The study report commissioned by the European Commission on corporate governance monitoring and enforcement practices within the Member States has been published: see here (pdf). The study was commissioned to describe within each Member State: the relationship between legislation and codes; the existing monitoring and enforcement mechanisms for codes and their effectiveness; companies' perceptions of the codes; the quality of companies' disclosure regarding governance principles and 'comply or explain'.The study found widespread support amongst regulators and institutional shareholders for the 'comply or explain' approach but identified clear scope for improving its operation with regard to the quality of information disclosed and enforcement. A greater role for regulators and statutory auditors is advocated as well as the adoption of a 'comply or explain' code for institutional shareholders regarding the exercise of their voting rights.
The report is accompanied by three appendices: [1] legal analysis by Member State [2] survey on company perceptions of governance codes and [3] methodology. Appendix one contains much useful information and provides a reasonable starting point for further research. However, the UK section is over simplified in places and is, therefore, potentially misleading. For example, the short summary on p. 421 is misleading to the extent that it suggests that all UK incorporated companies are subject to the Combined Code. Moreover, on p. 423, it is stated that that the consent of at least 75% of the shareholders is required to amend the articles of association: this should be at least 75% of votes cast at the relevant shareholders' meeting (see Sections 21 and 283 of the Companies Act 2006). Finally, is it correct to assert, as is done in the conclusion presented on p. 421, that the UK corporate governance framework "ensures that basic standards of corporate governance are maintained throughout all companies incorporated in the UK"?
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