EC Creates Corporate Governance Forum To Promote Convergence

by Ulrika Lomas, for LawAndTax-News.com, Brussels

20 October 2004

Speaking at the High Level European Corporate Governance Conference in The Hague on Monday, European Internal Market Commissioner, Frits Bolkestein announced the establishment of an European Corporate Governance Forum.

According to Mr Bolkestein, the Forum will examine best practices in Member States with a view to enhancing the convergence of national corporate governance codes and providing advice to the Commission.

“The more national corporate governance codes converge towards best practice, the easier it will be to restore confidence in capital markets in the wake of the scandals that have shaken trust in some European companies, including traditional “blue chips”. Broad convergence not only strengthens shareholders’ rights and the protection of third parties such as creditors and employees, it makes it easier for investors to compare investment opportunities," he explained, continuing:

"That leads to a more efficient allocation of capital, which matters to everyone because it is the basis for creating growth and jobs. The time is ripe for this initiative, as many Member States are reviewing their own corporate governance codes."

Mr Bolkestein concluded by suggesting that:

"The Forum with its distinguished membership, will be well placed to help build consensus on key issues. This work is not a precursor for a European corporate governance code, but it is a drive to raise standards across the board. The Forum will help us achieve this without bulldozing national traditions or forcing anything down anyone’s throat.”

The Forum comprises fifteen senior experts (appointed for a three year period) from various professional backgrounds (such as issuers, investors, academics, regulators and auditors) whose experience and knowledge of corporate governance are widely recognized at European level.

The Forum will meet, under the chairmanship of the European Commission, two to three times a year and will deliver a yearly report to the Commission.

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