15 November 2011

Commission published summary of the consultation responses to the EU corporate governance framework

On 5 April 2011, the EC adopted a Green Paper1 and launched a wide-ranging public consultation on the EU corporate governance framework. The consultation closed on 22 July 2011. In total, 409 answers were received from a wide range of professional representatives, citizens and public authorities.

The majority of respondents were not in favour of different corporate governance regimes based on the size of the respective companies. Opposition to the idea was particularly strong from business (companies and business federations) and investors (both institutional and retail) alike. Three main arguments were presented. The first is that the "comply or explain" principle already offers enough flexibility. It permits companies to apply only those recommendations which are suitable to their specific situation, which, of course, includes their size. The second one focuses on the investor perspective. In order to remain attractive and not to fall into a "sub-standard" category, it would be important for listed companies to provide the same corporate governance standards across all market capitalisations, particularly regarding transparency. The third argument was that it is difficult to establish meaningful size criteria across the EU. This was, however, challenged by the supporters of a differentiated approach. Support for differentiation came from the segments auditors/accountants and consulting/advisory. In addition, some business federations representing the needs of smaller companies or issuers were favourable to this idea.

Respondents put forward various definitions or methodological elements. Others mentioned existing models of differentiation. Many of those supporting differentiation were motivated by the desire to reduce the administrative burden of SMEs.

           

Full paper

Received responses

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