Codes vary considerably in approach with quite different degrees of detail. Codes with detailed provisions should allow for more deviations (as they would not fit all companies) while codes with high level principles make it difficult to explain why you don’t comply with the principle. High level principles or very detailed rules are not implemented in the same way. Both the UK and the Dutch Codes for instance include high level principles with a different level of detailed practices. The Dutch code specifies that the board has to certify that the internal control is effective but it does not define the process. In fact, boards should not expect the code to tell them how to do so. Moreover, there are substantial differences among the Member States in the type of ‘Drafting commission’ and ‘Monitoring organisation’. In this respect, quite important differences exist as to the role played by the government,
6 2012 Annual Conference — Comply or Explain the market authorities, the investors and the business world itself. For instance in the Netherlands, the Code was drafted and is monitored by a broad coalition of relevant stakeholders with an important role played by the relevant ministries. In France on the contrary, initiatives have purely been taken by the business federations (with two codes, respectively of AFEP-Medef and Middlenext) while the market supervisor, the AMF plays a role as monitoring organisation. However, the public authorities play an active role of influence not to say pressure and can take the initiative. For example, the Afep-Medef recommendation on executive remuneration was added to the Code under strong public pressure; the quota law was taken because of public authorities’ belief that gender diversity, although included in the Code, was not going fast enough. It is important that the Commission accepts that there is not one valid governance model throughout the EU . Europe offers an enormous diversity in governance practices, corporate forms and shareholding structures which call for a tailored approach. It is questioneable whether the route followed until now has sufficiently taken this diversity into consideration. In general, every aspect of corporate life cannot be harmonized. Codetermination can work well in Germany while it might be a disaster in the United Kingdom. People should return to the importance of subsidiarity, respecting the cultures and the different types of capitalism as well as the way businesses operate throughout Europe. CoE offers the flexibility to fit with the large diversity among and within the different EU Member States . As such, CG Codes and the best practices they are built upon can become the toolkit for achieving continuous improvement and gradual harmonisation within Europe.
- Spring '11
- Swedish Corporate Governance