Introduction

Key Governance Developments

Think-tank study identifies shortcomings in EU corporate governance frameworks, pointing to national variations

Shortcomings in essential corporate governance elements including board oversight, risk management, internal control systems and audit committee structures may adversely affect the quality of corporate reporting, according to a study by researchers Apostolos Thomadakis, Agustina Korenblit and Jelmer Nagtegaal from the Brussels-based Centre for European Policy Studies together with Milieu Law & Policy Consulting. The report identifies insights and supporting data from listed companies in ten EU member states, as well as comparing practice in Europe with regulation of internal controls and related reporting in Japan and the US. The authors conclude that member states often go beyond EU requirements in their national law or corporate governance codes, resulting in diverging approaches across the EU, and that the regulatory framework applicable to corporate governance is fragmented between multiple legal sources, from statutory obligations to voluntary corporate governance codes that operate on a comply-or-explain basis. Some EU countries require more detailed additional disclosure requirements than those of the Accounting Directive, and there are differing approaches to the format of publication and duration of public access.

Key Governance Developments

EU urged to focus on governance reforms rather than expanding reporting templates

Restoring confidence in EU corporate reporting depends more on effective governance than on lengthier reporting templates, according to a study by the Brussels-based Centre for European Policy Studies and Milieu Law & Policy Consulting for the European Commission. Its key recommendations include boards assuming greater responsibility for reporting, audit committees being better equipped to provide robust oversight and the establishment of clear internal controls. The authors say practices currently differ significantly between EU member states, with many companies failing to disclose the effectiveness of their controls. A pragmatic approach would involve concise management statements on internal controls, strengthening the capabilities of audit committees and adopting consistent terminology to enhance comparability in order to generate more credible disclosures and increase market confidence.

Best source: Centre for European Policy Studies

See also: European Commission


Cross-border family trusts complicate transparency in corporate governance

The increasing prevalence of cross-border family trusts, particularly in offshore jurisdictions such as the Cayman Islands and British Virgin Islands, is making it more difficult to identify the ultimate beneficial owners and controllers of companies in Hong Kong. Trust structures allow their settlors to retain considerable influence, frequently masking genuine control and undermining established governance frameworks, while regulatory oversight is restricted by the complexity of legal arrangements and limited international co-operation. Lawyers say these issues could be addressed by reforms including stricter disclosure rules, stronger cross-border regulatory collaboration and improved professional compliance standards to restore transparency and accountability in corporate governance.

Best source: Law.asia


British overseas territories resist full public access to beneficial ownership registers

British overseas territories including the British Virgin Islands and Cayman Islands are still insisting on restricting access to their beneficial ownership registers to individuals or groups that have a legitimate interest. The UK passed legislation in 2008 requiring the territories to create and open access to the registers as part of efforts to tackle corruption, tax evasion and money laundering. However, jurisdictions including the BVI and Cayman have been reluctant to do so, despite being offered an extended deadline of June this year to comply. Under rules introduced by the BVI, the registrar can deny access if it believes this is in the public interest of the territory, and companies would have to be informed of any access request.

Best source: The Guardian


FCA examines money laundering controls of UK asset managers

The UK's Financial Conduct Authority is examining how asset managers are countering money laundering in a mandatory questionnaire that must be returned by 29 December. The survey poses questions on jurisdictional exposure and offshore ownership, governance arrangements, transaction monitoring, sanctions screening and due diligence. The UK has been criticised for not doing enough to curb illegal money flows, including those through its overseas territories.

Best source: Financial News (subscription required)


Ireland climbs to fifth place in EU for female board representation at biggest listed companies: report

Ireland has risen to fifth among EU member states for the proportion of women members of the boards of its largest listed companies, up from 16th in 2018, according to a report from Balance for Better Business, an independent review body established by the Irish government. In Ireland, women occupy 42% of board seats at companies that are constituents of the ISEQ20 index, 39% across listed companies overall and 26% at privately-owned companies. The report finds that France leads the EU in women's representation on large company boards, followed by Italy, Denmark and the Netherlands.

Best source: RTÉ

See also: Irish Times

See also: Balance for Better Business

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