REPORT
2005-04-29
Dnr 100-563-2005
Copy to:
Utrikesdepartementet
Statssekreterare L-O Lindgren, N
Enheten för exportfrämjande och inre marknaChefen, UD-EIM
den
Göran Grén, UD-EIM
J Danelius, Justitiedepartementet
K Holmgren, Justitiedepartementet
M Ramstedt, Brysselrepresentationen
H Kjellin, Brysselrepresentationen
“Soft law - hard effects?”
Making “comply or explain” work for the Internal Market
We conclude that:
Corporate governance codes need to be seen from a free-movementperspective as well as from other perspectives.
The “comply or explain” notion is in conformity with Community
law as long as national corporate governance codes are truly voluntary and open. However, the “comply or explain” instrument needs
to be implemented in a way not to restrict free movement.
The implementation of national codes through stock exchange action
should be monitored.
The adoption of the Swedish code by the Stockholm Stock Exchange
is in conformity with the EC Treaty.
To avoid future risks of restrictions to free movement we propose that:
The Swedish Government, when monitoring the implementation of
the code in Sweden, should also look through “internal –marketglasses”.
At the Community level there is a need to consider how national
codes should be applied when companies are established or listed in
more than one Member State. It is not for us to propose how this
should be carried out.
BOX 6803, 113 86 STOCKHOLM
BESÖKSADRESS: DROTTNINGGATAN 89
TELEFON: 08-690 48 00, FAX 08-30 67 59
E-POST : REGISTRATOR@ KOMMERS. SE
WWW.KOMMERS.SE
Report
2005-04-29
2(15)
Contents:
1. The problem – why we are looking into this issue ............................ 3
2. The need for corporate governance ................................................... 3
3. Corporate governance models: Anglo-Saxon and Continental
models ................................................................................................... 4
4. The debate on corporate governance and voluntary codes ................ 5
5. What has the EU done to harmonize corporate governance codes? .. 7
5.1 Sweden and codes for corporate governance .............................. 9
6. “Comply or explain”: an analysis .................................................... 10
6.1 Different national corporate governance codes – a problem for
free movement? ............................................................................... 10
6.2 Corporate governance codes: private action or government
measure? .......................................................................................... 11
6.3 Article 39 of the proposal for the services directive – Codes of
conduct at Community level............................................................ 13
7. Conclusions, proposals .................................................................... 13
This report has been commissioned by the Ministry for Foreign Affairs
(Department for Export Promotion and Internal Market). The purpose is
to discuss whether or not voluntary codes, and in particular national corporate governance codes, can restrict free movement and infringe Community law.
Report
2005-04-29
1. The problem – why we are looking into this issue
The EU Internal Market provides for free movement of goods, services,
persons and capital. The basic notion is to make it as favourable and simple to do business between the Member States as it is to do business within a state. The National Board of Trade is a Swedish Governmental
Agency dealing with trade rules, including the rules of the EU Internal
Market. In this report, we have looked at the development of national soft
law codes for corporate governance with the aim of scrutinizing whether
these codes pose de facto problems to the free movement provided for by
the EC Treaty.
2. The need for corporate governance
One of the major characteristics of many large, listed companies is the
separation of ownership and management. This carries, within itself, a
potential conflict of interests between the company management (insiders) and the capital providers (outsiders) 1. This conflict can not be resolved easily by a contract since there are, for example, elements of uncertainty and information asymmetries2. Control mechanisms are therefore needed. The precise way in which those monitoring devices are set
up and implemented in a particular company defines the nature and characteristics of that company’s corporate governance. A brief definition of
corporate governance is then - the systems by which enterprises are managed and controlled.
The systems can be external safeguards or internal company structures.
The internal structures must at the same time enable procedures for internal control as well as efficient management.
Transparent financial reporting is essential for corporate governance. It
supports investor confidence by providing information about the condition, performance and risk profile of the firm. However, various factors
can hamper effective disclosure. Such factors include managerial advantages as regards information. A variety of enforcement mechanisms
that ensure proper financial disclosure are available (e.g. accounting
standards). These mechanisms are only effective however, where there
are proper corporate governance procedures.
1
Jorge Farinha, Faculdade de Economia da Universidade do Porto, Corporate governance: a survey of the literature April 2003 (revised November 2003).
2
The information asymmetries arise from the fact that the outsiders do not have access
to the same information as the insiders.
3(15)
Report
2005-04-29
4(15)
3. Corporate governance models: Anglo-Saxon and Continental models
The different corporate governance systems can generally be divided into
the Anglo-Saxon model (for instance in the USA and the UK) and the
continental model (for instance in Germany). Companies in the United
Kingdom and the USA generally comply with the Anglo-Saxon model.
The continental model is for example common in Germany.
The different aspects for the two models are summarized in the table below.
Table: Anglo-Saxon vs. Continental corporate governance. Capital-related aspects
Aspects
Anglo-Saxon
Continental
Ownership structure
Widely dispersed ownership;
dividends prioritized
Banks and other corporations
are major shareholders; dividends less prioritized
Role of banks
Banks play a minimal role in
corporate ownership
Important both in corporate
finance and control
Family controlled
firms
General separation of equity
holding and management
Family ownership important
only for small- and mediumsized enterprises
Management boards
One-tier (management) board
Two-tier boards; executive and
supervisory responsibility separate
Market for corporate
control
Hostile takeovers are the “correction mechanism” for management failure
Takeovers restricted
Role of stock exchange
Strong role in corporate finance
Reduced
Source: Lucian Cernat “The Emerging European corporate governance model: AngloSaxon, Continental, or still the century of diversity?” in Journal of European Public
Policy 11:1 February 2004, adapted from Rhodes and van Apeldoorn. Labour-related
parts of this table has been omitted since they lack relevance for this study.
The Swedish corporate governance structure shares aspects with both
models3. The ownership structure is similar to the one in the continental
model. That is, in general there is one dominating owner or group of
owners even if the total number of owners can be quite large. Takeovers
are however quite common in Sweden. Consequently, when it comes to
the market for corporate control, the Swedish system is closer to the Anglo-Saxon model than to the continental model.
3
Svensk kod för bolagsstyrning – förslag från kodgruppen SOU 2004:46.
Report
2005-04-29
The fact that European companies are very differently structured might
result in complications when common rules or guidelines are elaborated.
The possibility of creating a European corporate governance model is a
matter of dispute and three possible developments can be foreseen4:

