New EU Action Plan on company law and corporate governance plans stick to shareholder paradigm
In December the European Commissioner published the long-awaited EU Action Plan on European Company Law and Corporate Governance. The sixteen proposals made contain little in the way of correcting the power imbalance that currently exists between shareholders on the one hand and stakeholders (particularly employees) on the other hand in the governance of European companies.
The proposals in the Action Plan are divided up into three main substantive areas: non-binding recommendations for improving corporate governance, legislation impacting on shareholders to improve transparency and engagement, and measures regarding cross-border operations. An initiative to codify European company law is also announced. Stakeholder advocates will see many of the proposals in the areas of ‘enhancing transparency’ and ‘engaging shareholders’ as a step in the right direction. However, the proposals in the area of ‘improving the framework for cross-border operations in EU companies’ are a major concern for trade unions, as companies are increasingly using cross-border mobility to avoid worker involvement and weaken labour standards. Proposals for strengthening stakeholder voice (e.g. though worker participation) are sorely missing in the Action Plan. The final proposal for ‘codification of EU company law’ is also likely to raise concerns given that similar initiatives (e.g. simplification) have been used to create downward pressure on standards already achieved.