Published on 02-06-10
The European Commission has today launched a Green Paper asking a series of
questions about future corporate governance in the financial sector. The Green
Paper is looking for views on the following suggestions:
limit the number of directors' memberships in boards, for instance to 3;
require more expertise on boards;
widen the "fit and proper test" to include evaluation of expertise
and individual qualities of candidates;
enhance the role of supervisors in the review of corporate governance
structures;
mandate risk committees at board level tasked with setting policy on risk
appetite to be disclosed publicly through a risk statement,
strengthen the legal liability of directors via an expanded 'duty of
care';
strengthen the authority of the risk management function potentially giving
the Chief Risk Officer equal standing to the Chief Financial Officer;
regulate or restrict stock options and golden parachutes;
separate the functions of the Chairman and of the Chief Executive
Officer;
put in place a stricter duty for auditors to flag anything serious to boards
and supervisors, and to look at whether they should have an enhanced role to
check the risk systems. This enhanced role would be in addition to the planned
review by the Commission of auditors' existing role.
mandate that institutional investors publish their voting and engagement
policies and records and adhere to stewardship codes.
| 
