Avis juridique important

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31979K0950

Commission Recommendation No 950/79/ECSC of 14 May 1979 imposing a definitive anti-dumping duty on certain hematite pig iron originating in Brazil but coming from another third country

Official Journal L 120 , 16/05/1979 P. 0011 - 0013 Spanish special edition: Chapter 11 Volume 28 P. 0011  Portuguese special edition Chapter 11 Volume 28 P. 0011

****( 1 ) OJ NO L 114 , 5 . 5 . 1977 , P . 6 .  ( 2 ) OJ NO L 352 , 31 . 12 . 1977 , P . 13 .  ( 3 ) OJ NO L 21 , 30 . 1 . 1979 , P . 14 .  ( 4 ) SEE THE COMMISSION COMMUNICATION OF 31 DECEMBER 1977  ( OJ NO L 353 , 31 . 12 . 1977 , P . 1 .), AS AMENDED BY THE COMMUNICATIONS OF 1 . 4 . 1978 ( OJ NO L 87 , 1 . 4 . 1978 , P . 4 ), 13 . 5 . 1978 ( OJ NO L 126 , 13 . 5 . 1978 , P . 6 ), 5 . 7 . 1978 ( OJ NO L 183 , 5 . 7 . 1978 , P . 3 ) AND 30 . 12 . 1978 ( OJ NO L 372 , 30 . 12 . 1978 , P . 2 ).  ( 5 ) OJ NO C 35 , 8 . 2 . 1979 , P . 3 .  ( 6 ) OJ NO L 41 , 16 . 2 . 1979 , P . 29 .  ( 1 ) OJ NO L 92 , 11 . 4 . 1979 , P . 10 .    COMMISSION RECOMMENDATION NO 950/79/ECSC   OF 14 MAY 1979   IMPOSING A DEFINITIVE ANTI-DUMPING DUTY ON CERTAIN HEMATITE PIG IRON ORIGINATING IN BRAZIL BUT IMPORTED FROM SOME OTHER NON-MEMBER COUNTRY   THE COMMISSION OF THE EUROPEAN   COMMUNITIES ,   HAVING REGARD TO THE TREATY ESTABLISHING THE EUROPEAN COAL AND STEEL COMMUNITY , AND IN PARTICULAR ARTICLES 74 AND 86 THEREOF ,   HAVING REGARD TO COMMISSION RECOMMENDATION 77/329/ECSC ON PROTECTION AGAINST DUMPING OR THE GRANTING OF BOUNTIES OR SUBSIDIES BY COUNTRIES WHICH ARE NOT MEMBERS OF THE EUROPEAN COAL AND STEEL COMMUNITY ( 1 ), AS AMENDED BY RECOMMENDATIONS NO 3004/77/ECSC ( 2 ) AND NO 158/79/ECSC ( 3 ), AND IN PARTICULAR ARTICLES 17 AND 19 THEREOF ,   HAVING REGARD TO THE OPINIONS EXPRESSED WITHIN THE ADVISORY COMMITTEE PROVIDED FOR BY RECOMMENDATION 77/329/ECSC ,   WHEREAS THE COMMUNITY HAS PUBLISHED BASIC PRICES ( 4 ) ESTABLISHED ON THE BASIS OF THE LOWEST NORMAL PRICES OR NORMAL COSTS OF PRODUCTION IN THE SUPPLYING COUNTRY OR COUNTRIES WHERE NORMAL CONDITIONS OF COMPETITION PREVAIL AND INCLUDING THE COSTS OF TRANSPORT , INSURANCE AND CUSTOMS DUTIES ;   WHEREAS THE COMMISSION HAS RECEIVED A COMPLAINT , SUBMITTED IN THE NAME OF THE RELEVANT COMMUNITY INDUSTRY , SETTING OUT EVIDENCE AS TO THE EXISTENCE OF DUMPING OF CERTAIN HEMATITE PIG IRON ORIGINATING IN BRAZIL AND MATERIAL INJURY RESULTING THEREFROM ;   WHEREAS , SINCE THE INFORMATION RECEIVED INDICATED THAT THE COMPLAINT WAS ADMISSIBLE AND THAT DEFENSIVE MEASURES AGAINST DUMPING MIGHT BE NECESSARY , THE COMMISSION OFFICIALLY INFORMED THE IMPORTERS AND EXPORTERS KNOWN TO BE CONCERNED , PUBLISHED IN THE OFFICIAL JOURNAL OF THE EUROPEAN COMMUNITIES A NOTICE OF THE INITIATION OF AN INQUIRY CONCERNING THE IMPORTS IN QUESTION ( 5 ) AND COMMENCED AN EXAMINATION OF THE MATTER IN COOPERATION WITH THE MEMBER STATES ;   WHEREAS , SINCE PRELIMINARY EXAMINATION OF THE MATTER SHOWED THAT THERE WAS DUMPING AND SUFFICIENT EVIDENCE OF INJURY AND THE INTERESTS OF THE COMMUNITY CALLED FOR IMMEDIATE INTERVENTION , THE COMMISSION , BY RECOMMENDATION NO 294/79/ECSC ( 6 ), IMPOSED A PROVISIONAL ANTI-DUMPING DUTY ON THE IMPORTS IN QUESTION ;   WHEREAS , IN THE COURSE OF THE EXAMINATION OF THE MATTER , COMPLETED AFTER THE IMPOSITION OF THE PROVISIONAL ANTI-DUMPING DUTY , THE COMMISSION GAVE INTERESTED PARTIES THE OPPORTUNITY TO MAKE KNOWN THEIR VIEWS IN WRITING AND GAVE THE PARTIES DIRECTLY CONCERNED WHO SO REQUESTED THE OPPORTUNITY TO EXPRESS THEIR VIEWS ORALLY ;   WHEREAS , HOWEVER , IN SO FAR AS INTERESTED PARTIES DID NOT AVAIL THEMSELVES OF THE OPPORTUNITY TO MAKE KNOWN THEIR VIEWS OR PRESENT THEIR ARGUMENTS ON THE ESSENTIAL POINTS OF THE INQUIRY , THE COMMISSION HAD TO BASE ITS FINDINGS ON THE FACTS AVAILABLE ;   WHEREAS , IN THIS SITUATION , THE COMMISSION HAS FOUNDED ITS DUMPING CALCULATIONS UPON THE BASIC PRICES CALCULATED BY REFERENCE TO THE COST OF PRODUCTION IN A COUNTRY CONSIDERED TO BE ONE OF THE MOST EFFICIENT PRODUCERS OF THE PRODUCT IN QUESTION , AS ESTABLISHED BY MEANS OF THE LATEST PUBLICLY AVAILABLE DATA ;   WHEREAS SUCH COST OF PRODUCTION HAS BEEN CALCULATED TAKING INTO CONSIDERATION INTER ALIA THE FOLLOWING ELEMENTS : RAW MATERIAL ( INCLUDING IRON ORE , SINTER , PELLETS , SCRAP , FERRO ALLOYS AND OTHER IRON-BEARING MATERIALS AND FLUXES ), ENERGY COSTS ( COKE , FUEL OIL , ELECTRICITY ), LABOUR COSTS INCLUDING SOCIAL COSTS , OTHER OPERATING COSTS ( INCLUDING MAINTENANCE COSTS AND TRANSPORT COSTS ) AND CAPITAL COSTS , TO WHICH WAS ADDED A REASONABLE AMOUNT FOR ADMINISTRATION , SELLING AND ANY OTHER COSTS AND FOR PROFITS ;   WHEREAS , MOREOVER , THOSE BRAZILIAN DOMESTIC PRICES WHICH ARE AVAILABLE TO THE COMMISSION CONFIRM THE REASONABLENESS OF THESE BASIC PRICES ;   WHEREAS THE PRICES OF IMPORTS INTO THE COMMUNITY OF THE PRODUCTS WHICH ARE THE SUBJECT OF THE COMPLAINT HAVE BEEN COMPARED WITH THESE BASIC PRICES ;   WHEREAS THIS PRICE COMPARISON WAS MADE ON A FREE COMMUNITY FRONTIER DUTY-PAID BASIS ;   WHEREAS THIS EXAMINATION OF THE MATTER HAS SHOWN THAT THE PRODUCTS IN QUESTION WERE OFFERED FOR IMPORT WITHIN THE COMMUNITY AT PRICES LOWER THAN THE BASIC PRICES AND THAT DUMPING HAS TAKEN PLACE , THE MARGIN OF WHICH IS CONSTITUTED BY THIS UNDERCUTTING ;   WHEREAS , WITH REGARD TO THE INJURY TO THE INDUSTRY CONCERNED , THE EVIDENCE SUBMITTED TO THE COMMISSION SHOWS THAT , ON THE ONE HAND , IMPORTS INTO THE COMMUNITY OF THE PRODUCTS IN QUESTION HAVE INCREASED OVERALL FROM 416 000 TONNES IN 1974 TO 713 000 TONNES IN 1977 , WHILE IMPORTS ORIGINATING IN BRAZIL HAVE RISEN FROM APPROXIMATELY 0 TO 401 000 TONNES DURING THE SAME PERIOD ; WHEREAS OVERALL IMPORTS INTO THE COMMUNITY HAVE THUS ACHIEVED A MARKET SHARE OF 33 % AND IMPORTS ORIGINATING IN BRAZIL A MARKET SHARE OF 19 % ; WHEREAS IN 1978 THE EVOLUTION OF IMPORTS WAS INFLUENCED BY ANTI-DUMPING MEASURES AND THE CONCLUSION OF ARRANGEMENTS WITH RESPECT TO TRADE IN STEEL PRODUCTS BETWEEN THE COMMUNITY AND MOST OF THE SUPPLYING COUNTRIES ; WHEREAS , HOWEVER , BRAZIL HAS BEEN ABLE TO RETAIN A SIGNIFICANT SHARE OF THE MARKET , NAMELY 12 % DURING THE FIRST NINE MONTHS OF 1978 ; WHEREAS ON THE OTHER HAND THE COMMUNITY STEEL INDUSTRY IS IN A STATE OF CRISIS , CHARACTERIZED BY A REDUCTION IN THE REGION OF SOME 28.2 % IN DELIVERIES IN THE COMMUNITY OF THE PRODUCTS CONCERNED BETWEEN 1974 AND 1978 , BY REDUNDANCIES AND SHORT-TIME WORKING AMONG THE WORKFORCE OF THE FIRMS CONCERNED WHICH FELL FROM ABOUT 6 000 TO 4 000 BETWEEN 1974 AND 1978 , AND BY REDUCED PROFITS OR SERIOUS LOSSES ON THE PART OF MOST OF THOSE FIRMS ;   WHEREAS THE PRICES OF IMPORTS INTO THE COMMUNITY OF PRODUCTS ORIGINATING IN BRAZIL HAVE BEEN CONSIDERABLY LOWER THAN THE PRICES FOR SALES WITHIN THE COMMUNITY OF THE EQUIVALENT STEEL PRODUCTS FROM THE EUROPEAN INDUSTRY ;   WHEREAS , THEREFORE , THE FACTS AS FINALLY ESTABLISHED SHOW THAT MATERIAL INJURY HAS BEEN CAUSED TO THE COMMUNITY INDUSTRY  -  OR THAT SUCH INJURY WOULD HAVE BEEN CAUSED IF PROVISIONAL ACTION HAD NOT BEEN TAKEN  -  BY REASON OF IMPORTS ORIGINATING IN BRAZIL ;   WHEREAS IN THE MEANTIME CERTAIN ARRANGEMENTS WITH REGARD TO THE DIRECT IMPORTATION OF THE PRODUCTS IN QUESTION HAVE BEEN CONCLUDED BETWEEN THE COMMUNITY AND BRAZIL ;   WHEREAS THESE ARRANGEMENTS , WHICH WERE CONSIDERED SATISFACTORY BY THE COMMUNITY , MADE IT POSSIBLE TO TERMINATE , BY RECOMMENDATION NO 720/79/ECSC ( 1 ), THE PROVISIONAL ANTI-DUMPING DUTY ON DIRECT IMPORTS ;   WHEREAS , HOWEVER , THE ARRANGEMENT CONCLUDED WITH BRAZIL CONTAINED NO PROVISION FOR REGULATING INDIRECT IMPORTS , WHICH , AS SHOWN BY THE EXPERIENCE OF 1978 , ESPECIALLY IN THE CASE OF BRAZIL , THREATEN TO UPSET THE BALANCE OF THE WHOLE PRICE SYSTEM , AS REGARDS BOTH EUROPEAN PRODUCERS AND THE PRODUCERS IN THOSE OTHER SUPPLYING COUNTRIES WHICH HAVE RENEWED THE ARRANGEMENTS WITH RESPECT TO TRADE IN STEEL PRODUCTS ;   WHEREAS , GIVEN THE SERIOUS CONDITIONS BEING EXPERIENCED BY THE COMMUNITY INDUSTRY , THE INTERESTS OF THE COMMUNITY REQUIRE THE IMPOSITION OF A DEFINITIVE ANTI-DUMPING DUTY AND THE DEFINITIVE COLLECTION OF THE AMOUNT SECURED BY WAY OF PROVISIONAL DUTY WITH REGARD TO INDIRECT IMPORTS ;   WHEREAS THE AMOUNT OF SUCH DEFINITIVE DUTY SHOULD CORRESPOND TO THE DIFFERENCE BETWEEN THE BASIC PRICE PUBLISHED BY THE COMMISSION FOR THE PRODUCTS IN QUESTION AND THEIR PRICE ON IMPORTATION INTO THE COMMUNITY , DUE CONSIDERATION BEING GIVEN TO ANY REDUCTION IN VALUE CLAIMED BY THE IMPORTERS AND ESTABLISHED TO THE SATISFACTION OF THE COMPETENT NATIONAL AUTHORITIES ,   HAS ADOPTED THIS RECOMMENDATION :   ARTICLE 1   1 .  A DEFINITIVE ANTI-DUMPING DUTY IS HEREBY IMPOSED ON THE FOLLOWING PRODUCTS ORIGINATING IN BRAZIL BUT IMPORTED FROM SOME OTHER NON-MEMBER COUNTRY :   //   // CCT HEADING NO  //  DESCRIPTION  //  // EX 73.01 B  ( NIMEXE CODES 73.01-23 , 25 ) //  HEMATITE PIG IRON WITH A SILICON CONTENT OF MORE THAN 1 % AND CONTAINING AT LEAST 0.1 % OF MANGANESE BY WEIGHT //   2 .  THE AMOUNT OF THIS DUTY SHALL BE EQUAL TO THE AMOUNT BY WHICH THE EFFECTIVE PRICE ( BASIC PRICE PLUS EXTRAS ) ESTABLISHED BY CONTRACT , FREE-AT-FRONTIER DUTY-PAID , IS LOWER THAN THE EFFECTIVE PRICE ( BASIC PRICE PLUS EXTRAS ) LAST PUBLISHED BY THE COMMISSION FOR THIS PRODUCT AT THE TIME OF ITS ENTRY FOR COMMUNITY CONSUMPTION .   3 .  THE AMOUNT OF THE DUTY SHALL HOWEVER BE REDUCED TO THE EXTENT THAT THE IMPORTER ESTABLISHES TO THE SATISFACTION OF THE COMPETENT NATIONAL AUTHORITIES THAT THE PRICE DIFFERENTIAL REFERRED TO IN PARAGRAPH 2 ABOVE IS DUE TO A DIMINUTION IN VALUE RESULTING FROM THE QUALITY OF THE GOODS BEING INFERIOR TO THE LOWEST QUALITY SPECIFIED IN THE LAST PUBLICATION OF BASIC PRICES BY THE COMMISSION .   4 .  THIS DUTY SHALL BE COLLECTED ON THE SAME BASIS AS CUSTOMS DUTIES .   ARTICLE 2   THE AMOUNTS SECURED BY WAY OF PROVISIONAL DUTY UNDER THE PROVISIONS OF RECOMMENDATION NO 294/79/ECSC IN RESPECT OF PRODUCTS ORIGINATING IN BRAZIL BUT COMING FROM ANOTHER THIRD COUNTRY SHALL BE DEFINITIVELY COLLECTED TO THE EXTENT THAT THEY DO NOT EXCEED THE RATE OF DUTY FIXED IN THIS RECOMMENDATION .   ARTICLE 3   THIS RECOMMENDATION SHALL BE NOTIFIED TO THE MEMBER STATES .   IT SHALL ENTER INTO FORCE FOR EACH MEMBER STATE ON THE DATE OF ITS PUBLICATION IN THE OFFICIAL JOURNAL OF THE EUROPEAN COMMUNITIES .   DONE AT BRUSSELS , 14 MAY 1979 .   FOR THE COMMISSION   WILHELM HAFERKAMP   VICE-PRESIDENT


