private Company statute proposal with a view to enhancing cross-border opportunities for SMEs.
11. Identification of obstacles to employee share ownership.
12. Initiatives on the cross-border transfer of seats for companies.
13. Review of the rules for cross-border mergers.
14. Clear rules for cross-border divisions.
15. Codification of major company law Directives.
16. More transparency on information about groups of companies and recognition of the concept of the interest of the group.

Most initiatives are expected to be adopted during the course of the year 2013, although in some cases (initiatives 10 to 15) this will only involve further study and analysis with any subsequent action to be decided depending on the results of such study. Implementation of initiative 16 is expected for the year 2014.

Press release from the Commission; FAQs and Action Plan (provisional version)