March 2002 - Nr. 3
Enron’s Long Shadow
Germany Proposes Reform of Corporate Governance Laws
TWIG - The collapse of U.S. energy giant Enron has not escaped German lawmakers’ attention. On Wednesday (February 6), the federal government introduced draft legislation designed to improve the transparency of corporate information and to bring management practices in line with international standards. The draft would turn recommendations (not legally binding at present) of a government commission on corporate governance in matters pertaining to equity and financial statements into law. The core of the draft legislation is a new "code of conduct" for executives and boards of directors of listed companies.
If the draft becomes law, listed companies will be required to present an annual "statement of conformity," detailing whether and to what extent companies have complied with code guidelines. Government officials contend that companies that abide by this code will gain investors’ confidence and shares will gain in attractiveness as a result. The proposal also includes provisions for strengthening the rights of boards of directors, giving these supervisors information on the extent to which business development deviates from stated goals. Further, stockholders are to be empowered to decide over distribution of earnings at annual meetings.
