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Carolyn Dittmeier Trends in EU Corporate Governance: The Search for Stability. Trends in EU corporate governance. Is the stakeholder community satisfied with. Corporate governance perfomance. NO. The European Commission and Parliament debates From shareholders responsibilities

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Carolyn dittmeier trends in eu corporate governance the search for stability

Carolyn Dittmeier

Trends in EU Corporate Governance: The Search for Stability


Carolyn dittmeier trends in eu corporate governance the search for stability

Trends in EU corporate governance

Is the stakeholder community

satisfied with

Corporate governance

perfomance

NO


Carolyn dittmeier trends in eu corporate governance the search for stability

The European Commission and Parliament debates

From shareholders responsibilities

to board conduct

to internal governance


The issues

The Issues

Company structures

Comply or explain versus EU Regulation

Proportionality

Shareholder responsibilities

Short termism

External Supervisory role

External Audit

Board

Strategic Risk Management

Internal audit


Carolyn dittmeier trends in eu corporate governance the search for stability

The current legislative proposals and debates at the European Commission and Parliament

Corporate Governance in Financial Institutions

Lessons from the crisis: Audit Policy/Statutory Audit

EU Corporate Governance Framework / Company Law


Carolyn dittmeier trends in eu corporate governance the search for stability

Company Structures

Is the Two Tier System better than the Board / Audit Committee structure


Carolyn dittmeier trends in eu corporate governance the search for stability

EU Regulation versus Comply or Explain of National codes

EU Corporate Governance Green Paper

Over 400 responses

Please NO Regulation!


Carolyn dittmeier trends in eu corporate governance the search for stability

Comply or Explain

Comply AND Explain


Carolyn dittmeier trends in eu corporate governance the search for stability

National CG Codes

Need for convergence


Carolyn dittmeier trends in eu corporate governance the search for stability

90% of Corporate Governance Codesrequire or recommend Internal Audit, butfewproviderequisitestoensureitseffectiveness

Corporate Governance Codes and Internal audit

Required

Recommended

Germany

Austria

Finland

Luxemburg

Belgium

Hungary

France

Malta

Bulgaria

Romania

United Kingdom

Ireland

Greece

Slovakia

Cyprus

Italy

Netherlands

Slovenia

Czech Republic

Latvia

Spain

Denmark

Estonia

Sweden


Carolyn dittmeier trends in eu corporate governance the search for stability

Proportionality: No one size fits all!

But how to measure proportionality


Not one size but fit for all

Notonesizebutfitforall

June 6 at the European Parliament:

Finding an EU solution to achieve a truly effective corporate governance regime, while allowing entities the flexibility in selecting their own CG structures

MEP Evelyn Regner, European Commission Director UgoBassi,, Deputy Director General Assonime (EuropeanIssuers) Carmine Di Noia, ECIIA President Carolyn Dittmeier


Carolyn dittmeier trends in eu corporate governance the search for stability

Increase Shareholder responsibilities

  • Shareholder approval for more transactions

  • Mandatory annual elections of board members with criteria

  • Control on Related party transactions


Carolyn dittmeier trends in eu corporate governance the search for stability

  • Short Termism – Increase Long term viability

  • Corporate statutes to reflect overall goal of long term viability

  • Corporate governance reporting on long term objectives

  • Abandon Quarterly Reporting?


