EU Surveys ‘Comply or Explain’

The European Commision has commissioned  a €350,000 research study to assess the effectiveness of monitoring and enforcement mechanisms concerning Member States’ corporate governance codes.

Four researcb partners have been selected to underake the review: BUSINESSEUROPE (the Confederation of European Business); RiskMetrics Group; ecoDa (the European Confederation of Directors’ Associations) and Landwell & Associés, a European law firm.

According to the European Commission’s contract award notice, the objectives of the study are to describe the relationship, in the 27 Member States, between legislation and ‘soft’ law (codes) in corporate governance; to examine the existing monitoring and enforcement mechanisms in the Member States as far as corporate governance codes are concerned and to evaluate their effectiveness; to obtain an impression of the companies’ perception of the codes; and to evaluate the perception of EU shareholders as to the quality of companies’ disclosure on the application of corporate governance principles and of explanations given where the company declares not to comply, and of their reactions to disclosure perceived as insufficient.

What might be a little surprising to many observers is that a considerable amount of the research could have been provided to the Commission at no charge from the local governance code partners such as, for example, the Financial Reporting Council in the UK. The conclusions of the study are due to be published this coming Autumn.

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