With the close of Financial Year 2010, companies are currently in the process of producing their financial statements and annual reports. For the first time, following the enactment of Law 3873/2010, Greek listed companies have the obligation to disclose a Corporate Governance Statement as part of the report of the Board of Directors, which should include:
- The Corporate Governance Code which the company has decided to apply, as well as the location where this is available to the public. Please note that on February 10, 2011 the Hellenic Capital Markets Commission issued a relevant briefing. The Commission offers two options to listed companies with regard to the Code:
- Adoption of any acceptable / established code from Greece or abroad, or
- Development of a company-specific code of rules and principles on corporate governance, which the company will then be obliged to apply, provided that each such company-specific code will be submitted in writing to the Hellenic Capital Markets Commission until March 31, 2011.
(For more information visit www.hcmc.gr)
The Code drafted by the Hellenic Federation of Enterprises (SEV) is essentially the only one in Greece that can be used to cover this requirement. Following a lengthy public consultation process, SEV released the finalised Code on January 26 (available at www.sev.org.gr). If a company does not comply with certain of the Code’s provisions, the Statement should include a description of each of those deviations and, most importantly, an explanation of the reasons for non-compliance.
- Any of the company’s corporate governance practices applied beyond the requirements under relevant national law (i.e. laws 3016/2002, 3693/2007 art. 37 and 2190/1920), as well as the location where these are publicized. Please note that the SEV Code is expected to be enriched with an appendix, which will list its provisions that exceed existing legal requirements, thereby assisting companies in complying with this disclosure obligation.
- Information required by Article 10(1), points (c), (d), (f), (h) and (i) of European Directive 2004/25/EC on takeover bids, only if the company is subject to that Directive.
- Information on the operation of the shareholder meeting and its key powers, and a description of shareholders’ rights and how they can be exercised. Please note that relevant changes brought about after the enactment of new law 3884/2010 should be taken into consideration.
- The composition and operation of the Board of Directors, its committees and any other administrative, management or supervisory bodies. Additionally, disclosure of the following would be considered as best practice: the number of BoD and committee meetings that took place within the year, the number of meetings attended by each member, short CVs of Directors, the length of their tenure including end dates, as well as procedures relevant to BoD performance assessment.
- A description of the main features of the System of Internal Controls and Risk Management in relation to the financial reporting process. It is expected that companies will disclose information on existing internal controls and procedures in the following areas: a) risk identification and assessment related to the reliability of financial reporting, b) financial planning and monitoring, c) fraud prevention and detection, d) roles and responsibilities of company officials, e) financial close process including consolidation (e.g. manuals, documented procedures, access rights, approvals, reconciliations, etc), f) Information Technology General Controls (ITGCs) which ensure the integrity and accuracy of financial information provided through the company’s systems and applications.
For the Greek version, click here.