title: EC: Commission Recommendation of 15 February 2005 on the role of non-executive or supervisory directors of listed companies and on the committees of the (supervisory) board (Text with EEA relevance)

text:
               25.2.2005

               EN

               Official Journal of the European Union

               L 52/51

      COMMISSION RECOMMENDATION

   of 15 February 2005
   on the role of non-executive or supervisory directors of listed companies and on the committees of the (supervisory) board
   (Text with EEA relevance)
   (2005/162/EC)
   THE COMMISSION OF THE EUROPEAN COMMUNITIES,
   Having regard to the Treaty establishing the European Community, and in particular the second indent of Article 211 thereof,
   Whereas:

               (1)

               In a Communication adopted on 21 May 2003, the Commission presented its Action Plan ‘Modernising Company Law and Enhancing Corporate Governance in the European Union — A Plan to Move Forward’ (1). The main objectives of the Action Plan are to strengthen shareholders’ rights and protection for employees, creditors and the other parties with which companies deal, while adapting company law and corporate governance rules appropriately for different categories of company, and to foster the efficiency and competitiveness of businesses, with special attention to some specific cross-border issues.

               (2)

               In its Resolution of 21 April 2004, the European Parliament welcomed the Action Plan and expressed strong support for most of the initiatives announced. The European Parliament called on the Commission to propose rules to eliminate and prevent conflicts of interest, and stressed in particular the need for listed companies to have an audit committee, whose functions should include overseeing the external auditor’s independence, objectivity and effectiveness.

               (3)

               Non-executive or supervisory directors are recruited by companies for a variety of purposes. Of particular importance is their role in overseeing executive or managing directors and dealing with situations involving conflicts of interests. It is vital to foster that role in order to restore confidence in financial markets. Member States should therefore be invited to adopt measures which would be applicable to listed companies, defined as companies whose securities are admitted to trading on a regulated market in the Community. When implementing this Recommendation, Member States should consider the specificities of collective investment undertakings of the corporate type and prevent the various types of collective investment undertaking from being subjected, unnecessarily, to unequal treatment. As regards collective investment undertakings as defined in Council Directive 85/611/EEC of 20 December 1985 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS) (2), that Directive already provides for a set of specific governance mechanisms. However, in order to prevent the unnecessarily unequal treatment of those collective investment undertakings of the corporate type not subject to harmonisation at Community level, Member States should take into account whether and to what extent these non-harmonised collective investment undertakings are subject to equivalent governance mechanisms.

