Good and efficient corporate governance is of utmost importance to companies and their stakeholders. It ensures long-term sustainability, streamlines the relationship between a company and its stakeholders, and it is one of the elements that can help restore confidence in the internal market.

There is no one-size-fits-all solution in this area. The legal environment differs from Member State to Member State – especially with the difference between one-tier and two-tier boards. Companies should have the flexibility to design effective corporate policies tailor-made to their corporate objectives and goals.

Keeping a balance between professional regulation (soft law) and hard law is key in this area. Solutions based on "hard law" should be kept to a minimum and only for those aspects where professional regulation cannot provide satisfactory results. In this fast-moving area, corporate governance codes are the best means of promoting the right corporate behaviour. They are flexible, easy to implement and update, and allow for deviations (with explanations).

Any EU intervention in this area should be based on sound empirical and scientific evidence and should respect the following principles: subsidiarity, principle-based approach, market-driven approach, comply or explain, transparency and disclosure, global orientation and better regulation.

BUSINESSEUROPE agrees that the "comply or explain" principle should be strictly applied, and that whenever a company departs from a provision of a code, it should explain why and, if it is the case, include particulars of the alternative solution chosen.

BUSINESSEUROPE believes that many of the issues raised by the green paper pertain to national corporate governance codes. In most of these areas there is no need for EU legislative intervention. Emphasis should rather be shifted from more regulation to better monitoring and effective application of legislation or corporate governance codes.

The EU should avoid falling into the trap of over-regulation. This could hamper or even stop market-driven evolution of corporate governance practices, disrupt the delicate balance found at national level and might also lead to "regulatory fatigue".

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