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Response to the EU Green Paper on CG framework

Response to the EU Green Paper on CG framework

Response to the EU Green Paper on CG framework 150 150 ECODA

The 2011 Green Paper addressed the following three subjects:

– The board of directors – high performing, effective boards are needed to challenge executive management. This means that boards need non-executive members with diverse views, skills and appropriate professional experience. Such members must also be willing to invest sufficient time in the work of the board. The role of chairman of the board is particularly important, as are the board’s responsibilities for risk management.

– Shareholders – the corporate governance framework is built on the assumption that shareholders engage with companies and hold the management to account for its performance. However, there is evidence that the majority of shareholders are passive and are often only focused on short-term profits. It therefore seems useful to consider whether more shareholders can be encouraged to take an interest in sustainable returns and longer-term performance, and how to encourage them to be more active on corporate governance issues. Moreover, in different shareholding structures there are other issues, such as minority protection.

– How to apply the ‘comply or explain’ approach which underpins the EU corporate governance framework.

 

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