               (4)

               In view of the complexity of many of the issues at stake, the adoption of detailed binding rules is not necessarily the most desirable and efficient way of achieving the objectives pursued. Many corporate governance codes adopted in Member States tend to rely on disclosure to encourage compliance, based on the ‘comply or explain’ approach: companies are invited to disclose whether they comply with the code and to explain any material departures from it. This approach enables companies to reflect sector- and enterprise-specific requirements, and the markets to assess the explanations and justifications provided. With a view to fostering the role of non-executive or supervisory directors, it is therefore appropriate that all Member States be invited to take the steps necessary to introduce at national level a set of provisions based on the principles set out in this Recommendation, to be used by listed companies either on the basis of the ‘comply or explain’ approach or pursuant to legislation.

               (5)

               If Member States decide to use the ‘comply or explain’ approach (whereby companies are required to explain their practices by reference to a set of designated best practice recommendations), they should be free to do so on the basis of relevant recommendations developed by market participants.

               (6)

               Any measures adopted by Member States in line with this Recommendation should aim fundamentally at improving the corporate governance of listed companies. Since that objective is relevant to the protection of investors, actual or potential, in all companies listed in the Community, whether or not they are incorporated in one of the Member States, the measures should also cover companies incorporated in third countries but listed in the Community.

               (7)

               The presence of independent representatives on the board, capable of challenging the decisions of management, is widely considered as a means of protecting the interests of shareholders and other stakeholders. In companies with a dispersed ownership, the primary concern is how to make managers accountable to weak shareholders. In companies with controlling shareholders, the focus is more on how to make sure that the company will be run in a way that sufficiently takes into account the interests of minority shareholders. Ensuring adequate protection for third parties is relevant in both cases. Whatever the formal board structure of a company, the management function should therefore be subject to an effective and sufficiently independent supervisory function. Independence should be understood as the absence of any material conflict of interest; in this context, proper attention should be paid namely to any threats which might arise from the fact that a representative on the board has close ties with a competitor of the company.

               (8)

               In order to ensure that the management function will be submitted to an effective and sufficiently independent supervisory function, the (supervisory) board should comprise a sufficient number of committed non-executive or supervisory directors, who play no role in the management of the company or its group and who are independent in that they are free of any material conflict of interest. In view of the different legal systems existing in Member States, the proportion of (supervisory) board members to be made up of independent directors should not be defined precisely at Community level.

               (9)

               The supervisory role of non-executive or supervisory directors is commonly perceived as crucial in three areas, where the potential for conflict of interest of management is particularly high, especially when such matters are not a direct responsibility for shareholders: nomination of directors, remuneration of directors, and audit. It is therefore appropriate to foster the role of non-executive or supervisory directors in these areas and to encourage the creation within the (supervisory) board of committees responsible respectively for nomination, remuneration and audit.

               (10)

               In principle, and without prejudice to the powers of the general meeting, only the (supervisory) board as a whole has statutory decision-making authority and, as a collegiate body, is collectively accountable for the performance of its duties. The (supervisory) board has the power to determine the number and structure of the committees which it deems to be appropriate to facilitate its own work, but these committees are in principle not to be a substitute for the (supervisory) board itself. As a general rule, therefore, the nomination, remuneration and audit committees should make recommendations aimed at preparing the decisions to be taken by the (supervisory) board. However, the (supervisory) board should not be precluded from delegating part of its decision-making powers to committees when it considers it appropriate and when this is permissible under national law, even though the (supervisory) board remains fully responsible for the decisions taken in its field of competence.

               (11)

               Since the identification of candidates to fill unitary or dual board vacancies raises issues relevant to the selection of non-executive or supervisory directors who are to oversee management or relevant to the continuation in office of management, the nomination committee should be composed mainly of independent non-executive or supervisory directors. That would leave room on the nomination committee for non-executive or supervisory directors who do not meet the independence criteria. It would also leave room for executive/managing directors (in companies where the nomination committee is created within the unitary board and as long as executive/managing directors do not form a majority on that committee).

               (12)

               Given the different approaches in the Member States with respect to the bodies responsible for appointing and removing directors, the role of a nomination committee created within the (supervisory) board should essentially be to make sure that, where the (supervisory) board plays a role in the appointment and removal process (either through a power to table proposals or to make decisions, as defined by national law), this role is performed in as objective and professional a way as possible. The nomination committee should therefore essentially make recommendations to the (supervisory) board with respect to the appointment and removal of directors by the body competent under national company law.

               (13)

               In the area of remuneration, corporate governance codes adopted in Member States tend to focus primarily on the remuneration of executive or managing directors, since the potential for abuse and conflicts of interest is essentially located there. Many codes also recognise that some consideration should be given at board level to the remuneration policy for senior management. Finally, the issue of stock options is granted special attention. Given the different approaches in the Member States with respect to the bodies responsible for setting the remuneration of directors, the role of a remuneration committee created within the (supervisory) board should essentially be to make sure that, where the (supervisory) board plays a role in the remuneration setting process (either through a power to table proposals or to make decisions, as defined by national law), this role is performed in as objective and professional a way as possible. The remuneration committee should therefore essentially make recommendations to the (supervisory) board with respect to those remuneration issues for decision by the body competent under national company law.

               (14)

               Two key responsibilities of the (supervisory) board seem to ensure that the financial reports and other related information disseminated by the company present an accurate and complete picture of the company’s position and to monitor the procedures established for the evaluation and management of risks. In this context, most corporate governance codes assign to the audit committee an essential role in assisting the (supervisory) board to fulfil these duties. In some Member States, such responsibilities are attributed, wholly or partly, to corporate bodies external to the (supervisory) board. It is therefore appropriate to provide that an audit committee created within the (supervisory) board should, as a general rule, make recommendations to the (supervisory) board with respect to those audit issues, and that such functions may be performed by other structures — external to the (supervisory) board — which would be equally effective.

               (15)

               In order for non-executive or supervisory directors to play an effective role, they should have the right background and sufficient time for the job. In addition, a sufficient number of them should meet appropriate independence criteria. Before the appointment of non-executive or supervisory directors, adequate information should be provided on these issues and that information should be updated with sufficient frequency.

               (16)

               With respect to the qualifications of directors, most corporate governance codes insist on the need to have qualified individuals on the board, but at the same time recognise that the definition of what constitutes proper qualifications should be left to the company itself, because such qualifications will depend, inter alia, on its activities, size and environment and because they should be met by the board as a whole. There is nevertheless one issue which usually raises particular concern, namely the need for particular competence in the audit committee where some specific knowledge is deemed to be indispensable. The (supervisory) board should therefore determine the desired composition of the audit committee and evaluate it periodically, devoting specific attention to the experience necessary in that committee.

               (17)

               With respect to the commitment of directors, most corporate governance codes seek to make sure that directors devote sufficient time to their duties. Some of these codes limit the number of directorships that may be held in other companies: the positions of chairman or of executive or managing director are usually recognised as more demanding than those of non-executive or supervisory director, but the precise numbers of other directorships acceptable vary widely. However, the involvement required from a director may vary widely depending on the company and its environment; in such a situation, each director should undertake to strike a proper balance between his various engagements.

               (18)

               Generally, corporate governance codes adopted in the Member States recognise the need for a significant proportion of non-executive or supervisory directors to be independent, that is to say, free of any material conflict of interest. Independence is most often understood as the absence of close ties with management, controlling shareholders or the company itself. In the absence of any common understanding of what independence precisely entails, it is appropriate to provide a general statement describing what the general objective is. Provision should also be made to cover a (non-exhaustive) number of situations, involving the relationships or circumstances usually recognised as likely to generate a material conflict of interest, which Member States must duly consider when introducing at national level the criteria to be used by the (supervisory) board. The determination of what constitutes independence should principally be an issue for the (supervisory) board itself to determine. When the (supervisory) board applies the independence criteria, it should focus on substance rather than form.

