European company law and corporate governance should make sure that companies are competitive and sustainable. The Commission's analysis indicates that further improvements can be made, by facilitating long-term shareholder engagement, by increased transparency between companies and their shareholders and by simplifying cross-border operations.
On the basis of its reflection and the results of the consultations, the Commission identified several lines of action in the area of company law and corporate governance that are fundamental to putting in place modern legislation for sustainable and competitive companies.
Internal Market and Services Commissioner Michel Barnier said: "This Action Plan on company law and corporate governance sets out the way forward: shareholders should receive additional rights, but also fully assume their responsibilities to make sure that the company remains competitive over the longer term. Companies should also become more transparent in several respects. This will contribute to effective governance of companies."
Key elements of the action plan
1. Increasing the level of transparency between companies and their shareholders in order to improve corporate governance. This will include in particular:
Increasing companies' transparency as regards their board diversity and risk management policies;
Improving corporate governance reporting;
Better identification of shareholders by issuers;
Strengthening transparency rules for institutional investors on their voting and engagement policies.
2. Initiatives aimed at encouraging and facilitating long-term shareholder engagement, such as:
More transparency on remuneration policies and individual remuneration of directors, as well as a shareholders' right to vote on remuneration policy and the remuneration report;
Better shareholders' oversight on related party transactions, i.e. dealings between the company and its directors or controlling shareholders;
Creating appropriate operational rules for proxy advisors (i.e. firms providing services to shareholders, notably voting advice), especially as regards transparency and conflicts of interests;
Clarification of the 'acting in concert' concept to make shareholder cooperation on corporate governance issues easier;
Investigating whether employee share ownership can be encouraged.
3. Initiatives in the field of company law to support European businesses and encourage their growth and competitiveness:
Further investigation on a possible initiative on the cross-border transfer of seats for companies;
Facilitating cross-border mergers;
Clear EU rules for cross-border divisions;
Follow-up of the European Private Company statute proposal (IP/08/1003) with a view to enhancing cross-border opportunities for SMEs;
An information campaign on the European Company/European Cooperative Society Statute;
Targeted measures on groups of companies, i.e. recognition of the concept of the interest of the group and more transparency regarding the group structure.
In addition, the action plan foresees merging all major company law directives into a single instrument. This would make EU company law more accessible and comprehensible and reduce the risk of future inconsistencies.
The Commission’s ‘Europe 2020’ Strategy (see IP/10/225) calls for improvement of the business environment in Europe. EU company law and corporate governance rules for companies, investors and employees must be adapted to the needs of today’s society and to the changing economic environment. European company law and corporate governance should make sure that companies are competitive and sustainable.
With its 2011 Green Paper on EU corporate governance (IP/11/404) the Commission initiated an in-depth reflection to evaluate the effectiveness of the current corporate governance rules for European companies. It also carried out an on-line public consultation on the future of European company law which generated a large number of responses by a wide variety of stakeholders (IP/12/149).
See also MEMO/12/972