Commission Action Plan on Modernising Company Law and Enhancing Corporate Governance in the European Union
On 21 May, 2003, the European Commission presented a Communication on an Action Plan on Modernising Company Law and Enhancing Corporate Governance in the European Union. (Press Release) The main objectives of the Action Plan are
- to strengthen shareholders' rights and protection for employees, creditors and the other parties with which companies deal, while adapting company law and corporate governance rules appropriately for different categories of company;
- to foster the efficiency and competitiveness of business, with special attention to some specific cross-border issues.
Further information on the Action Plan is available on the EU Commission internet site (see Frequently Asked Questions).
The Action Plan set out in the Commission's communication does not adopt all of the recommendations of the High Level Group, but it reflects the issues and themes raised in its final report. The Action Plan is based on two core principles: increasing transparency and strengthening the role of independent non-executive directors. The Commission identifies the strengthening of shareholders' rights (and the protection of third parties) and the fostering of business efficiency and competitiveness as the two main policy objectives to be achieved. For this purpose, the Action Plan proposes a ten-year programme of 24 measures to be undertaken in the short, medium and long term. To achieve this the Action Plan proposes a mix of legislative and non-legislative measures.
On 20 December 2005 the European Commission launched a public consultation on future priorities for the Action Plan. All interested parties are invited to reply to a series of 14 questions on possible future priorities by 31 March 2006. This will be followed by the publication of a report on the answers received.
Objectives of the consultation
The consultation's 14 questions aim to clarify and evaluate the following:
1) The overall aim and context for future priorities;
2) Continued relevance of the medium and long term measures in light of the Lisbon agenda;
3) The added value of modernisingand simplifying European Company Law, with particular regard to the Better Regulation initiative.
The consultation document is available at:
http://europa.eu.int/comm/internal_market/company/consultation/index_en.htm
Replies should be sent by 31 March 2006 to: MARKT-COMPLAW@cec.eu.int
EU Commission Recommendation on Directors' Remuneration
On 6 October, 2004, the European Commission adopted a Recommendation on directors' remuneration (See Press Release). It recommends that Member States should ensure listed companies disclose their policy on directors' remuneration and tell shareholders how much individual directors are earning and in what form, and ensure shareholders are given adequate control over these matters and over share-based remuneration schemes. The Commission Recommendation - fostering an appropriate regime for the remuneration of directors of listed companies takes due account of the comments expressed in the public consultation, which was launched in February 2004. The results of the consultation were presented by the Commission on 15 June, 2004.
EU Commission Recommendation on the role of independent directors
On 6 October, 2004, the European Commission also adopted a Recommendation on the role of independent non-executive directors on listed companies' boards (See Press Release). The Recommendation concentrates on the role of non-executive or supervisory directors in key areas where executive or managing directors may have conflicts of interest. It includes minimum standards for the qualifications, commitment and independence of non-executive or supervisory directors.
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