               (19)

               In view of the importance attaching to the role of non-executive or supervisory directors with respect to the restoration of confidence, and more generally to the development of sound corporate governance practices, the steps taken for the implementation of this Recommendation in Member States should be monitored closely,

         HEREBY RECOMMENDS:
   SECTION I
   SCOPE AND DEFINITIONS
   1.   Scope
   1.1.   Member States are invited to take the steps necessary to introduce, at national level, a set of provisions concerning the role of non-executive or supervisory directors and the committees of the (supervisory) board to be used by listed companies, either through a ‘comply or explain’ approach or through legislation, and with the instruments best suited to their legal environment.
   They should take due account of the specificities of collective investment undertakings of the corporate type, as covered by Directive 85/611/EEC. Member States should also consider the specificities of collective investment undertakings of the corporate type which are not covered by that Directive and the sole purpose of which is to invest money raised from investors in a diversified range of assets and which do not seek to take legal or management control over any of the issuers of their underlying investments.
   1.2.   If Member States decide to use the ‘comply or explain’ approach, whereby companies are required to explain their practices by reference to a set of designated best practice recommendations, they should require companies to specify annually the recommendations with which they have not complied (and, in the case of recommendations whose requirements are of a continuing nature, for what part of the accounting period such non-compliance occurred), and explain in a substantial and specific manner the extent of, and the reasons for, any material non-compliance.
   1.3.   In their consideration of the principles set out in this Recommendation, Member States should, in particular, take into account the following:
   1.3.1.   the functions and characteristics assigned by Member States to any of the committees created within the (supervisory) board and proposed in this Recommendation should duly take into account the rights and duties of relevant corporate bodies as defined under national law;
   1.3.2.   Member States should be allowed to choose, in whole or in part, between the creation within the (supervisory) board of any of the committees with the characteristics advocated in this Recommendation, and the use of other structures — external to the (supervisory) board — or procedures. Such structures or procedures, which could be either mandatory for companies under national law or best practice recommended at national level through a ‘comply or explain’ approach, should be functionally equivalent and equally effective.
   1.4.   With respect to listed companies incorporated in one of the Member States, the set of provisions to be introduced by Member States should cover at least those listed companies which are incorporated within their territory.
   With respect to listed companies not incorporated in one of the Member States, the set of provisions to be introduced by Member States should cover at least those listed companies which have their primary listing on a regulated market established in their territory.
   2.   Definitions for the purposes of this Recommendation
   2.1.   ‘Listed companies’ means companies whose securities are admitted to trading on a regulated market, within the meaning of Directive 2004/39/EC, in one or more Member States.
   2.2.   ‘Director’ means any member of any administrative, managerial or supervisory body of a company.
   2.3.   ‘Executive director’ means any member of the administrative body (unitary board) who is engaged in the daily management of the company.
   2.4.   ‘Non-executive director’ means any member of the administrative body (unitary board) of a company other than an executive director.
   2.5.   ‘Managing director’ means any member of the managerial body (dual board) of a company.
   2.6.   ‘Supervisory director’ means any member of the supervisory body (dual board) of a company.
   SECTION II
   PRESENCE AND ROLE OF NON-EXECUTIVE OR SUPERVISORY DIRECTORS ON (SUPERVISORY) BOARDS
   3.   Presence of non-executive or supervisory directors
   3.1.   The administrative, managerial and supervisory bodies should include in total an appropriate balance of executive/managing and non-executive/supervisory directors such that no individual or small group of individuals can dominate decision-making on the part of these bodies.
   3.2.   The present or past executive responsibilities of the (supervisory) board’s chairman should not stand in the way of his ability to exercise objective supervision. On a unitary board, one way to ensure this is that the roles of chairman and chief executive are separate; in the case of unitary and dual boards, one option may be that the chief executive does not immediately become the chairman of the (supervisory) board. In cases where a company chooses to combine the roles of chairman and chief executive or to immediately appoint as chairman of the (supervisory) board the former chief executive, this should be accompanied with information on any safeguards put in place.
   4.   Number of independent directors
   A sufficient number of independent non-executive or supervisory directors should be elected to the (supervisory) board of companies to ensure that any material conflict of interest involving directors will be properly dealt with.
   5.   Organisation in board committees
   Boards should be organised in such a way that a sufficient number of independent non-executive or supervisory directors play an effective role in key areas where the potential for conflict of interest is particularly high. To this end, but subject to point 7, nomination, remuneration and audit committees should be created within the (supervisory) board, where that board plays a role in the areas of nomination, remuneration and audit under national law, taking into account Annex I.
   6.   Role of the committees vis-à-vis the (supervisory) board
   6.1.   The nomination, remuneration and audit committees should make recommendations aimed at preparing the decisions to be taken by the (supervisory) board itself. The primary purpose of the committees should be to increase the efficiency of the (supervisory) board by making sure that decisions are based on due consideration, and to help organise its work with a view to ensuring that the decisions it takes are free of material conflicts of interest. The creation of the committees is not intended, in principle, to remove the matters considered from the purview of the (supervisory) board itself, which remains fully responsible for the decisions taken in its field of competence.
   6.2.   The terms of reference of any committee created should be drawn up by the (supervisory) board. Where permissible under national law, any delegation of decision-making power should be explicitly declared, properly described and made public in a fully transparent way.
   7.   Flexibility in setting up the committees
   7.1.   Companies should make sure that the functions assigned to the nomination, remuneration and audit committees are carried out. However, companies may group the functions as they see fit and create fewer than three committees. In such a situation, companies should give a clear explanation both of the reasons why they have chosen an alternative approach and how the approach chosen meets the objective set for the three separate committees.
   7.2.   In companies where the (supervisory) board is small, the functions assigned to the three committees may be performed by the (supervisory) board as a whole, provided that it meets the composition requirements advocated for the committees and that adequate information is provided in this respect. In such a situation, the national provisions relating to board committees (in particular with respect to their role, operation, and transparency) should apply, where relevant, to the (supervisory) board as a whole.
   8.   Evaluation of the (supervisory) board
   Every year, the (supervisory) board should carry out an evaluation of its performance. This should encompass an assessment of its membership, organisation and operation as a group, an evaluation of the competence and effectiveness of each board member and of the board committees, and an assessment of how well the board has performed against any performance objectives which have been set.
   9.   Transparency and communication
   9.1.   The (supervisory) board should make public at least once a year (as part of the information disclosed by the company annually on its corporate governance structures and practices) adequate information about its internal organisation and the procedures applicable to its activities, including an indication of the extent to which the self-evaluation performed by the (supervisory) board has led to any material change.
   9.2.   The (supervisory) board should ensure that shareholders are properly informed as regards the affairs of the company, its strategic approach, and the management of risks and conflicts of interest. The roles of directors regarding communication and engagement with shareholders should be clearly delineated.
   SECTION III
   PROFILE OF NON-EXECUTIVE OR SUPERVISORY DIRECTORS
   10.   Appointment and removal
   Non-executive or supervisory directors should be appointed for specified terms subject to individual re-election, at maximum intervals to be determined at national level with a view to enabling both the necessary development of experience and sufficiently frequent reconfirmation of their position. It should also be possible to remove them, but their removal should not be easier than for an executive or managing director.
   11.   Qualifications
   11.1.   In order to maintain a proper balance in terms of the qualifications possessed by its members, the (supervisory) board should determine its desired composition in relation to the company’s structure and activities, and evaluate it periodically. The (supervisory) board should ensure that it is composed of members who, as a whole, have the required diversity of knowledge, judgement and experience to complete their tasks properly.
   11.2.   The members of the audit committee, should, collectively, have a recent and relevant background in and experience of finance and accounting for listed companies appropriate to the company’s activities.
   11.3.   All new members of the (supervisory) board should be offered a tailored induction programme covering to the extent necessary their responsibilities and the company’s organisation and activities. The (supervisory) board should conduct an annual review to identify areas where directors need to update their skills and knowledge.
   11.4.   When the appointment of a director is proposed, disclosure should be made of his particular competences which are relevant to his service on the (supervisory) board. To enable markets and the public to assess whether these competences remain appropriate over time, the (supervisory) board should disclose every year a profile of the board’s composition and information on the particular competences of individual directors which are relevant to their service on the (supervisory) board.
   12.   Commitment
   12.1.   Each director should devote to his duties the necessary time and attention, and should undertake to limit the number of his other professional commitments (in particular any directorships held in other companies) to such an extent that the proper performance of his duties is assured.
   12.2.   Where the appointment of a director is proposed, his other significant professional commitments should be disclosed. The board should be informed of subsequent changes. Every year, the board should collect data on such commitments, and make the information available in its annual report.
   13.   Independence
   13.1.   A director should be considered to be independent only if he is free of any business, family or other relationship, with the company, its controlling shareholder or the management of either, that creates a conflict of interest such as to impair his judgement.
   13.2.   A number of criteria for assessment of the independence of directors should be adopted at national level, taking into account the guidance set out in Annex II, which identifies a number of situations reflecting the relationships or circumstances usually recognised as likely to generate material conflict of interest. The determination of what constitutes independence is fundamentally an issue for the (supervisory) board itself to determine. The (supervisory) board may consider that, although a particular director meets all the criteria laid down at national level for assessment of the independence of directors, he cannot be considered independent owing to the specific circumstances of the person or the company, and the converse also applies.
   13.3.   Proper information should be disclosed on the conclusions reached by the (supervisory) board in its determination of whether a particular director should be regarded as independent.
   13.3.1.   When the appointment of a non-executive or supervisory director is proposed, the company should disclose whether it considers him to be independent; if one or more of the criteria laid down at national level for assessment of independence of directors is not met, the company should disclose its reasons for nevertheless considering that director to be independent. Companies should also disclose annually which directors they consider to be independent.
   13.3.2.   If one or more of the criteria laid down at national level for assessment of independence of directors has not been met throughout the year, the company should disclose its reasons for considering that director to be independent. To ensure the accuracy of the information provided on the independence of directors, the company should require the independent directors to have their independence periodically re-confirmed.
   SECTION IV
   FINAL PROVISIONS
   14.   Follow-up
   Member States are invited to take the necessary measures to promote the application, by 30 June 2006, of the principles set out in this Recommendation and to notify the Commission of the measures taken in accordance with this Recommendation, in order to enable the Commission to monitor closely the situation and, on that basis, to assess the need for further measures.
   15.   Addressees
   This Recommendation is addressed to the Member States.

      Done at Brussels, 15 February 2005.

            For the Commission

         Charlie McCREEVY

            Member of the Commission

      (1)  COM(2003) 284 final.

