On 12 March 2020, the long-awaited Ministry of Finance draft law under the title “Corporate governance of sociétés anonymes, modern capital market and incorporation of the 2017/828 EU Directive of the European Parliament and of the Council” was put under electronic deliberation until 2 April 2020.
The provisions of the draft law govern the management and internal operation of sociétés anonymes with shares or other securities listed on a regulated market operating in Greece. These said provisions may however, also be applied voluntarily by companies with shares not listed οn a regulated market.
Obligation to choose a specific corporate governance model
Companies must adopt and apply a specific corporate governance framework, depending on the size, nature, range and complexity of their activities. This framework must include four pillars of organisational structure, and in particular:
Changes in the composition and operation of the BoD
The main changes are the following:
The draft law provides for the minimum content of this Policy, which is approved by the BoD and submitted, as well as any revision thereof, for approval to the Hellenic Capital Market Commission.
Obligation to establish Remuneration and Nomination Committees
The obligation to establish both a Remuneration Committee as well as a Nomination Committee as separate committees from the BoD is established by law. Such provision was considered at a "soft law" level until today.
Enriched content of the Internal Regulation and the adoption of an Internal Regulation for the company’s major subsidiaries
The draft law defines the minimum content of the Internal Regulation of listed companies, which should incorporate, inter alia, the key features of the Internal Audit System with a minimum description of internal audit, risk management and regulatory compliance functions.
Additionally, listed companies should ensure that their major subsidiaries, as defined in the draft law, also adopt an Internal Regulation.
It is noted that the provisions of the proposed draft law introduce the obligatory confirmation by a certified auditor or audit firm that the company has indeed adopted an Internal Regulation in accordance with the required content required by the draft law.
Obligation of the listed companies to implement a Corporate Governance Code prepared by a body of recognized status
The flexibility of the companies to choose their preferred Code is maintained, under the “comply or explain” principle.
Strengthening the responsibilities of the Internal Audit Unit (IAU)
The responsibilities, the range of tasks, the way of appointment and the impediments referring to the appointment of the staff of the IAU are defined, with an explicit reference to the IAU Head, to whom increased responsibility is given.
A significant amendment is that the internal auditors’ reporting requirement to the Hellenic Capital Market Commission no longer requires the prior approval of the company's BoD.
Additional Disclosure and Transparency obligations
The following disclosure obligations by the company to the shareholders and the investing public are imposed, and in particular:
Moreover, specific duties for the Shareholders Service Unit and the Corporate Announcements Unit are also being put forth.
Penalties’ increase for the breach of the above obligations
The Hellenic Capital Market Commission may impose penalties on the company or the members of the BoD, consisting either of a reprimand or fine not exceeding 7% of the company's turnover for each year of infringement.
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