VIPsight Europe

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Corporate governance package – frequently asked questions

I. Revision of the Shareholder Rights Directive as regards the encouragement of long-term shareholder engagement

Key issues addressed by the proposal:

1. Insufficient engagement of institutional investors and asset managers

2. Insufficient link between pay and performance of directors

3. Lack of shareholder oversight on related party transactions

4. Inadequate transparency of proxy advisors

5. Difficult and costly exercise of rights flowing from securities for investors

1. Why does corporate governance matter? What is good corporate governance?

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European Corporate Governance Forum

Annual Report 2009, April 2010 :

In 2009, the European Corporate Governance Forum1 held three meetings (on 17 February, 19 May and 4 November 2009). The minutes of these meetings are publicly available on the Forum's website. … In addition, the Forum accompanied the work of the Commission on its report on corporate governance in financial institutions that is due to be published in Spring 2010.

During the discussions (regarding : shareholder voting in listed companies), the Forum members stressed in particular the following points:

1. Information has to be channelled through the chain of intermediairies. Downstream, the information received from an account provider by an account holder has to be passed on to the ultimate account holder. Upstream, the information received by an account provider from its account holder must be passed on to the issuer, or where applicable to the following account provider.
2. Intermediaries should be obliged to facilitate the exercise of the voting rights by shareholders/account holders. The provision of a certificate or a proxy should be the minimum in this context.
3. There should be an EU-wide standard format for the certificate on the holding.
4. The exercise of voting rights by intermediaries should not be possible without authorisation and instructions from the account holder.

In March 2009, the Forum published a statement on the application of codes to companies that are listed (also) in a Member State other the one where they have their registered office. In March 2009, the Forum published a statement on the application of codes to companies that are listed (also) in a Member State other the one where they have their registered office.

In 2010, the Forum will continue its work on fundamental issues such as the functioning in practice of the comply-or-explain principle, also in the light of the lessons to be drawn from the the financial crisis. Furthermore, it will analyse the findings of the study on monitoring and enforcement systems in the Member States with a view to drawing conclusions on further steps to be taken. Finally, the work on minority shareholder protection should be launched.

The Forum meetings to be held in 2010 have provisionally been scheduled to take place on 19 February, 2 June and 26 November 2010.