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Executive Summary
In mid-December 2012, the European Commission published its Action Plan outlining future initiatives in the areas of corporate governance and company law. The focus of this commentary is on the issue of corporate governance.
There was increased interest from all stakeholders in the plan in the light of comments Commissioner Barnier had made supporting the so-called “shareholder spring” of 2012 and calling for mandatory measures (“a regulation spring”). These seemed to portend a more muscular approach to EU oversight of key governance issues in the wake of the weaknesses exposed by the financial crisis.
The plan as it stands will no doubt be seen as decidedly underwhelming. Despite the modest ambitions of the plan, the financial sector will still need to monitor closely the progress of the few concrete measures announced and perhaps more importantly the public debate which should accompany the procession of the issues covered through the EU institutions.
In the short to medium term there remain plans for imposing a limited number of obligations on institutional investors, asset managers, mutual funds, pension funds and new to the regulatory table, proxy advisers, to bring about effective stakeholder engagement. New elements might arise from the responses to the planned consultation (Green Paper) on the long-term financing of the European economy.
The plan reinforces the value of companies taking part in voluntary initiatives such as codes-of-conduct driven by trade associations (e.g. EFAMA) or quasi legal bodies such as the Financial Reporting Council (FRC UK) to shape the debate very effectively.
The UK, through the work of the FRC and the Kay Review, appears to be in a position to make a strong and influential contribution to the Corporate Governance debate in the EU.
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