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On 12 December 2012, the European Commission approved a new
action plan outlining future initiatives in the areas of company
law and corporate governance for the purpose of improving corporate
competitiveness and sustainability.
The action plan identifies three main areas for action: (i)
enhancing transparency, (ii) increasing shareholder engagement, and
(iii) supporting corporate growth and competitiveness. These goals
are to be achieved through the implementation into the national
laws of the Member States of sixteen different actions considered
fundamental.
As regards enhancing transparency between
companies and their shareholders, the Commission would like to
introduce measures aimed at:
encouraging companies to enhance board diversity (i.e. in terms
of skills and views of the board members) and assign greater weight
to the reporting of non-financial risks;
improving corporate governance reporting on the reasons for
derogating from particular recommendations of the applicable
corporate governance codes;
improving the visibility of shareholders and the identification
of shareholders by issuers; and
strengthening the transparency rules applicable to the voting
and engagement policies of institutional investors.
Various initiatives will also be taken to encourage and
facilitate long-term shareholder engagement in
order to avoid the inability to take corrective action and the
supervision of management exclusively by the board. These
initiatives include:
ensuring greater transparency with regard to remuneration
policies and the individual remuneration of directors, as well as a
right of shareholders to vote on and approve remuneration policies
and the remuneration report;
implementing adequate safeguards to protect the interests of
shareholders in related-party transactions, i.e. transactions
between the company and its directors and/or controlling
shareholders (conflicts of interests, corporate opportunities,
etc.);
ensuring a coherent and effective operational framework for
proxy advisors, especially as regards transparency and conflicts of
interest;
clarifying the concept of "acting in concert" with a
view to increasing legal certainty on the relationship between
investor cooperation with corporate governance issues and the rules
on acting in concert; and
investigating whether employee share ownership can and should
be encouraged.
Finally, the Commission will improve the legal framework for
cross-border transactions in order to support the
growth and competitiveness of European businesses. To this end,
various actions will be taken with respect to:
the cross-border transfer of a company's registered office
without the loss of legal personality;
the cross-border merger rules, in particular asset valuation
methods, the duration of the period of protection for creditors,
and the consequences of completion of the merger for
creditors;
a new legal framework for cross-border divisions;
follow-up of the proposed European Private Company Statute with
a view to enhancing cross-border opportunities for SMEs;
information campaign on the European Company and European
Cooperative Statutes in order to encourage companies to opt for
these corporate forms; and
measures targeting corporate groups, i.e. greater transparency
regarding the information available about corporate groups and
recognition of the concept of "group interest".
In addition, the action plan foresees merging all major company
law directives into a single instrument. This would make European
company law more accessible and comprehensible and reduce the risk
of future inconsistencies.
Certain measures proposed by the European Commission have
already been implemented in Belgium, such as the right of the
shareholders of a Belgian listed company to vote on and approve the
remuneration policies of the company's executive directors and
the remuneration report. However, many of the proposed measures
will require legislative initiatives that will apply either to only
listed companies (e.g., voting policies of institutional investors)
or to all companies, listed or not (e.g., provisions on
cross-border divisions).
As regards the timeframe, the European Commission aims to take
these initiatives in 2013, with the exception of those concerning
corporate groups, which are scheduled for 2014.
We will of course keep you informed of any new legislative
developments in these areas.
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