New guidelines for small and mid-cap listed companies aim to influence the corporate governance debate following the European Commission’s green paper
The Quoted Companies Alliance, the representative body for the UK’s small and mid-cap quoted company sector, Middlenext, the French association for listed SMEs and mid-cap companies, and Deutsches Atkieninstitut, the German association for listed companies, have today published a short set of common corporate governance guidelines (the Guidelines). The Guidelines can be read here.
The Guidelines are “high-level principles [which] aim to identify and address the corporate governance issues which are relevant to small and mid-cap quoted companies throughout Europe”.
The European Commission’s initiative on listed company corporate governance
In April 2011 the European Commission issued a green paper on the EU corporate governance framework, which we discussed in this post. The Guidelines have been produced in response to the Commission’s work on listed company governance, as the QCA press release which accompanies the issue of the Guidelines makes clear:
“By producing these guidelines, we want to show the European Commission the benefits of a principles-led approach and one that is not prescriptive, taking into account national differences and different market standards. Ultimately, we want to prevent a European directive on corporate governance that turns governance into an inflexible, box-ticking, compliance exercise.”
Accordingly, the Guidelines “highlight the need for a principles-based approach to corporate governance throughout Europe, rather than one based on strict rules. They also emphasis that a proportionate approach is required and that one size does not fit all in terms of governance”.
The Guidelines
The Guidelines are short – two and half a pages – and are drafted to be applicable both to companies with a continental European supervisory and management board structure and to companies with an Anglo-Saxon unitary board. The Guidelines cover high level governance issues:
- Structure and process: Annual corporate governance statements and how the board operates.
- Responsibility and accountability of the board.
- Board balance and size: Composition, appointment, independence.
- Board skills and capabilities: Diversity, ability experience of individual directors, and the creation of committees.
- Risk management and internal control: Monitoring and disclosure of internal processes, and auditor independence.
- Remuneration policy.
- Transparency of shareholder meetings and voting.
The European Commission consultation on its corporate governance green paper closes on 22 July 2011.
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