Carolyn dittmeier trends in eu corporate governance the search for stability

Increase Supervisors/regulators involvement

  • Enhanced, two-way communication between auditors and supervisors with alert system

  • Board competency test

  • Monitor CG Resports

  • Oversight of conflict of interests

  • A bigger stick


Carolyn dittmeier trends in eu corporate governance the search for stability

External Audit – Lessons from the Crisis

  • Independence, independence and independence

  • Rules for independence and quality under supervisory body

  • Audit Committee responsible

  • Almost eliminate non-audit services

  • Audit firms to publish accounts, methods, fees

Impact assessment


Carolyn dittmeier trends in eu corporate governance the search for stability

External Audit – Lessons from the Crisis

  • External audit role is integral to corporate governance

    • Include risk reports of the entity / check on excessive risk

    • Social responsibility role

    • Right to be heard at general meetings

    • Duty to report to Supervisor


Carolyn dittmeier trends in eu corporate governance the search for stability

ECIIA’s Clarificationto key EuropeanParliamentMember


The issues1

The issues

Company structures

Comply or explain versus EU Regulation

Proportionality

Shareholder responsibilities

Short termism

External Supervisory role

External Audit

Board

Strategic Risk Management

Internal audit


Carolyn dittmeier trends in eu corporate governance the search for stability

Stronger Board of Directors crucial:

Composition, Competencies, Compensation

  • Fit and proper test by legislation -regular external evaluation

  • Separate role of the CEO and Chairman

  • Strict remuneration policy based on long-term performance

  • Diversity

  • Strategic Risk Management


Carolyn dittmeier trends in eu corporate governance the search for stability

  • Directive 2006/43/EC86-Article 41

  • “the Directive’s most frequently non-transposed article”


Carolyn dittmeier trends in eu corporate governance the search for stability

Strategic Risk Management

  • Annual report on risk, risk management systems and the adequacy of internal control

  • Annual Board approval of risk model assessment

  • Establish Risk Committee or Risk function

  • Adopt /describe framework


Carolyn dittmeier trends in eu corporate governance the search for stability

ECIIA Guidance

ECIIA & Ferma joint papers: ReinforcingBoard And Senior Management competencies on risk management, internal control and internal audit

Part II

Senior Management Focus

December 2011

Part I

Board Focus

2010


Carolyn dittmeier trends in eu corporate governance the search for stability

Internal Audit

The time is right for Assurance


Carolyn dittmeier trends in eu corporate governance the search for stability

Explicit potential Impacts on internal audit?

  • “The two facets of auditing – internal and external – to be clearly circumscribed in law” (Financial sector)

  • “Efficient, regular dialogue”

    • IA to inform External Auditor who reports to Supervisory authority?

  • Risk model assessment

    • CSR and CG hand in hand


Carolyn dittmeier trends in eu corporate governance the search for stability

Implicit potential Impacts on internal audit?

Independence

Quality Assurance

Assurance methodology

Advisory role


Carolyn dittmeier trends in eu corporate governance the search for stability

ECIIA Guidance

  • Corporate Governance Insights

  • Issued May 2012

  • Reinforcing Audit Committee oversight regarding global assurance

  • A single defined governance framework for global risk management and assurance

  • The Three lines of Defence model for global assurance

  • Ensuring adequacy of Internal audit

  • Ensuring proper distinction between internal audit assurance and statutory/ external audit


Carolyn dittmeier trends in eu corporate governance the search for stability

ECIIA in open discussionwith EU associations

on EU regulatoryconsultations

European Commission

Business Europe


Three lines of defense

Three Lines of Defense

The IIA AdvocacyPlatform


Carolyn dittmeier trends in eu corporate governance the search for stability

The ECIIA working hard for the profession

  • Promoting good corporate governance and appropriate recognition of Internal Audit in the European regulatory enviornment

  • Marie_HélèneLaimay,

  • Vice President

  • Carolyn Dittmeier,

  • President

  • Martin Stevens,

  • Treasurer

  • Kristina Bernotaitė

  • Juan Ignacio Ruiz Zorrilla

  • Philip Ratcliffe

  • Hans Joachim

  • Büsselberg

Pascale Vandenbussche SecretaryGeneral

  • Thijs Smit


Carolyn dittmeier trends in eu corporate governance the search for stability

The Corporate Governance Citizen Program

Through Citizens comes Progress

Generali Assicurazioni


Thank you enjoy the conference

ThankyouEnjoy the Conference


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