To create a Single Market for Financial Services the harmonisation of rules relating to company law, corporate governance, accounting, reporting and auditing is essential. Policy objectives include providing equivalent protection for shareholders and other parties, to ensuring freedom of establishment for companies throughout the EU, and to promoting cross-border co-operation between companies in different Member States. On accounting standards and statutory audit, the quality, comparability and transparency of the financial information provided by companies should be increased, and the compatibility between the Accounting Directives and International Financial Reporting Standards should be ensured. This includes close co-operation with international bodies.

 

Numerous financial scandals have prompted a new debate on corporate governance and showed that the regulatory framework for company law and corporate governance needs to be modernised. Investors are demanding more transparency and better information on companies, and are seeking to gain more influence on the way the public companies they own operate. The current financial crisis has underlined the need for shareholders to be able to monitor their managers and hold them to account for their actions.