The two models, the Anglo-Saxon and Continental, are in competition and one of the models will survive the competition.

It would be possible to create a hybrid model.

The two models are resistant to change. This is due to the fact that
corporate governance is a complex structure with systemic links
between its elements. The costs of changing the models would be
too high.
4. The debate on corporate governance and voluntary
codes
Company law has battled with the problems of corporate governance
since the 17th century. The relevance of corporate governance issues has
however further increased over the last twenty years.
In the late 1980s/early 1990s, a number of company failures such as
Maxwell Communications increased interest in corporate governance
issues. The European debate on corporate governance began in the United Kingdom. Most of the trade and industry actors advocated self regulation rather than changes within the legislation. In a report from the Cadbury Committee in 19925, a self-regulated code with the principle of
“comply or explain” was proposed for the UK.
The debate on corporate governance and the trend towards voluntary
codes of conduct (soft law) spread from the United Kingdom to the
Netherlands, France and most other EU Member States in the 1990s.
These codes were soft law instruments and in some countries competing
codes appeared. Germany was one of the last EU countries to adopt a
corporate governance code. The German decision on a code was taken in
2002. In the Nordic countries there are codes in Denmark, Norway and
Finland. In Sweden, a code will apply from July 2005.
The codes provide recommendations on different issues but the dominant
focus is on boards and board-related issues6. Examples of such issues are:

board membership criteria,

separation of the role of chairman of the board and CEO,
Lucian Cernat “The Emerging European corporate governance model: Anglo-Saxon,
Continental, or still the century of diversity?” in Journal of European Public Policy
11:1 February 2004.
5
Cadbury Committee (1992) Report of the Committee on the Financial Aspects of Corporate Governance, London:Gee.
6
M. Becht, P.Bolton and A. Röell “Corporate Governance and Control”, ECGI Finance
Working Paper no 02/2002.
4
5(15)
Report
2005-04-29

board size,

frequency of board meetings,

the proportion of inside versus outside (and independent) directors,

the appointment of former executives as directors,

age and other term limits,

evaluation or board performance,

the existence, number and structure of board committees,

meeting length and agenda, and

assignment and rotation of members.
Other non-board-related issues that tend to be included in the voluntary
codes are:

