PracticeAuditEU to tighten corporate governance laws

EU to tighten corporate governance laws

EU foreign ministers have this week agreed to develop an 'action plan' on company law, which is to include a review of corporate governance, notably singling out the role company bosses play in this regard.

Link: New EU accounting laws pave way for IASs

The review, aimed at preventing an Enron-type scenario happening in the European Union is the result of the European Commission tasking a group of experts last year with reviewing the continent-wide rules covering public tenders and modernising company law.

This mandate was widened following the collapse of Enron and other disasters most notably WorldCom.

The group has looked at corporate executive pay, as well as the role of auditing committees and non-executive directors. It also took into account the new corporate responsibility rules introduced by the Sarbanes-Oxley Act recently put into force in the US.

The European Commission said it was still too early to comment on the conclusions of the report, which is expected some time this month.

EU foreign ministers called on the commission to develop the action plan on company law ‘as soon as is feasible’ and declared their intention ‘to deal with the action plan as a matter of priority’.

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