12 December 2012

ACCA: Modernisation of European company law and corporate governance rules

ecoDa, EuropeanIssuers and ACCA welcome the EC's Action Plan on company law and corporate governance, while recognising that it will raise some implementation challenges. The organisations appreciate the EC's commitment to ensure thorough ex-ante impact assessments on individual initiatives.

ecoDa, EuropeanIssuers and ACCA believe the proposed measures entail interesting elements that should pave the way towards a modern, more user-friendly and efficient regulatory framework on company law and corporate governance. They share the view that emphasis should be on simplification, shareholders’ identification and their effective engagement, as well as on transparency, but they need to make sure that the foreseen measures will deliver real benefits to companies, shareholders and investors. 

John Davies, head of technical at ACCA, says: "ACCA is very supportive of initiatives aimed at increasing transparency, such as strengthening disclosure on board policies on diversity and risk management, on the quality of explanations for non-compliance in corporate governance reports and regarding shareholders’ engagement via the modification of the Shareholder Rights Directive. 

"On the company law components of the Action Plan, we are pleased to see that the Commission is proposing to merge and genuinely codify the provisions of various company law Directives to make a more coherent and consistent set of rules. As a global body, ACCA is also very interested in the commitment to further explore the feasibility of the cross-border transfer of the registered office – which is a long-running problem area -  and the concept of 'group interest'. It will be difficult to resolve them but, in theory, both offer opportunities for benefits to be achieved. We also urge EU decision-makers to ensure a proper follow-up of the European Private Company - the so-called SPE - proposal, in order to encourage and facilitate cross-border operation by SMEs."

Lutgart Van den Berghe, Chair of ecoDa Policy Committee, expressed that: "ecoDa is convinced that only an improvement of the quality of explanations can safeguard the flexibility offered today by the European governance approach. Flexibility was seen as the condition to guarantee that companies have their governance tailored to their specific needs. Notwithstanding that there is some evidence that the quality of explanations and the quantity of the supervision are improving, it is obvious that more should be done to increase the effectiveness of the governance codes and to foster a better dialogue between companies and their shareholders. Therefore, ecoDa welcomes European initiatives to enhance the quality of explanations. More widely, ecoDa claims for proportionate and tailored governance measures, and encourages the European Commission to see governance as a means to an end, not an end in itself."

Susannah Haan, Secretary General of EuropeanIssuers, said that: "We are pleased to see the Commission has listened to companies’ concerns regarding the need for more effective shareholder identification and for better disclosure from shareholders regarding their voting policies and use of proxy advisers. It is essential to promote better understanding between companies and shareholders in Europe, given all the regulatory changes which mean that many companies will be obliged in the future to move from bank funding to market finance."

The challenges will lie in the concrete design and implementation of the proposed actions, which will require on the one hand a balanced and integrated approach from policymakers, and on the other, engagement with stakeholders to ensure that the proposals are perceived to assist improved company performance and integrated shareholder engagement, rather than merely as creating new burdens.

Press release

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