      (2)  OJ L 375, 31.12.1985, p. 3. Directive as last amended by Directive 2004/39/EC of the European Parliament and of the Council (OJ L 145, 30.4.2004, p. 1).

      The following Annexes provide additional guidance for the interpretation of the principles set out in the Recommendation.

      ANNEX I
      Committees of the (supervisory) board
      1.   COMMON FEATURES
      1.1.   Size
      When committees are created within the (supervisory) board, they should normally be composed of at least three members. In companies with small (supervisory) boards, they could exceptionally be composed of two members only.
      1.2.   Composition
      Chairmanship and membership of the committees should be decided with due regard to the need to ensure that committee membership is refreshed and that undue reliance is not placed on particular individuals.
      1.3.   Terms of reference
      The exact mandate of each committee created should be described in the terms of reference drawn up by the (supervisory) board.
      1.4.   Available resources
      Companies should ensure that committees are provided with sufficient resources to discharge their duties, which includes the right to obtain — in particular from officers of the company — all the necessary information or to seek independent professional advice on issues falling in their area of competence.
      1.5.   Attendance at committee meetings
      With a view to ensuring the autonomy and objectivity of the committees, directors other than the committee members should normally be entitled to attend its meetings only at the invitation of the committee. The committee may invite or require certain officers or experts to attend.
      1.6.   Transparency

                  1.

                  Committees should discharge their duties within the set terms of reference, and ensure that they regularly report to the (supervisory) board about their activities and results.

                  2.

                  The terms of reference set for any committee created, explaining its role and any authority delegated to it by the (supervisory) board where permissible under national law, should be made public at least once a year (as part of the information disclosed by the company annually on its corporate governance structures and practices). Companies should also make public annually a statement by existing committees about their membership, the number of their meetings and attendance over the year, and their main activities. In particular, the audit committee should confirm that it is satisfied with the independence of the audit process and describe briefly the steps it has taken to reach this conclusion.

                  3.

                  The chairman of each committee should be able to communicate directly with shareholders. The circumstances in which this should happen should be spelled out in the committee’s terms of reference.

            2.   THE NOMINATION COMMITTEE
      2.1.   Creation and composition

                  1.

                  Where, under national law, the (supervisory) board is playing a role, either by making decisions itself or by making proposals for consideration by another corporate body, in the process for appointment and/or removal of directors, a nomination committee should be set up within the (supervisory) board.

                  2.

                  The nomination committee should be composed of at least a majority of independent non-executive or supervisory directors. When a company deems it appropriate for the nomination committee to comprise a minority of non-independent members, the Chief Executive Officer could be a member of such a committee.

            2.2.   Role

                  1.

                  The nomination committee should at least:

                              —

                              identify and recommend, for the approval of the (supervisory) board, candidates to fill board vacancies as and when they arise. In doing so, the nomination committee should evaluate the balance of skills, knowledge and experience on the board, prepare a description of the roles and capabilities required for a particular appointment, and assess the time commitment expected,

                              —

                              periodically assess the structure, size, composition and performance of the unitary or dual board, and make recommendations to the (supervisory) board with regard to any changes,

                              —

                              periodically assess the skills, knowledge and experience of individual directors, and report on this to the (supervisory) board,

                              —

                              properly consider issues related to succession planning.

                  2.

                  In addition, the nomination committee should review the policy of the (management) board for selection and appointment of senior management.

            2.3.   Operation

                  1.

                  The nomination committee should consider proposals made by relevant parties, including management and shareholders (1). In particular, the Chief Executive Officer should be adequately consulted by, and entitled to submit proposals to the nomination committee, especially when dealing with issues related to executive/managing directors or senior management.

                  2.

                  In performing its duties, the nomination committee should be able to use any forms of resources it deems appropriate, including external advice or advertising, and should receive appropriate funding from the company to this effect.

            3.   THE REMUNERATION COMMITTEE
      3.1.   Creation and composition

                  1.

                  Where, under national law, the (supervisory) board is playing a role, either by making decisions itself or by making proposals for consideration by another corporate body, in the process for setting remuneration of directors, a remuneration committee should be set up within the (supervisory) board.

                  2.

                  The remuneration committee should be composed exclusively of non-executive or supervisory directors. At least a majority of its members should be independent.

            3.2.   Role

                  1.

                  With respect to executive or managing directors, the committee should at least:

                              —

                              make proposals, for the approval of the (supervisory) board, on the remuneration policy for executive or managing directors. Such policy should address all forms of compensation, including in particular the fixed remuneration, performance-related remuneration schemes, pension arrangements, and termination payments. Proposals related to performance-related remuneration schemes should be accompanied with recommendations on the related objectives and evaluation criteria, with a view to properly aligning the pay of executive or managing directors with the long-term interests of the shareholders and the objectives set by the (supervisory) board for the company,

                              —

                              make proposals to the (supervisory) board on the individual remuneration to be attributed to executive or managing directors, ensuring that they are consistent with the remuneration policy adopted by the company and the evaluation of the performance of the directors concerned. In doing so, the committee should be properly informed as to the total compensation obtained by the directors from other companies affiliated to the group,

                              —

                              make proposals to the (supervisory) board on suitable forms of contract for executive or managing directors,

                              —

                              assist the (supervisory) board in overseeing the process whereby the company complies with existing provisions regarding disclosure of remuneration-related items (in particular the remuneration policy applied and the individual remuneration attributed to directors).

                  2.

                  With respect to senior management (as defined by the (supervisory) board), the committee should at least:

                              —

                              make general recommendations to the executive or managing directors on the level and structure of remuneration for senior management,

                              —

                              monitor the level and structure of remuneration for senior management, on the basis of adequate information provided by executive or managing directors.

                  3.

                  With respect to stock options and other share-based incentives which may be granted to directors, managers, or other employees, the committee should at least:

                              —

                              debate the general policy regarding the granting of such schemes, in particular stock options, and make any related proposals to the (supervisory) board,

                              —

                              review the information provided on this topic in the annual report and to the shareholders meeting where relevant,

                              —

                              make proposals to the (supervisory) board concerning the choice between granting options to subscribe shares or granting options to purchase shares, specifying the reasons for its choice as well as the consequences that this choice has.

            3.3.   Operation

                  1.

                  The remuneration committee should consult at least the chairman and/or chief executive about their views relating to the remuneration of other executive or managing directors.

                  2.

                  The remuneration committee should be able to avail itself of consultants, with a view to obtaining the necessary information on market standards for remuneration systems. The committee should be responsible for establishing the selection criteria, selecting, appointing and setting the terms of reference for any remuneration consultants who advise the committee, and should receive appropriate funding from the company to this effect.

            4.   THE AUDIT COMMITTEE
      4.1.   Composition
      The audit committee should be composed exclusively of non-executive or supervisory directors. At least a majority of its members should be independent.
      4.2.   Role

                  1.

                  With respect to the internal policies and procedures adopted by the company, the audit committee should assist the (supervisory) board to at least:

                              —

                              monitor the integrity of the financial information provided by the company, in particular by reviewing the relevance and consistency of the accounting methods used by the company and its group (including the criteria for the consolidation of the accounts of companies in the group),

                              —

                              review at least annually the internal control and risk management systems, with a view to ensuring that the main risks (including those related to compliance with existing legislation and regulations) are properly identified, managed and disclosed,

                              —

                              ensure the effectiveness of the internal audit function, in particular by making recommendations on the selection, appointment, reappointment and removal of the head of the internal audit department and on the department’s budget, and by monitoring the responsiveness of management to its findings and recommendations. If the company does not have an internal audit function, the need for one should be reviewed at least annually.

                  2.

                  With respect to the external auditor engaged by the company, the audit committee should at least:

                              —

                              make recommendations to the (supervisory) board in relation to the selection, appointment, reappointment and removal of the external auditor by the body competent under national company law, and to the terms and conditions of his engagement,

                              —

                              monitor the external auditor’s independence and objectivity, in particular by reviewing the audit firm’s compliance with applicable guidance relating to the rotation of audit partners, the level of fees paid by the company, and other related regulatory requirements,

                              —

                              keep the nature and extent of non-audit services under review, based inter alia on disclosure by the external auditor of all fees paid by the company and its group to the audit firm and network, with a view to preventing any material conflicts of interest from arising. The committee should set and apply a formal policy specifying, in accordance with the principles and guidance provided in Commission Recommendation 2002/590/EC (2), the types of non-audit services which are (a) excluded, (b) permissible after review by the committee, and (c) permissible without referral to the committee,

                              —

                              review the effectiveness of the external audit process, and the responsiveness of management to the recommendations made in the external auditor’s management letter,

                              —

                              investigate the issues giving rise to any resignation of the external auditor, and make recommendations as to any required action.

            4.3.   Operation

                  1.

                  The company should provide an induction programme for new audit committee members, and subsequent relevant training on an ongoing and timely basis. All committee members should be provided in particular with full information relating to the company’s specific accounting, financial and operational features.

                  2.

                  The management should inform the audit committee of the methods used to account for significant and unusual transactions where the accounting treatment may be open to different approaches. In this respect, particular attention should be paid to both the existence of, and the justification for, any activity carried out by the company in offshore centres and/or through special purpose vehicles.

                  3.

                  The audit committee shall decide whether and, if so, when the chief executive officer or chairman of the managing board, the chief financial officer (or senior employees responsible for finance, accounting, and treasury matters), the internal auditor and the external auditor, should attend its meetings. The committee should be entitled to meet with any relevant person outside the presence of executive or managing directors, if it so wishes.

