I. INTRODUCTION

Through application of the Directive 2013/34/EU, the “comply or explain” principle was introduced in the European Union. Subject to this principle, the companies, which are obliged to comply a company governance code, should comply such code or explain the reasons why they eventually fail to comply such code.

II. RECOMMENDATION

The Recommendation published on the 9th of April of 2014 under the number 2014/208/EU has the purpose of providing to Member States, responsible bodies for national governance codes, companies and other parties concerned with guidance for improving the overall quality of said declarations.

The recommendation is essentially addressed to:

– The companies which are required to submit a corporate governance statement  in accordance with the above mentioned directive: and,

– Member States.

III. QUALITY OF EXPLANATION IN CASE OF DEPARTURE FROM A CODE

In case of departure from a governance code, companies should provide explanations, and in this statement the following items shall be referred:

a) Explain in what manner the company has departed from a recommendation;

b) Describe the reasons for the departure;

c) Describe how the decision to depart from the recommendation was taken within the company;

d) Where the departure is limited in time, explain when the company envisages complying with a particular recommendation;

e) Where applicable, describe the measure taken.

IV. OBLIGATIONS OF THE MEMBER STATES

Member States should draw this Recommendation to the attention of the bodies responsible for national corporate governance codes, listed companies and other parties concerned.

V. CONCLUSION

The Commission’s major object is to support efficiency and transparency of the companies in the European Union. Likewise, in the text introduces the concept “culture of accountability”.

The Commission mentions that the non-listed companies also will be able to use this guidance in order to achieve a better competitiveness and transparency.

Finally, the Member States are invited to inform the Commission of the measures taken by the 13th of April of 2015.

 

 

Vilá Abogados

 

For more information, please contact:

va@vila.es

 

17th of April 2014