[A-List] Europe/US rivalry: corporate governance

["Michael Keaney" <michael.keaney@xxxxxx>]

EU to push tough corporate governance rules
By Francesco Guerrera in Brussels
Financial Times: October 31 2002

Companies listed in the European Union face a new set of tough corporate
governance rules aimed at preventing an Enron-style scandal in Europe.

The rules are a sign of the EU's determination to increase investor
protection and prevent corporate fraud in the wake of the crisis that rocked
US markets.

The rules, to be proposed to the European Commission by legal experts next
week, could lead to a shake-up in corporate governance in several EU member
states, including Germany, France, Italy and Spain. However, they stop short
of an EU-wide binding corporate governance law similar to the US
Sarbanes-Oxley Act, which had been feared by many European companies.

After a six-month study, the Commission's group of company law experts is
expected to recommend new measures to strengthen and harmonise the EU's
widely diverging corporate governance rules.

The Brussels authorities are expected to urge all European companies to
adopt the guidelines, with the veiled threat of passing binding legislation
if they fail to comply. People familiar with the report say it will
recommend all listed companies publish remuneration of individual directors
in the annual report. This would require changes in Germany and Spain.

The seven-strong group, chaired by Jaap Winter, legal adviser to Unilever,
is also expected to urge companies to allow shareholders to vote on the way
directors' pay and bonuses are calculated at the annual general meeting.