                  4.

                  The internal and external auditors should, in addition to maintaining an effective working relationship with management, be guaranteed free access to the (supervisory) board. To this effect, the audit committee shall act as the principal contact point for the internal and external auditors.

                  5.

                  The audit committee should be informed of the internal auditor’s work programme, and receive internal audit reports or a periodic summary.

                  6.

                  The audit committee should be informed of the external auditor’s work programme, and should obtain a report by the external auditor describing all relationships between the independent auditor and the company and its group. The committee should obtain timely information about any issues arising from the audit.

                  7.

                  The audit committee should be free to obtain advice and assistance from outside legal, accounting or other advisors as it deems necessary to carry out its duties, and should receive appropriate funding from the company to this effect.

                  8.

                  The audit committee should review the process whereby the company complies with existing provisions regarding the possibility for employees to report alleged significant irregularities in the company, by way of complaints or through anonymous submissions, normally to an independent director, and should ensure that arrangements are in place for the proportionate and independent investigation of such matters and for appropriate follow-up action.

                  9.

                  The audit committee should report to the (supervisory) board on its activities at least once every six months, at the time the yearly and half-yearly statements are approved.

         (1)  When proposals are submitted by shareholders for the consideration of the nomination committee and the latter decides not to recommend these candidates for the approval of the (supervisory) board, this does not prevent shareholders from proposing the same candidates directly to the general meeting when they have the right to table draft resolutions to this effect under national law.

         (2)  OJ L 191, 19.7.2002, p. 22.

      ANNEX II
      Profile of independent non-executive or supervisory directors

                  1.

                  It is not possible to list comprehensively all threats to directors’ independence; the relationships or circumstances which may appear relevant to its determination may vary to a certain extent across Member States and companies, and best practices in this respect may evolve over time. However, a number of situations are frequently recognised as relevant in helping the (supervisory) board to determine whether a non-executive or supervisory director may be regarded as independent, even though it is widely understood that assessment of the independence of any particular director should be based on substance rather than form. In this context, a number of criteria, to be used by the (supervisory) board, should be adopted at national level. Such criteria, which should be tailored to the national context, should be based on due consideration of at least the following situations:

                              (a)

                              not to be an executive or managing director of the company or an associated company, and not having been in such a position for the previous five years;

                              (b)

                              not to be an employee of the company or an associated company, and not having been in such a position for the previous three years, except when the non-executive or supervisory director does not belong to senior management and has been elected to the (supervisory) board in the context of a system of workers’ representation recognised by law and providing for adequate protection against abusive dismissal and other forms of unfair treatment;

                              (c)

                              not to receive, or have received, significant additional remuneration from the company or an associated company apart from a fee received as non-executive or supervisory director. Such additional remuneration covers in particular any participation in a share option or any other performance-related pay scheme; it does not cover the receipt of fixed amounts of compensation under a retirement plan (including deferred compensation) for prior service with the company (provided that such compensation is not contingent in any way on continued service);

                              (d)

                              not to be or to represent in any way the controlling shareholder(s) (control being determined by reference to the cases mentioned in Article 1(1) of Council Directive 83/349/EEC (1));

                              (e)

                              not to have, or have had within the last year, a significant business relationship with the company or an associated company, either directly or as a partner, shareholder, director or senior employee of a body having such a relationship. Business relationships include the situation of a significant supplier of goods or services (including financial, legal, advisory or consulting services), of a significant customer, and of organisations that receive significant contributions from the company or its group;

                              (f)

                              not to be, or have been within the last three years, partner or employee of the present or former external auditor of the company or an associated company;

                              (g)

                              not to be executive or managing director in another company in which an executive or managing director of the company is non-executive or supervisory director, and not to have other significant links with executive directors of the company through involvement in other companies or bodies;

                              (h)

                              not to have served on the (supervisory) board as a non-executive or supervisory director for more than three terms (or, alternatively, more than 12 years where national law provides for normal terms of a very small length);

                              (i)

                              not to be a close family member of an executive or managing director, or of persons in the situations referred to in points (a) to (h);

                  2.

                  The independent director undertakes (a) to maintain in all circumstances his independence of analysis, decision and action, (b) not to seek or accept any unreasonable advantages that could be considered as compromising his independence, and (c) to clearly express his opposition in the event that he finds that a decision of the (supervisory) board may harm the company. When the (supervisory) board has made decisions about which an independent non-executive or supervisory director has serious reservations, he should draw all the appropriate consequences from this. If he were to resign, he should explain his reasons in a letter to the board or the audit committee, and, where appropriate, to any relevant body external to the company.

         (1)  OJ L 193, 18.7.1983, p. 1. Directive as last amended by Directive 2003/51/EC of the European Parliament and of the Council (OJ L 178, 17.7.2003, p. 16).


				|

		52014PC0437

			Recommendation for a COUNCIL DECISION abrogating Decision 2010/283/EU on the existence of an excessive deficit in Belgium /* COM/2014/0437 final */

			   	Recommendation for a
COUNCIL DECISION
abrogating Decision 2010/283/EU on the
existence of an excessive deficit in Belgium
THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty on the
Functioning of the European Union, and in particular Article 126(12)
thereof,
Having regard to the recommendation from
the Commission,
Whereas:
(1)       By Council Decision 2010/283/EU
of 2 December 2009[1],
following a recommendation from the Commission, it was decided that an
excessive deficit existed in Belgium. The Council noted that the general
government deficit planned for 2009 was 5.9% of GDP, thus above the 3% of GDP
Treaty reference value, while the general government gross debt was planned to
reach 97.6% of GDP in 2009, thus above the 60% of GDP Treaty reference value[2].
(2)       On 2 December 2009, in
accordance with Article 126(7) of the Treaty and Article 3(4) of Council
Regulation (EC) No 1467/97 of 7 July 1997 on speeding up and clarifying the
implementation of the excessive deficit procedure[3], the Council, based on
a recommendation from the Commission, addressed a recommendation to Belgium with
a view to bringing the excessive deficit situation to an end by 2012 at the
latest. The recommendation was made public.
(3)       On 21 June 2013, on the
basis of a Commission recommendation, the Council decided under Article 126(8)
of the Treaty that Belgium had not taken effective action in compliance with
the Council Recommendation of 2 December 2009 to correct its excessive deficit
by 2012, and decided under Article 126(9) of the Treaty to give notice to
Belgium to put an end to the excessive deficit situation by 2013. Belgium was
given the deadline of 15 September to report on the measures taken to comply
with this decision in accordance with Article 5(1a) of Council Regulation (EC)
No 1467/97. On 15 November 2013, the Commission concluded that Belgium had
taken effective action and that no further steps in the excessive deficit
procedure were needed at that moment.
(4)       In accordance with Article
4 of the Protocol on the excessive deficit procedure annexed to the Treaties,
the Commission provides the data for the implementation of the procedure. As
part of the application of this Protocol, Member States are to notify data on
government deficits and debt and other associated variables twice a year,
namely before 1 April and before 1 October, in accordance with Article 3 of
Council Regulation (EC) No 479/2009 of 25 May 2009 on the application of the
Protocol on the excessive deficit procedure annexed to the Treaty establishing
the European Community[4].

(5)       When considering whether a
decision on the existence of an excessive deficit should be abrogated, the
Council should take a decision on the basis of notified data. Moreover, a
decision on the existence of an excessive deficit should be abrogated only if
the Commission forecasts indicate that the deficit will not exceed the 3% of
GDP threshold over the forecast horizon[5].
(6)       Based on data provided by
the Commission (Eurostat) in accordance with Article 14 of Regulation (EC) No
479/2009 following the notification by Belgium before 1 April 2014, the 2014 Stability Programme, and the Commission 2014 spring forecast,
the following conclusions are warranted:
–
After peaking at 5.6% of GDP in 2009, of which
around 0.7 % of GDP due to one-off factors, Belgium's general government
deficit was brought down to 2.6% of GDP in 2013, in line with the Council
decision of 21 June 2013. The improvement was driven by significant fiscal
consolidation, as well as by an improvement in the cyclical conditions.
–
The stability programme for 2014-17, submitted
by the Belgian government on 30 April 2014, plans the deficit to decline to 2.15%
of GDP in 2014 and then fall to 1.4% of GDP in 2015. Based on a no-policy-change
assumption, the Commission 2014 Spring forecast projects a deficit of 2.6% of
GDP in 2014, and 2.8% of GDP in 2015. Thus, the deficit is set to remain below
the Treaty reference value of 3% of GDP over the forecast horizon.
–
After improving by 0.7% of GDP in 2013, the
structural balance, i.e. adjusted for the economic cycle and net of one‑off
and other temporary measures, is forecast to remain stable in 2014 and worsen
slightly in 2015, based on a no‑policy‑change assumption. In this
context, it appears that there is currently an emerging gap of 0.5% of GDP
relative to the required adjustment of the structural balance towards the
medium-term objective in 2014, suggesting that there is a need to reinforce the
budgetary measures in order to ensure full compliance with the preventive arm
of the pact in view of the emerging risk of a significant deviation from the
required adjustment path and the breach of the debt benchmark.
–
The debt-to-GDP ratio rose by around 5
percentage points between 2009 and 2013, to 101.5%, in part due to Belgium's contribution
to financial assistance to euro area Member States. The gross government debt
is forecast to remain around this level in 2014 and 2015.
(7)       The Council recalls that,
starting in 2014, which is the year following the correction of the excessive
deficit, Belgium is subject to the preventive arm of the Stability and Growth Pact
and should progress towards its medium-term objective at an appropriate pace,
including respecting the expenditure benchmark, and make sufficient progress
towards compliance with the debt criterion in
accordance with Article 2(1a) of Council Regulation (EC) No 1467/97 of July
1997 on speeding up and clarifying the implementation of the excessive deficit
procedure.
(8)       In accordance with Article
126(12) of the Treaty, a Council Decision on the existence of an excessive
deficit is to be abrogated when the excessive deficit in the Member State
concerned has, in the view of the Council, been corrected.
(9)       In the view of the
Council, the excessive deficit in Belgium has been corrected and Decision 2010/283/EU
should therefore be abrogated,
HAS ADOPTED THIS DECISION:
Article 1
From an overall assessment it follows that
the excessive deficit situation in Belgium has been corrected.
Article 2
Decision 2010/283/EU is hereby abrogated.
Article 3
This Decision is addressed to the Kingdom
of Belgium.
Done at Brussels,
                                                                       For
the Council
                                                                       The
President
[1]               OJ L 125, 21.5.2010, p. 34.
[2]               The general government deficit and debt for 2009 were
subsequently revised to 5.6% and 95.7% of GDP respectively.
[3]               OJ L 209, 2.8.1997, p. 6.
[4]               OJ L 145, 10.6.2009, p. 1.
[5]               In line with the “Specifications on the
implementation of the Stability and Growth Pact and Guidelines on the format
and content of Stability and Convergence Programmes” of 3 September 2012. See: http://ec.europa.eu/economy_finance/economic_governance/sgp/pdf/coc/code_of_conduct_en.pdf


