17 June 2003

Speech Bolkestein on Company Law and Corporate Governance

Excerpt

“As you know, the Commission unveiled its Communication on Modernising Company Law and Enhancing Corporate Governance in the EU on 21 May 2003. In parallel with this Action Plan, we presented a Communication on Statutory Audit. The Action Plan provides a comprehensive, dynamic and flexible company law and corporate governance framework for Europe.

“Our Action Plan should help to protect investors from fraud and malpractice. It will also ensure that those who lead companies in Europe behave more responsibly and are held to account by shareholders. We will do this in 2 ways: (1) by increasing transparency, and (2) by equipping shareholders with the means to control the actions of those to whom they have entrusted their hard-earned savings.

“Our approach is to be firm on the principles but flexible on their application. The Action Plan therefore proposes a mix of legislative and non-legislative measures.

“Disclosure requirements are a highly effective market-led way of rapidly achieving results. Our first policy line is therefore to enhance corporate governance disclosure. Our second policy line is to generate shareholder power by strengthening shareholders' rights in listed companies.

“A sound corporate governance framework will be achieved neither by the markets acting on their own only, nor by the introduction of an overly prescriptive legal infrastructure. By increasing transparency and generating shareholder power we will help to restore confidence in the markets. This is the European way forward, different from the United States Sarbanes-Oxley Act, but with the same objectives.

Full speech

© European Commission