financial reporting,

the role of auditors,

executive compensation, and

the role of the Annual General Meeting.
Further company failures in more recent times, associated to accounting
frauds and other irregularities (Enron, WorldCom to mention a few) have
led to financial scandals. One consequence of this later development was
a major focus of interest on the interplay between internal control devices
and independent external auditing7. This led to a demand for tighter internal control and reporting in companies, for more transparency in managerial matters in companies including remuneration, for more and better
accounting information, and for the establishment of independent audit
committees and increased supervision of auditors.
In the USA the answer to these demands was the Sarbanes-Oxley Act in
2002. The Sarbanes-Oxley Act contains a number of principles and
standards. It is supplemented by detailed rules fixed by the US Securities
and Exchange Commission (SEC). The changes introduced by the Sarbanes-Oxley Act concern executive remuneration, shareholder monitoring and board monitoring. The Sarbanes-Oxley Act specifies that audit
committees shall comprise only persons who are independent.
7
Report on corporate governance in Denmark, December 2003 (European corporate
governance institute web site; http://www.ecgi.org/).
6(15)
Report
2005-04-29
The definitions and rules on how to determine such independence are
fixed by the rules of the SEC. These rules are however contentious. One
argument against them is that they are not appropriate as they wouldn’t
have prevented for example the Enron scandal, as this involved irresponsible and partly criminal conduct, particularly by external auditors.
5. What has the EU done to harmonize corporate governance codes?
The EC Treaty provides for the freedom of establishment and the free
movement of goods and services. The European Commission has a mandate to defend these basic freedoms. This can include harmonisation of
company and accountancy law. The Commission began to launch legislation aiming at harmonising accountancy law in the early 1960s8. This
effort resulted in a number of directives. The process of harmonisation
ceased during the 1980s and with the exception of directive 2004/25/EC
on takeover bids, no directive has been produced in the area of company
law since 1990.
Until quite recently, the Commission has refrained from taking any initiative in the area of corporate governance9. Differences in standards were
not seen to distort the free movement of goods or services. Due to the
principles of subsidiarity and proportionality, this area was left to the
Member States10.
With the dissemination of corporate governance codes, the question
about what should be done at the EU level in this area arose. The Commission consulted several experts in order to determine weather any action was needed11. The Consultancy company Ernst &Young carried out
a study in 1995. The conclusion was that the EU should set framework
principles for corporate governance of large companies in a directive.
The directive could be implemented by national law or by a national
code.
Weil, Gotshal & Manges carried out a study on corporate governance
codes in the EU Member States in 2002. The study concluded that there
was a high degree of convergence between the codes. Consequently, it
did not recommend the creation of a single code at the EU level.
8
Legal basis was article 54.3 g and now, after amendment, it is article 44.2 g of the EC
Treaty.
9
K. Lannoo and A. Khachaturyan “Reform of Corporate Governance in the EU”, CEPS
Policy Brief no 38 October 2003.
10
The principle of subsidiarity means that the EU should only implement measures that
are more efficient than measures decided on the national level. The principle of proportionality means that any EU-wide action should be proportional to the objective pursued. See article 5 of the EC Treaty and the Protocol on the application of the principles
of subsidiarity and proportionality.
11
See note 9 above.
7(15)
Report
2005-04-29
The Winter group
A working group, the High Level Group of Company Law Experts (“the
Winter group”) was created in 2002. The group’s task was to investigate
how progress in company law could be made through reviewing the corporate law directives and to make recommendations for the reform of
