Guarded responses to EU corporate governance consultation

Some clear views emerged from responses to the European Union's green paper on corporate governance earlier this year, though it's far from clear whether the ideas it tossed into the debate will see the light of legislation. The consultation attracted more than 400 responses, a large number for a specialist subject, and for a green paper, which by definition is still quite a long way from generating legislation. In its summary document, the European Commission avoided strong policy guidance – that may come later – but it did give its view about what the respondents had to say.

• Tiered recommendations: A majority of respondents – of those, that is, who expressed a clear view – rejected the idea that member states should develop different governance recommendations for large and smaller companies. "Opposition to the idea was particularly strong from business (companies and business federations) and investors (both institutional and retail) alike," it noted. The summary of arguments against is so powerful that you have to wonder who supported the idea.
  
• Codes for unlisted companies: Here the views split, and in a way that would seem to make it difficult to create a policy. Some 70 per cent of respondent took a clear stance, and of those 70 per cent didn't like the idea that the EU should get involved. The other 30 per cent, however, were pretty uniformly representatives of employees, retail investors and civil society groups, pitting the big and powerful against the small and defenceless.
  
• Split chair and CEO: Three quarters of the respondents were clear on the matter, but that's as far as clarity goes. Half those with clear views wanted a split, the other half didn't. Employees, institutional and retail investors, civil society groups, the insurance sector, proxy agents and accountants were generally in favour; companies were generally opposed.
  
• Diversity and skills: What should EU policy say about recruiting the right skills to the board, and the right mix? Here the responses were muddy. Some of those who liked the idea of a strong policy didn't want the EU to get involved in enacting it. National standards would be more appropriate. Others wanted the EU involved, but only with "soft law". Others saw no need. If this were any provision other than the one involving the gender mix on boards, you would expect to see no action at all. This question wasn't quite the same as two others:
  
• Diversity policy: Most respondents thought it would be okay to tell companies to publish a policy statement, on the basis that transparency would give investors the information to act as they saw fit.
  
• Gender balance: Should listed companies have to have a certain proportion of women on the board? The majority rejected a compulsory quota system, like the one that operates in Norway, but some thought a policy that urged companies to adopt a target was fine.

And more. Limiting the number of directorships an individual could hold didn't win very much favour. The idea of getting an outsider to conduct a board evaluation every three years split the respondent pretty much down the middle.

Source document: There are more questions and answers in the feedback statement, an 18-page pdf file.