A first step towards new corporate governance rules for the EU

Brussels, 12 November 2002

The High Level Group of Company Law Experts has presented its final report on company law and corporate governance to the European Commission , in preparation of a EU action plan for company law to be presented in early 2003 .

Calling for a full and open debate on the reports recommendations, Internal Market Commissioner Frits Bolkestein said: We have a unique opportunity in the European Union, as we move towards the integration of our capital markets by 2005, to put into place the best corporate governance standards in the world.

The report covers corporate law practices in Europe such as corporate restructuring and capital formation. Chapter III covers corporate governance and introduces recommendations on pre-meeting communications for shareholders, participa tion to meetings via electronic means, the role of non-executive directors, remuneration policy, audit committees and fraud sanctions.

The recommendations, despite being relatively sensible and well-thought, will suffer comparison with what was put forward in Sarbanes-Oxley. In case of corporate fraud, responsibility is attributed only to the board as a whole rather than to individuals. No EU-wide code is yet envisaged and the report only encourages coordination between Member States national codes.

Frits Bolkestein addressed concerns over the reports rather defensive stand by accusing the Americans of overreacting and putting too much pressure on their companies.

Please click here for the full text of the report.