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Corporate Governance

Corporate Governance for listed companies

ESMA identifies and addresses developments in the area of listed companies’ corporate governance (CG), including those proposed by the European Commission in connection to the revision process of the Shareholder Rights Directive (SRD), and undertakes further actions in accordance with ESMA’s responsibilities.

    According to its founding regulation (1095/2010), ESMA may act in the field of activities of market participants, including matters of corporate governance, as long as such action is necessary to ensure the effective and consistent application of the acts under its remit, including the Transparency Directive (TD).

    While there is no specific Corporate Governance Directive, the proposal for a revised Shareholder Rights Directive (SRD) addresses some of the main issues in this area. ESMA monitors the on-going revision of the SRD and any impact in this and other areas of its remit.

    ESMA's work on listed companies’ CG has until now concentrated mainly on proxy advisors. In this area, ESMA first performed an analysis of the proxy advisory industry which led to the conclusion that there was no clear evidence of market failure and therefore no justification to introduce binding regulation. In its 2013 Final Report, ESMA opted therefore for encouraging a market-led Code of Conduct to foster greater understanding and assurance towards proxy advisors. An industry group published the Best Practice Principles for Providers of Shareholder Voting Research and Analysis (BPP) in March 2014 and a number of signatory statements were issued later in the same year.

    At the end of 2015, ESMA published a follow-up report on the development of the Best Practice Principles for Providers of Shareholder Voting Research and Analysis.  ESMA's current work mainly concentrates on exchanging and mapping practices in some key areas of the revised SRD, including the disclosure of directors' remuneration in listed companies.