Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions – Action plan: European company law and corporate governance – a modern legal framework for more engaged shareholders and sustainable companies

The Commission’s ‘Europe 2020’ Communication calls for improvement of the business environment in Europe. A modern and efficient company law and corporate governance framework for European undertakings, investors and employees must be adapted to the needs of today’s society and to the changing economic environment.

This Action Plan outlines the initiatives that the Commission intends to take in order to modernise the company law and corporate governance framework. It identifies three main lines of action:

- Enhancing transparency: companies need to provide better information about their corporate governance to their investors and society at large. At the same time companies should be allowed to know who their shareholders are and institutional investors should be more transparent about their voting policies so that a more fruitful dialogue on corporate governance matters can take place.

- Engaging shareholders: shareholders should be encouraged to engage more in corporate governance. They should be offered more possibilities to oversee remuneration policy and related party transactions, and shareholder cooperation to this end should be made easier. In addition, a limited number of obligations will need to be imposed on institutional investors, asset managers and proxy advisors to bring about effective engagement.

- Supporting companies’ growth and their competitiveness: there is a need to simplify cross-border operations of European businesses, particularly in the case of small and medium-sized companies.

Besides supporting these three key objectives, the Commission will launch an overarching codification exercise in order to make the regulatory framework more user-friendly.

• Primary Source

EUR-Lex: COM(2012)740: Follow the progress of this document through the decision-making procedure http://eur-lex.europa.eu/legal-content/EN/HIS/?uri=COM:2012:740:FIN

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