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Corporate governance

Directors & board members

Directors have a crucial role in corporate governance, ensuring proper management of the company and looking after investors' interests.

Directors' duties & liability

In April 2013 the Commission published an external study on directors’ duties and liability, as reflected in national law. This could serve as a basis for future regulatory steps in this area.

Directors' role in listed companies

Recommendation 2005/162/ECdeals with the role of non-executive or supervisory directors in listed companies. It:

  • lays down rules on the independence of directors
  • recommends that companies set up committees on the (supervisory) board to deal with:
    • nomination
    • remuneration
    • audit issues.

Application of the recommendation in EU member countriespdf Choose translations of the previous link 


Shareholders' rights

Directive (EU) 2017/828 amending Directive 2007/36/EC aims to encourage shareholder engagement, in particular in the long term. It introduces requirements in relation to identification of shareholders, transmission of information, facilitation of exercise of shareholders rights, transparency of institutional investors, asset managers and proxy advisors, remuneration of directors and related party transactions.

In April 2014 the European Commission presented:

Directive 2007/36/ECsets certain rights for shareholders in listed companies, including:

2014 proposal to revise this directive

2013 – Commission discussions with stakeholders on increasing shareholder engagementpdf Choose translations of the previous link .

Takeover bids

Directive 2004/25/ECsets minimum standards for takeover bids (or changes of control) involving securities of EU companies. It aims to protect minority shareholders, employees and other interested parties.

Application of the takeover directive

Sustainable investment

Employee share ownership

The work in this area aims to encourage and make it easier for employees to own shares of their companies or participate in their profits, and for companies to offer such schemes to their employees, including on a cross-border basis.

Remuneration policies

Remuneration for board members is a key area where managers may have a conflict of interest and account should be taken of shareholder interests.

Directors' remuneration


Proper disclosure of companies' corporate governance arrangements offers useful information to investors and reputational benefits to business.

In April 2014 the European Commission presented:

EU legal framework

  • Recommendation 2014/208/EUon corporate governance reporting, especially explanations companies should provide for breaking governance codes (‘comply or explain’)
  • Directive 2013/34/EU
    • made key changes to 4 EU accounting directives.
    • established the rule of collective responsibility of the board (Article 20)
    • introduced the obligation for EU listed companies to provide a corporate governance statement in their annual report, giving information on: governance codes, shareholder meeting and its powers, shareholders' rights, administrative, management and supervisory bodies and their committees, etc.

See also

Financial institutions

CRD IV package

Following the 2008 financial crisis, the EU has introduced binding rules on corporate governance and remuneration for credit institutions and investment firms, now reflected in the CRD IV package.

Directive 2013/36/EU  (Capital Requirements Directive) and Regulation (EU) No 575/2013 (Capital Requirements Regulation) lay down rules for banks and investment firms including on:

  • effective risk management
  • tasks, requirements and composition of the boards
  • remuneration for executives and employees considered "material risk takers" –including a "bonus cap" (maximum ratio between variable and fixed compensation)
  • disclosure related to corporate governance and remuneration.

Commission report on remuneration under the Capital Requirements Directive and Regulation (July 2016)

Under Article 161(2) of Directive 2013/36/EU the Commission carried out a review of the CRD/CRR remuneration rules.

Commission report on the diversity of credit institutions' and investment firms' management bodies

Under Article 161(5) of Directive 2013/36/EU the Commission published a reportpdf(300 KB) Choose translations of the previous link on the diversity of credit institutions' and investment firms' management bodies, finding that overall there is still room to improve.