company law. Events such as Enron and WorldCom resulted, however, in
a modification of the group’s task. Consequently, corporate governance
matters were included in the group’s mandate. In November 2002, the
group released its report A Modern Regulatory Framework for Company
Law in November 2002.
Issues dealt with included the responsibility of financial reports, revision,
compulsory yearly publication of stock-exchange listed company’s corporate governance, and the remuneration of board members. The perspective of the proposals is the Anglo-Saxon corporate governance model12. Regarding a common code of conduct, the group concluded that the
Commission should not prepare such a code. This is because market
forces are the driving force behind the development of codes. The Commission’s resources are therefore, according to the working group, more
efficiently used in other areas of corporate law.
Commission Action Plan
In 2003, the action plan on “Modernising Company Law and Enhancing
corporate governance in the EU” recognized most of the proposals of the
Winter group. Priority should be given to the issues related to corporate
governance and the Commission should work for convergence through
different legislative acts and measures. The proposals shall improve the
legal framework for corporate activity aiming at increasing the competitiveness and effectiveness of European companies.
The Commission did not propose action to be taken to establish a European code of conduct. Instead it suggested that the EU should play a coordinating role in the Member States’ development of such codes. The
Commission approach to corporate governance issues differs from the
American approach in the Sarbanes-Oxley Act as it is not as detailoriented and rule-intensive.
One reason for the different approach is the more heterogeneous situation
in the EU when it comes to problems, markets and traditions. However,
the principles are the same in the EU and in the USA. These principles
also cover independent members of the boards and remunerations. According to the Commission’s action plan, the annual reports of listed
companies should contain a statement on their corporate governance
structures and practices, including voting rights and ownership details,
the composition of the supervisory board etc.
12
Intervju med Rolf Skog i Agenda 1/03 (Öhrling PricewaterhouseCoopers).
8(15)
Report
2005-04-29
The existence of a relevant code of conduct and the compliance or noncompliance with such a code by the individual company should also be
described (the comply-or-explain principle).
In certain areas, where the members of a company’s management have
conflicting interests, the action plan contemplates introducing requirements of independence for persons taking part in the decision-making
processes. One consequence is that the majority of the members of supervisory boards, audits or remuneration committees must remain independent.
The Commission’s follow-up to the action plan includes the 2004 recommendations concerning independent members of the board and remunerations. A new directive on shareholders’ rights aims to strengthen the
role of the shareholders.
Another initiative from the Commission is the setting up of the European
Corporate Governance Forum. It had its first meeting in January 2005
and their next meeting will be in June 2005. The purpose of the Forum is
to give credible policy advice to the Commission.
5.1 Sweden and codes for corporate governance
Corporate governance has, for a long time, been a matter for discussion
in Sweden. In 1999 new rules were introduced in the Swedish Companies
Act (Aktiebolagslagen) regulating among other things the shareholders’
meeting, the board of directors and auditing. In 2002, a committee
(”Förtroendekommissionen”) was established to enhance confidence in
business. One issue of confidence was weakness in the corporate governance system. The committee started to design a code in 2003. At the
same time, the industry also discussed the matter. A subgroup to the
committee was formed with members from the committee as well as representatives from industry.
The subgroup prepared a proposal for a code in 2003/2004. The Swedish
government had no active role in this work. The work on a Swedish code
closely followed the British code. The reason for this is the capital market perspective. The code covers issues such as:

