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Have your say on future governance of the financial sector
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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.

    Michel Barnier, European Commissioner for Internal Market and Financial Services is in listening mode

    Michel Barnier, European Commissioner for Internal Market and Financial Services is in listening mode

    The consultation is open until 1 September 2010 and everyone - from major financial institutions to private individuals - is invited to website. On the basis of the consultation, the European Commission will consider at the beginning of 2011 what legislative or non-legislative proposals might be required.

    The European Commission has also today adopted a proposal for a more centralised supervision of Credit Rating Agencies in the European Union, via the newly created European Securities and Markets Authority (ESMA). More information on the proposal is available from the Europa website.

     

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    Last update: 30/10/2010  |Top