Dáil Éireann Debate, Thursday - 24 February 2005
53 Mr. Gormley asked the Minister for Enterprise, Trade and Employment his views on the establishment of an EU-wide corporate governance code in the context of increasing volumes of transnational trade; and if he will make a statement on the matter. [6222/05]
Amharc ar fhreagraAs the Deputy may be aware, there is no EU-wide corporate governance code. It is a matter for the European Commission to initiate proposals. The Commission has studied the matter comprehensively and concluded that a European corporate governance code would not add significant value but would simply add an additional layer between international principles recently updated at OECD level and national corporate governance codes. The Commission's comparative study of national corporate governance codes revealed a remarkable level of convergence anyway.
However, the Commission also concluded that the self-regulatory approach that characterises corporate governance codes in most member states was not sufficient to guarantee sound corporate governance. Given the increased integration of European capital markets, it felt that the EU should adopt a common approach on a few essential rules and should ensure adequate monitoring of national corporate governance codes. To this end, the Commission, in its action plan on company law and corporate governance, published in May 2003, included a range of corporate governance initiatives, a number of which are in place while others are under negotiation or still being developed.
For example, the Commission has put in place a corporate governance forum drawn from relevant interest groups with the job of monitoring corporate governance developments and encouraging ongoing convergence and best practice in the member states. Ireland has a representative on this group. The Commission's action plan was endorsed by the Competitiveness Council in September 2003, the broad approach on the way forward on corporate governance shared by the member states. This is particularly so as far as having a European wide code is concerned.
While the focus at EU level is on corporate governance applicable to listed companies, at national level here improved corporate governance initiatives applicable to companies generally have been put in place in recent years as follows: proactive enforcement of the provisions of company law by the establishment and resourcing of the multidisciplinary Office of the Director of Corporate Enforcement; increased penalties and additional resources to ensure companies meet their filing obligations with the Companies Registration Office; provision of new corporate governance requirements, for example, director's compliance statement in the Companies (Auditing and Accounting) Act 2003 — these do not apply to smaller companies; establishment of the company law review group on a statutory footing to ensure that the provisions of our company law are consolidated, modernised and simplified, thus making compliance easier; and establishment of IFSRA, which has the job of regulating the financial institutions and exercising important consumer protection powers as regards the provision of financial services to the consumer. Business, markets and the public want companies that operate good corporate procedures and practices throughout the EU.