the shareholders’ meeting,

the selection of board of directors as well as the auditors,

the remuneration of the auditors and the members of the board of
directors,

the board of directors’ tasks, size and composition,

the board of directors’ financial reporting, internal control and internal relationship to the auditor, and

the role of the CEO.
9(15)
Report
2005-04-29
6. “Comply or explain”: an analysis
6.1 Different national corporate governance codes – a problem for
free movement?
It is important to ensure that the development of national corporate governance codes does not restrict fundamental freedoms of Community law
when European companies operate across borders in the Internal Market.
These companies are dependent on the freedom of establishment and the
free movement of services and capital, as established by the EC Treaty.
However, the fact remains that any government or government-sponsored
measure which makes cross-border activities (e.g. transfer of capital) less
attractive constitutes, in principle, a restriction which is inconsistent with
Community law.
According to the European Commisson communication13 the existence of
various national codes is not seen as a problem. According to the European Commission, in the rare instances where national code provisions
are divergent, the "comply or explain" principle offers a satisfactory solution.
Take, for example, a Swedish company listed both in Sweden and in another Member State. Since the company is established in Sweden, it acts
under the Swedish Companies Act. The company therefore has to comply
with the Swedish corporate governance code, the Swedish Companies
Act and perhaps also the code of the other Member State.
Things can get really complicated if the code of the other Member State
has rules that contradict the Swedish Companies Act. In this case the
“comply or explain” instrument will show its importance so that companies avoid having to comply with several codes that (in the worst case)
contradict the binding law that the company has to comply with in the
country of establishment. The Stockholm stock exchange has recently
decided that foreign companies listed in Stockholm shall apply the code
of their home country, a rule that facilitates cross border activity.
To avoid problems it is therefore important that the national codes are
indeed fully voluntary and that the non-binding nature of the codes is
clearly stated in order to ensure legal security. The advantage of voluntary codes (soft law) as compared to legislative measures is that voluntary codes can be more demanding and outspoken14. Binding law limits
the scope and must consider reasonable punishment for non-compliance.
13
COM (2003) 284 final - Modernising Company Law and Enhancing Corporate Governance in the European Union - A Plan to Move Forward, page 11.
14
If a company deviates from a voluntary national corporate governance code, it is up to
the market (investors, journalists etc.) to judge. The “punishment” for unjustified noncompliance is negative publicity and less credibility in the market place.
10(15)
Report
2005-04-29
In our SOLVIT capacity15 we receive complaints relating to voluntary
schemes in general. One example is companies saying that voluntary
labelling schemes that are difficult to get access to become binding de
facto. Even if such national schemes or codes of conduct contribute to
improving the competition which is beneficial for consumers, we support
common solutions at Community level rather than different national initiatives which may make free movement of services and goods more difficult.
From a legal point of view, truly voluntary schemes normally do not infringe Community law as long as they are open and accessible for everyone without discrimination. However, companies should not have to
choose between being active cross-border on the one hand, and inducing
confidence through a corporate governance code on the other. Our conclusion is that corporate governance codes need to be seen from a freemovement-perspective as well as from other perspectives.
6.2 Corporate governance codes: private action or government
measure?
The EC Court of Justice has noted on several occasions that the free
movement rules do not only prohibit restrictions to trade emanating from
the State itself. These rules also apply, in particular in conjunction with
Article 10 EC (the principle of loyalty), where a Member State does not
adopt adequate measures to prevent obstacles to free movement created
by private individuals on its territory16. If the restrictive or protectionist
measures are supported by the state, the measures will most likely violate
Community law. In that respect, the famous case Buy Irish can be mentioned (case 249/81).
In that case the Court held that by adopting a series of measures designed
to promote Irish products including, in particular, the encouragement of
the use of a Guaranteed Irish symbol and the organisation of a large advertising campaign, Ireland had infringed Article 28 EC (free movement
of goods).
15
Effective Problem Solving in the Internal Market. SOLVIT is an on-line problem
solving network set up in 2002 in which EU Member States communicate via a database to solve disputes caused by the misapplication of Internal Market law by public
authorities. SOLVIT is informal, without legal proceedings and aims to find solutions to
problems within ten weeks. There is a SOLVIT centre in every Member State (as well
as in Norway, Iceland and Liechtenstein). National SOLVIT centres can help by dealing
with complaints from both citizens and businesses. The Member States share a network
that is coordinated by the European Commission. The Commission provides the database facilities and, when needed, helps to speed up the resolution of problems. The
Commission also passes formal complaints it receives on to SOLVIT – if there is a good
chance that the problem can be solved without legal action.
16
See e.g. case C-265/95 Commission v France and case C-112/00 Schmidberger which
concerned the free movement of goods and case C-281/98 Angonese concerning the
free movement of persons.
11(15)
Report
2005-04-29
The fact that those measures had been taken by a private company (the
Irish Goods Council) was not decisive given that the Irish Goods Council
had been set up at the initiative of the Irish Government, which appointed
the members of its Management Committee, granted it public subsidies
covering the greater part of its expenses and defined the aims and the
broad outline of the advertising campaign conducted by it. In those circumstances, the measures adopted were attributable as a whole to the
Irish Government and therefore not outside the scope of Article 28 EC.
Another example is case C-325/00, Commission v Germany, in which
the Court decided that a German quality label (Made in Germany) for
products in the food sector violated Community law. Even though the
