A public consultation on improving corporate governance in Europe, until now usually based on self-regulation, was launched at the beginning of April by the EU Commission, backing up the adoption of the Single Market Act. Three issues are weighed up in the Green Paper coming along with the consultation: restructuring the boards of directors, enhancing shareholders’ involvement on corporate governance issues and long term performance, and monitoring and enforcing the current national codes of corporate governance.

Looking at boards’ structures, the Green Paper recommends diversity, and in particular gender diversity, to be considered as a selection criteria for the new members. It also solicits opinions on whether payment policies at top levels should be made public or not. Changing the high risk taking culture in many companies, and not just financial institutions, by asking the executive management to assume a clear position and disseminate it internally and externally, is also put under debate.

A second set of questions looks at solutions to counter shareholders’ apathy, which is proven by the current average holding period of shares of only eight months. Responsibility relies on investors, but also on intermediary agencies that may need to show more transparency and cooperate more with the other shareholders of the investee company. The Paper pushes forward the idea of creating an EU mechanism to help companies identify their shareholders easier, in light of facilitating dialogue and long term decision making. Minority shareholders protection, as well as employee share ownership, should also be given thought as a way to build a market culture of measured risk taking.

The last chapter focuses on ways to improve monitoring and enforcement of existing national corporate governance codes, due to the fact that the “comply or explain” approach does not enhance the quality of information provided by companies. More, few Member States have public or specialized authorities check the completeness of information provided.

The consultation is open until 22nd July 2011. A feedback statement summarizing the results of the consultation will be released in autumn. On this basis a decision will be made whether legislative proposals are necessary. They will, however, be tabled only after conducting a thorough impact assessment.