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Charlie McCREEVY

European Commissioner for Internal Market and Services

Corporate Governance in Europe

European Corporate Governance Forum
Brussels, 20 January 2005

Ladies and Gentlemen,

It is an honour and a particular personal pleasure for me to welcome you to the renovated Berlaymont building, on the site of what used to be, a long time ago, a nunnery. But please don’t think that this historic reference is an indication of my intention to lock you up in small window-less rooms with hard beds and a restricted diet until you have provided us with the magical recipe for what to do on corporate governance in the EU ...

I am particularly pleased that we have managed to gather as members of this Forum some of the most prominent European personalities in the field of corporate governance. Your experience and competence in this area are widely recognized at EU level and your very diverse backgrounds will provide different and I am sure fascinating perspectives. I should like to open proceedings by posing two questions which should provide a framework for your work.

What do we want to achieve and how?

Since the recent financial scandals, corporate governance has become a major political issue. Sound corporate governance is essential for enhancing competitiveness and efficiency of business, strengthening shareholders’ rights and to restore confidence in capital markets.

At present, there are a number of different national corporate governance models. This means companies have flexibility to choose their own corporate governance model. But it may entail some frictional and fragmentary costs.

The Commission does not want to enact a European Code of Corporate Governance. We see no need for this at present and the adoption of such a code, if it were even possible, would be an inevitable and possibly messy political compromise, which would be unlikely to achieve full information for investors about the key corporate governance rules. The Commission said this clearly in its 2003 Action Plan and I agree. The basis of codes of corporate governance should come from the markets and/or national legislation. However, the EU has a role to play in encouraging convergence, where possible, in the efforts of Member States to improve corporate governance practices.

The Dutch Presidency took in this regard an important initiative by organizing a one-day Conference in October 2004 on Corporate Governance practices in the EU. The debate was of a very high quality and I am sure that the Conference’s proceedings will be of use to you in your work and that in due course you work will also be taken up in similar future conferences. The Luxembourg Presidency, as well as the future UK Presidency, also intends to organize conferences on corporate governance matters.

However, we need to have a standing body where national experiences will be shared and discussed in detail – at the highest level, with outstanding European experts in this field.

It was with this in mind that we established the European Corporate Governance Forum.

The second question I wish to pose is:

What will be your mission?

A first area of work is to examine the existing national codes of corporate governance in order to determine whether there is convergence - if yes to which extent and if not, to determine whether, and, if so, how convergence could be reached.

I would also like you to give thought to priorities for convergence. The Commission cannot do everything. In which areas should we focus our efforts: improving shareholder democracy, cross-border voting rights, by exchange of information, best practices etc.

As to the organization, I suggest there will be few meetings organised: two, maybe three maximum, a year.

The first part of today’s meeting will be devoted to working methods and arrangements. The working methods should be clearly defined, especially as regards transparency, to which the Commission attaches great importance.

When the Forum was established, it was envisaged that it might have a spokesperson. I suggest that the spokesperson should be decided by you today.

Although I will not be able to spend all day with you, I will have the pleasure of inviting you for lunch – which, today at least, I can assure you will not be monastic rations.

I wish you good luck with your work and for this morning’s opening session, and look forward to meeting with you again at lunch-time.

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