system was set up by a private company, the Court classified it as a public measure attributable to the Government because of the involvement
and support of the German Government.
In a recent example from the 98/34/EC procedure, in which we are involved as the Swedish contact point17, the Commission delivered comments saying that guidelines which become effectively binding can create
barriers to trade. The guidelines in question were de facto binding. If a
company had not followed the guidelines, the Swedish Market Court
would have had the ability to try the matter. In this event, the Market
Court could issue a judgement ordering an economic operator to act in
accordance with the guidelines, making them effectively binding.
According to the Commission such guidelines would be compatible with
Community law if they were fully voluntary. A parallel might be drawn
to the emergence of national corporate governance codes. In our opinion,
these codes must be of a clear non-binding nature and accept that companies that choose to abide by codes of other Member States are allowed to
do so. One can argue that national corporate governance codes are not
capable of creating “free movement problems” in the same sense that we
see in the field of voluntary labelling schemes.
The Swedish corporate governance code
We consider that the involvement of the government in the shaping of the
code and in the forthcoming management of the code, is enough to conclude that the code can be regarded as a “state measure”.
The Swedish Consumer Agency’s guidelines on the labelling of textiles, skins for
clothing and goods made from down, Notification 2003/341/S, the draft was later withdrawn.
17
12(15)
Report
2005-04-29
6.3 Article 39 of the proposal for the services directive – Codes of
conduct at Community level
This article deals with self regulation at Community level in order to attain a common understanding of quality of services (e.g. professional
ethics, impartiality and the conditions to which estate agents are subject).
The codes are supposed to be drawn up by different sectors of the service
industry at the European level. The Commission will be involved in the
process and support the Member States in the implementation at national
level, which will be done by relevant professional bodies, organisations
and associations in the various Member States.
7. Conclusions, proposals
Conclusion 1: corporate governance codes need to be seen from freemovement-perspective as well
In Chapter 6, we have analysed whether corporate governance codes may
be in breach of the provisions on free movement of the EC Treaty. As we
have put it, it is against the letter and spirit of the EC Treaty, if companies are forced to choose between operating cross-border, on the one
hand, and inducing confidence through applying the rules of a corporate
governance code on the other. We have, in particular, looked at the effects when a company wishes to be listed in more than one stock exchange. An analysis of this kind is necessary to establish whether or not
the codes are legal or not.
It is somewhat surprising how little attention that has been paid to this
aspect of the emerging corporate governance codes. The European
Commission, in its Communication of 21 May, 2003 (see above), looks
at the issue from another perspective, namely the possible need for a European code. It concludes, wisely it appears, that a European code is not
desirable at this point. On the difficult topic of the free-movementperspective, the Commission merely states that “the ‘comply or explain’
principle offers a satisfactory solution”. The preparatory reports behind
the Swedish code (SOU 2004:46 and SOU 2004:130) are silent on the
matter.
Conclusion 2: the “comply or explain” notion is legal as long as the
codes are truly voluntary and open, but it needs to be implemented in a
way not to restrict free movement
13(15)
Report
2005-04-29
The “comply or explain” notion, when voluntary and open, appears to be
in conformity with the EC Treaty provisions on free movement. But its
effects may nevertheless be too restrictive to free movement if the accepted explanations are limited in a way that is disadvantageous to companies with cross-border activities.
It should be clearly foreseen, for instance, that a company that acts under
several codes needs to comply with only one set of rules. This may be
either one of two or more complete codes available, or a combination of
elements from two or more codes. It is for the markets to scrutinize the
action of the companies, to avoid “code-shopping” or a “race to the bottom”.
Conclusion 3: the implementation of national codes through stock exchange action should be monitored
The codes will have impact on the rules for listing in stock exchanges in
Europe. Therefore, one crucial point will be how the stock exchanges
will act to implement the codes. Action in the form of generally applicable rules for listing is of course the most important, but individual cases
of listing or de-listing will also need to be looked at. If the end result is
that a company suffers from having been active cross-border, the whole
issue of legality of the codes will be put on the table.
Conclusion 4: the current situation in Sweden is in conformity with the
EC Treaty
We have criticized the fact that the preparatory reports behind the Swedish code are silent on the issue of free movement. In our view, a full
analysis of the interplay between the Swedish code and relevant EC Treaty provisions should have been undertaken before adoption of the code.
Nevertheless, we conclude that the result is in conformity with the EC
Treaty. This is due to the fact that the Stockholm stock exchange, in its
implementation decision, so clearly has highlighted to the possibility of
“explaining” through reference to other codes.
Proposal 1: the Swedish Government, when monitoring the implementation in Sweden, should also look through “internal-market-glasses”
14(15)
Report
2005-04-29
Above, we have highlighted the aspects that we feel need to be addressed
to ensure the legality of the emerging codes, and we have concluded that
the Swedish situation at present is in conformity with the EC Treaty.
Notwithstanding this, the situation obviously will be monitored continuously. We do not wish to encroach upon the prerogative of the Government bodies responsible for financial market affairs. We do, however,
wish to emphasize that such future monitoring will need to be complemented with a look through “internal-market-glasses” as well.
Proposal 2: at the Community level there is a need to consider how national codes should be applied when companies are established or listed
in more than one Member State.
We have suggested that the Swedish Government should monitor the
effects of the Swedish code. This need goes for the Community level as
well. It is not for us to propose how this should be carried out.
15(15)