| The European Parliament's Committee on Legal Affairs has voted against a controversial proposal to introduce compulsory audit committees into listed companies, banks and insurance companies. The proposal forms part of the draft directive on the statutory audit of annual accounts and consolidated accounts (nicknamed Eurosox) which aims to protect against corporate governance scandals such as occurred at Parmalat.
Speaking to Chase Cooper about the decision, the Committee's Rapporteur Bert Doorn MEP, said "Corporate governance should develop along the lines of principles, rather than detailed rules, in order to do justice to the different corporate governance systems in Europe".
The news will be welcomed by the Institute of Directors and other representative industry bodies who had expressed concerns that the proposal was inflexible and would undermine national corporate governance codes such as the UK's "comply or explain" approach.
Comments made subsequently by Charlie McCreevy, EU Commissioner for Internal Market and Services, indicate a willingness to find a practical solution. In his speech at the Second European Corporate Governance Conference in
Luxembourg on 28 June, McCreevy said, "I am a pragmatic man. If the directive confirms the now well-established
principle of an audit committee as a tried and tested way of ring-fencing the
audit function, then I am prepared to live with some flexibility. But we should
be clear about what we are doing and avoid introducing woolly new concepts which
may do little more than fudge the issue."
The decision will go to a full vote of the EU Parliament later in the year. |