Important legal notice

|

52006SC0020

Recommendation for a Council Decision on the existence of an excessive deficit in the United Kingdom  /* SEC/2006/0020 final */

	[pic] | COMMISSION OF THE EUROPEAN COMMUNITIES |Brussels, 11.1.2006SEC(2006) 20 finalRecommendation for aCOUNCIL DECISIONon the existence of an excessive deficit in the United Kingdom(presented by the Commission)EXPLANATORY MEMORANDUMThe application of the excessive deficit procedure (EDP) is governed by Article 104 of the Treaty and by Council Regulation (EC) No 1467/97 of 7 July 1997[1] “on speeding up and clarifying the implementation of the excessive deficit procedure”, which is part of the Stability and Growth Pact. However, while most provisions apply to the United Kingdom in the same manner as to other countries not participating in the euro area, Article 5 of the Protocol on certain provisions relating to the United Kingdom[2] states that the obligation under Article 104(1) of the Treaty to avoid excessive general government deficits does not apply to the United Kingdom unless the country moves to the third stage of EMU. Instead, while in the second stage of EMU, the United Kingdom is committed under Article 116(4) of the Treaty “to endeavour to avoid excessive deficits”.In the period since the UK’s previous EDP was abrogated in May 1998, the UK general government balance moved from a comfortable surplus position in the late 1990s to a deficit of 3.2% of GDP in 2003/04[3]. This development was equivalent to a change in the structural fiscal balance of around 4 percentage points of GDP in the period between 1999/00 and 2003/04. During these years, the general government expenditure ratio increased from less than 40% to about 43% of GDP. In the same period, government gross fixed capital formation increased from 1.2% to 1.6% of GDP; the government gross debt ratio went down to 37.6% of GDP in 2002/03 and has been increasing since then. Such an evolution coupled with developments in interest rates led to interest payments having fallen from 2.9% to 2.0% of GDP in that period. As a consequence of the deficit for 2003/04 exceeding the reference level, the Commission initiated an excessive deficit procedure with the Article 104(3) report prepared in April 2004[4]. However, since the then assessment was that the excess of the deficit over 3% of GDP was small and likely to be temporary, the deficit was not judged to be excessive.According to the EDP data notified by the United Kingdom in August 2005, the general government deficit in the United Kingdom reached 3.2% of GDP in the 2004/05 financial year (running from April to March)[5],[6], thus exceeding again the 3% of GDP reference value. The reported figure for the 2004/05 financial year deficit provided prima facie evidence on the existence of an excessive deficit in the United Kingdom in the sense of the Treaty and the Stability and Growth Pact.The Commission therefore adopted a report according to Article 104(3) of the Treaty assessing the fulfilment of the Treaty requirements concerning the deficit and the debt criteria[7]. The report considered that, although above the 3% of GDP Treaty reference value, the 2004/05 deficit was close to it. The excess over the 3% of GDP reference value was not exceptional. In particular, it did not result from an unusual event and the growth performance accompanying the breach of the reference value in 2004/05 does not qualify as a severe economic downturn. Growth of 3.2% in 2004 was estimated to have been above-potential as was growth in financial year 2004/05. The estimated output gap in 2004 was positive. As regards the issue of temporariness, the deficit was expected to persist above 3% throughout 2005/06 and 2006/07, based on an interim updated economic and budgetary outlook for the United Kingdom.In its report the Commission also analysed all relevant factors for the medium-term economic and budgetary positions as well as others that appeared relevant to the assessment of public finances in the United Kingdom. According to the Stability and Growth Pact, relevant factors can be taken into account in the steps leading to the decision on the existence of an excessive deficit [thus including the Economic and Financial Committee opinion in accordance with Article 104(4), the Commission opinion in accordance with Article 104(5) and the Council decision in accordance with Article 104(6)], “if the double condition of the overarching principle that – before other relevant factors are taken into account - the excess of the reference value is temporary and the deficit remains close to the reference value - is fully met”. In the case of the United Kingdom, although the projected deficit for 2004/05 was close to the reference value, the report concluded that the government deficit was projected to be above 3% of GDP in financial years 2005/06 and 2006/07.Article 104(4) of the Treaty states that “the Committee provided for in Article 114 (i.e. the Economic and Financial Committee) shall formulate an opinion on the report of the Commission”. The Committee issued its opinion on 30 September 2005, this opinion being consistent with the assessment made by the Commission in its report, and noting that the excessive deficit could not be considered temporary. The Committee nevertheless recommended that further steps under the EDP should await the finalisation of the Commission’s forthcoming autumn forecasts.In the Commission services’ autumn forecasts, assuming United Kingdom fiscal policy remains as announced, the deficit was expected to widen to just below 3½% of GDP in 2005/06 and to remain over 3% of GDP in 2006/07, showing a gradual improvement to around 3% of GDP only in 2007/08. These projections confirmed the Commission’s assessment made in its report under Article 104(3) and the EFC opinion adopted under Article 104(4) that the deficit was expected to remain over 3% of GDP in 2005/06 and 2006/07 and was therefore not temporary. Based on these projections, the excess over the 3% of GDP reference value is therefore neither exceptional nor temporary, although the deficit is close to the reference value.Subsequent to the Commission services’ autumn forecasts, the United Kingdom announced fiscal measures in the Pre-Budget Report presented to Parliament on 5 December 2005. In net terms, United Kingdom authorities’ costings of these measures, compared with the baseline of announced policy (as taken into account in the autumn forecasts), represent an easing of policy by 0.1 pp of GDP in the current financial year and a tightening of policy by just below 0.1 pp of GDP in 2006/07. Taking into consideration these measures, which are all structural, the Commission’s assessment nevertheless remains that the deficit through to 2006/07 is expected to exceed 3% of GDP, with the deficit in 2006/07 estimated at around 3.1% of GDP, and is therefore not temporary.Therefore, again based on the double condition above not being satisfied, for the purpose of the Commission opinion in accordance with Article 104(5) and the Council decision in accordance with Article 104(6), other relevant factors are not taken into account in the case of the United Kingdom. This analysis therefore suggests that the deficit criterion in the Treaty is not fulfilled. In contrast, the general government debt ratio remains well below the 60% reference value (having recorded 40.8% of GDP in the 2004/05 financial year) although, given the scale of actual and projected primary deficits, on a rising trend: in the Commission’s autumn forecasts reaching around 44½% of GDP in 2007/08. The table below shows the Commission services’ autumn forecasts for UK general government deficit and debt ratios on a financial year basis.United Kingdom: public finance projections on a financial year basis(% of GDP)Outturn | Projections |2004/05 | 2005/06 | 2006/07 | 2007/08 |General government deficit | 3.2 | 3.4 | 3.2 | 3.0 |General government gross debt | 40.8 | 42.7 | 43.7 | 44.5 |The Commission, having taken into account its report, the opinion of the Committee, the Commission services’ autumn forecasts and the United Kingdom’s December 2005 Pre-Budget Report, is thus of the opinion that an excessive deficit exists in the United Kingdom. This opinion, adopted by the Commission on 11 January 2006, is herewith addressed to the Council, according to Article 104(5) of the Treaty. The Commission is recommending that the Council shall decide accordingly, in conformity with Article 104(6).In addition, the Commission is submitting to the Council a recommendation for a Council recommendation to be addressed to the United Kingdom with a view to bringing the situation of an excessive deficit to an end, according to Article 104(7) of the Treaty. According to Council Regulation (EC) No 1467/97, the Council recommendation should “establish a deadline for the correction of the excessive deficit, which should be completed in the year following its identification unless there are special circumstances. In the recommendation, the Council shall request that the Member State achieves a minimum annual improvement of at least 0.5% of GDP as a benchmark, in its cyclically adjusted balance net of one-off and temporary measures, in order to ensure the correction of the excessive deficit within the deadline set in the recommendation”.In the case of the United Kingdom, the consideration of relevant factors does not suggest the existence of special circumstances warranting a departure from the standard deadline for correcting the deficit. In particular, while the negative output gap is expected to widen between 2005 and 2006 by approaching 0.5 percentage point, output in the Commission services’ autumn forecasts (before taking account of the measures in the December Pre-Budget Report) was projected to be strengthening from late 2005, with approximately trend-level growth from 2006. The measures announced in the Pre-Budget Report do not materially affect this growth profile, with the slight fiscal tightening from 2006/07 focused on the offshore oil sector of the economy which can be assumed not to react to the measures in a conventional cyclical manner. As for the cyclically-adjusted deficit, in the