Shareholders and Stakeholders: Key Players in Corporate Governance

Enhancing Transparency and Accountability

The EU’s Market Abuse Regulation (MAR) requires listed companies to disclose certain transactions involving their shares or debt instruments within three business days. This regulation aims to prevent insider trading and ensure that investors have access to timely information.

Disclosure Requirements

Under MAR, persons discharging managerial responsibilities (PDMRs) are prohibited from conducting transactions on their own account or for the account of a third party during a 30-day “closed period” before an interim financial report or year-end report is announced. This prohibition does not apply to chief accounting officers (CAPs).

• Listed companies are required to make available information about their board members’ and CEO’s shareholdings on their website.

The Management Body: Responsibilities and Liabilities

The management body, comprising the board of directors and senior executives, is responsible for overseeing the company’s operations and ensuring its long-term sustainability. Under the Companies Act, the board must act in the best interest of the company and exercise independent judgment when making decisions.

• Key responsibilities of the management body include:
  • Setting the company’s overall goals and strategy
  • Identifying ESG risks and opportunities
  • Ensuring compliance with laws and regulations
  • Ensuring that the company’s disclosure is transparent, accurate, reliable, and relevant

Indemnities and Insurance

A company may not indemnify its directors for their liability to the company. However, directors’ and officers’ liability insurance is permitted.

Stakeholders: A Key Consideration in Corporate Governance

Under the Companies Act, the purpose of a limited liability company is to generate profit for its shareholders. However, the management body has discretion to consider the interests of other stakeholders, such as:

• Employees
• Customers
• Suppliers
• The wider community

as a means to achieve long-term shareholder value.

Employee Representation on the Board

Where the average number of employees exceeds 25 or 1,000, respectively, employee representatives may be appointed to the board. These representatives have the same rights and duties as non-employee directors.

Corporate Social Responsibility and ESG-related Matters

The EU has implemented various laws and regulations related to environmental, social, and governance (ESG) issues, including:

• Anti-discrimination
• Anti-corruption
• Work environment
• Employment protection
• Employee participation
• Corporate governance

Listed companies are required to prepare a corporate governance report as part of their annual accounts.

Conclusion

Overall, the management body plays a crucial role in corporate governance, overseeing the company’s operations and ensuring its long-term sustainability. Stakeholders, including employees and other non-shareholder groups, also have a significant impact on the company’s decision-making processes.