COMMISSION STAFF WORKING DOCUMENT Implementation Plan Accompanying the document Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on amending Directive 2007/36/EC as regards the encouragement of long-term shareholder engagement and Directive 2013/34/EU as regards certain elements of the corporate governance statement
Date: 2014-04-09
Institutions: European Commission
Subjects: access to information, administrative transparency, board of directors, corporate governance, management audit, protection of shareholders, remuneration of work, shareholder, trade intermediary













EUR-Lex - 52014SC0128 - EN











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52014SC0128

COMMISSION STAFF WORKING DOCUMENT Implementation Plan Accompanying the document Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on amending Directive 2007/36/EC as regards the encouragement of long-term shareholder engagement and Directive 2013/34/EU as regards certain elements of the corporate governance statement /* SWD/2014/0128 final  */









Implementation
Plan[1]
1.
Introduction
The past years
have highlighted several shortcomings in the corporate governance of listed
companies in the European Union. Companies have paid remuneration to their
directors which was insufficiently linked to performance, boards have concluded
related party transactions which might not always have been in the best
interest of the company and they have provided corporate governance information
that lacked quality. Also, institutional investors and asset managers have,
generally speaking, not sufficiently engaged with the companies they invested
in. Moreover, the growing importance of proxy advisors has cast doubts on the
quality and reliability of their advice, which might in turn compromise the
voting and engagement of shareholders.
To address those
shortcomings, the proposal for a revised Shareholder Rights Directive will
increase transparency standards on several of these issues. Moreover, it will
give shareholders more effective tools to oversee directors thus improving the
governance and (financial) performance of EU listed companies, contributing to
the long-term financing of companies through equity markets and improving the
conditions for cross-border equity investments.
2. Deliverables
and Implementation Challenges
The proposed amendments aim at enhancing the corporate governance of
listed companies in the EU in several areas. Member States will have to ensure that
the new provisions are properly transposed into national law within the
prescribed deadline. Given the existing transposition of Directive 2007/36/EC,
Member States will be able to build on their current legislation. Also, the
implementation of the amended Directive should be significantly facilitated by
the fact that the main stakeholders have been consulted in advance on the
legislative proposal and so the draft text benefited from their input and
expertise.
The main challenges
Member States will face in the transposition are the following:
2.1 Early
dissemination of information to market participants
Member States’
authorities should as soon as possible share information with market
participants on the new legislative provisions and their possible effects in
order to anticipate any potential problems with their implementation on the
ground at a later stage. The Commission will assist in this by actively
engaging with stakeholders and giving presentations on the new legislation at
conferences and similar events.
2.2 Effective
cooperation and coordination among all actors
A proper
implementation of the Directive can only be ensured and a level playing field
in the corporate governance of listed companies achieved if all Member States and their relevant bodies closely cooperate and coordinate in the
implementation process.
 2.3 Monitoring application
by market participants
The application
of the new rules by the market participants needs to be monitored. In
compliance with the principle of subsidiarity, the relevant information should
be gathered primarily by the Member States through their relevant national
authorities and bodies. The costs of such activity could be met from existing
operational budgets, and would not be significant. Monitoring activity should
involve sample reviews of corporate governance reports, including information
on remuneration and on related party transactions, as well as of information
published by institutional investors, asset managers and proxy advisors.
3. Support
Actions
In order to assist the
Member States with the transposition of the Directive the Commission is willing
to offer the following measures of support.
3.1 General Assistance
The Commission is conscious that cooperation with national
authorities must be developed at a very early stage. Therefore, certain general
measures should be put in place as soon as possible after the adoption of the
proposal. First, the Commission will provide a single contact point for Member
States to facilitate the dissemination of information regarding the proposed
legislation as well as transposition procedures (e.g. a functional mailbox).
Also, the DG MARKT web-site will be updated with relevant information on the
new Directive. 
3.2
Implementation Workshops and Bilateral Meetings
To deal with any
questions or issues that might arise in the course of the implementation period,
an implementation workshop could be organised. The workshop would aim at
establishing a harmonised approach and facilitating a timely transposition of
the Directive into national legislation by providing a forum for sharing
information for the Member States.
In addition to such meetings
with all Member States, the Commission may also, where appropriate, organise bilateral
meetings or exchanges with particular Member States to closely monitor the
implementation process and to spread best practices.
3.3 CLEG – Expert
Group on Company Law
As an expert group
in the field of company law and corporate governance, the Company Law
Expert Group (CLEG) will be the privileged forum to discuss aspects related to
the implementation of the amended Directive. It brings together experts from
all Member States of the EU and representatives of the European Commission and
thus provides a platform for the exchange of good practices.
3.4. Ex Post
Evaluation Report
On the basis of the
data collected by the Member States (see above) and five years after the
expiration of the transposition deadline, the Commission would consider the
need to produce an ex-post evaluation report. Such evaluation could take into
account several indicators such as the level of shareholder turnout and dissent
in general meetings, the engagement of institutional investors and asset
managers and the quality in terms of clarity, comparability and
comprehensiveness of their disclosures. In terms of possible downsides it will
be necessary to assess whether any companies have chosen to de-list from EU
regulated stock exchanges as a consequence of the new policy. Such an
evaluation will be carried out by the Commission, but the possibility of
commissioning an external study will also be considered. The results and feedback
from the monitoring and evaluation process will be considered with a view to
propose further amendments where appropriate.
4. Contact
point 
The responsible
unit within DG Internal Market and Services is unit F2 "Corporate
Governance and Corporate Social Responsibility". The responsible policy
officers can be reached via MarktF2@ec.europa.eu.
[1] This Implementation Plan is provided for
information purposes only. It does not legally bind the Commission on whether
the identified actions will be pursued or on the form in which they will be
pursued.