Commission services’ autumn forecasts this was assessed to improve by 0.3 percentage point of GDP between 2005 and 2006; this improvement can be expected to be around 0.4 percentage point of GDP, after taking account of the Pre-Budget Report measures. In sum, therefore, on the basis of announced policies, output growth is projected to remain reasonably strong in a situation of moderate reduction of the cyclically-adjusted deficit, but with the actual deficit remaining slightly above the reference value. Against this baseline, the application of the benchmark annual improvement of at least 0.5% of GDP would require only a further slight degree of fiscal effort.Accordingly, in the recommendation, since overall growth performance in the United Kingdom remains reasonably satisfactory and the structural improvement in the government balance required to put to an end its excessive deficit is modest, it is considered as being consistent with the Stability and Growth Pact that a budgetary correction should be completed at the latest by financial year 2006/07.Recommendation for aCOUNCIL DECISIONon the existence of an excessive deficit in the United KingdomTHE COUNCIL OF THE EUROPEAN UNION,Having regard to the Treaty establishing the European Community, and in particular Article 104(6) thereof,Having regard to the recommendation from the Commission,Having regard to the observations made by the United Kingdom,Whereas:(1) Article 104 of the Treaty lays down an excessive deficit procedure (EDP) to ensure that Member States avoid excessive government deficits or that they correct such deficits when they occur.(2) Pursuant to point 5 of the Protocol on certain provisions relating to the United Kingdom of Great Britain and Northern Ireland, the obligation under Article 104(1) of the Treaty to avoid excessive general government deficits does not apply to the United Kingdom unless it moves to the third stage of economic and monetary union[8]. While in the second stage of economic and monetary union, the United Kingdom is required to endeavour to avoid excessive deficits, pursuant to Article 116(4) of the Treaty.(3) The Stability and Growth Pact is based on the objective of sound government finances as a means of strengthening the conditions for price stability and for strong sustainable growth conducive to employment creation.(4) The excessive deficit procedure under Article 104 of the Treaty, as clarified by Council Regulation (EC) No 1467/97 on speeding up and clarifying the implementation of the excessive deficit procedure[9], which is part of the Stability and Growth Pact, provides for a decision on the existence of an excessive deficit. The Protocol on the excessive deficit procedure annexed to the Treaty sets out further provisions relating to the implementation of the excessive deficit procedure. Council Regulation (EC) No 3605/93[10] lays down detailed rules and definitions for the application of the provision of the said Protocol.(5) Article 104(5) of the Treaty requires the Commission to address an opinion to the Council if the Commission considers that an excessive deficit exists in a Member State or may occur. Having taken into account its report in accordance with Article 104(3) of the Treaty and having regard to the opinion of the Economic and Financial Committee in accordance with Article 104(4), the Commission services’ autumn 2005 forecast, as well as the United Kingdom’s December 2005 Pre-Budget Report, the Commission concluded that an excessive deficit exists in the United Kingdom. The Commission therefore addressed such an opinion to the Council in respect of the United Kingdom on 11 January 2006.(6) Article 104(6) of the Treaty states that the Council should consider any observations which the Member State concerned may wish to make before deciding, after an overall assessment, whether an excessive deficit exists. In the case of the United Kingdom, this overall assessment leads to the following conclusions.(7) In the period since the United Kingdom’s previous excessive deficit procedure was abrogated in May 1998, the UK general government balance moved from a comfortable surplus position in the late 1990s to a deficit of 3.2% of GDP in 2003/04[11]. This development was equivalent to a change in the structural fiscal balance of around 4 percentage points of GDP in the period between 1999/00 and 2003/04. During these years, the general government expenditure ratio increased from less than 40% to about 43% of GDP. In the same period, government gross fixed capital formation increased from 1.2% to 1.6% of GDP; the government gross debt ratio went down to 37.6% of GDP in 2002/03 but has been increasing since then. Such an evolution coupled with developments in interest rates led to interest payments having fallen from 2.9% to 2.0% of GDP in that period. As a consequence, the Commission initiated an excessive deficit procedure with the Article 104(3) report prepared in April 2004[12]. However, since the then assessment was that the excess of the deficit over 3% of GDP was small and likely to be temporary, the deficit was not judged to be excessive.(8) In the 2004/05 financial year, according to the EDP data notified by the United Kingdom in August 2005, the general government deficit remained at 3.2% of GDP, again above but close to the 3% of GDP Treaty reference value. The excess over the 3% of GDP reference value was not exceptional. In particular, it did not result from an unusual event outside the control of the United Kingdom authorities, nor was it the result of a severe economic downturn. Growth of 3.2% in 2004 is estimated to have been above-potential as was growth in financial year 2004/05. The estimated output gap in 2004 is estimated to have been positive. Therefore, the excess of the deficit over the reference value cannot be considered as resulting from a severe economic downturn. The excess over the 3% of GDP reference value is also considered not temporary, based on the Commission services’ autumn 2005 forecasts. Assuming United Kingdom fiscal policy remained as hitherto announced, the deficit in these forecasts was expected to widen to just below 3½% of GDP in 2005/06 and to remain over 3% of GDP in 2006/07. Based on these projections, the excess over the reference value could not be considered either exceptional or temporary in the sense of the Treaty and the Stability and Growth Pact although the deficit is close to the reference value. Subsequent to the Commission services’ autumn forecasts, the United Kingdom announced fiscal measures in the Pre-Budget Report presented to Parliament on 5 December 2005. In net terms, United Kingdom authorities’ costings of these measures, compared with the baseline of announced policy (as taken into account in the Commission services’ autumn forecasts), represent an easing of policy by 0.1 pp of GDP in the current financial year and a tightening of policy by 0.1 pp of GDP in 2006/07. Taking into consideration these measures, which are all structural, the assessment nevertheless remains that the deficit in 2006/07, at around 3.1% of GDP, is expected to exceed 3% of GDP and is therefore not temporary. This indicates that the Treaty requirement concerning the deficit criterion is not fulfilled.(9) In contrast, the general government debt ratio remains well below the 60% reference value (the August EDP data reporting a ratio of 40.8% of GDP in the 2004/05 financial year) although, given the scale of actual and projected primary deficits, on a rising trend. In the Commission’s autumn forecasts the debt ratio is projected to reach around 44½% of GDP in 2007/08.(10) According to Article 2(4) of Regulation (EC) No 1467/97, “relevant factors” can only be taken into account in the Council decision on the existence of an excessive deficit in accordance with Article 104(6) if the double condition - that the deficit remains close to the reference value and that its excess over the reference value is temporary - is fully met. This double condition is not met in the case of the United Kingdom. Therefore, other relevant factors are not taken into account in this decision.HAS ADOPTED THIS DECISION:Article 1From an overall assessment it follows that an excessive deficit exists in the United Kingdom.Article 2This decision is addressed to the United Kingdom of Great Britain and Northern Ireland.Done at Brussels, […]For the CouncilThe President […] [1] OJ L 209, 2.8.1997 as amended by Council Regulation (EC) No 1056/2005 (OJ L 174, 7.7.2005, p. 5).[2] http://europa.eu.int/eur-lex/en/treaties/selected/livre340.html[3] August 2005 EDP notification, revised down from 3.3% of GDP. The United Kingdom August data were validated by Eurostat on 26 September 2005.[4] See: http://europa.eu.int/comm/economy_finance/about/activities/sgp/country/edp/edprep2004_uk.pdf[5] The EDP applies to the United Kingdom on a UK financial year basis. Actual UK general government balance data reported here apply the Eurostat decision of 14 July 2000 on the allocation of UMTS receipts. The UK has not generally applied this decision in domestic publication of its public finance data, which results in the net lending balance on a Eurostat basis being approximately 0.1 percentage point of GDP per annum lower than reported in UK national accounts from respectively 2001 and 2001/02 onwards.[6] However, the 2004/05 deficit outturn has been revised upwards since the August notification. The outturn consistent with that reported in the December 2005 Pre-Budget Report is 3.3% of GDP.[7] http://europa.eu.int/comm/economy_finance/about/activities/sgp/edp/com_rep_uk.pdf[8] http://europa.eu.int/eur-lex/en/treaties/selected/livre340.html[9] OJ L 209, 2.8.1997, p. 6. Regulation as amended by Regulation (EC) No 1056/2005 (OJ L 174, 7.7.2005, p. 5).[10] OJ L 332, 31.12.1993, p. 7. Regulation as amended by Regulation (EC) No 475/2000 (OJ L 58, 3.3.2000, p. 1) and by Commission Regulation (EC) No 351/2002 (OJ L 55, 26.2.2002, p. 23).[11] August 2005 EDP notification, revised down from 3.3% of GDP. The United Kingdom August data were validated by Eurostat on 26 September 2005.[12] See: http://europa.eu.int/comm/economy_finance/about/activities/sgp/country/edp/edprep2004_uk.pdf