Monday, December 27, 2004

Corporate reform architect warns against convergence

The leading architect of European corporate governance reforms has warned against pushing cross-border convergence faster than the market dictates.

Jaap Winter, chairman of the high-level group of company law experts whose recommendations lie behind the European Commission's drive for better standards, said practices were changing “relatively fast”. He added: “In all member states things are happening, codes are produced, legislation is changed, boards are starting to operate differently.”

Scandals such as those at Parmalat, the Italian dairy company that collapsed under 14bn (pounds) ($19bn) of debt, Ahold, the Dutch retailer, and Royal Dutch/Shell's reserves debacle have given reforms fresh impetus. Mr Winter, a Dutch lawyer, said there was a “sense of urgency that things must be transparent, that conflicts of interest must be dealt with, that non-executives have a real role to play”.

He warned, however, that the objective should not be to force Europe's varied systems of finance, share ownership and governance to converge. “Convergence is OK where companies are operating under very similar circumstances. It should probably be stimulated but we should be sensitive to differences that still exist and are relevant. I don't think we should start pushing for convergence in those areas.”

Corporate reform architect warns against convergence

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