A high-level conference in Brussels on 25 October discussed the issue of how investors and industry could best be protected from any future accounting debacles.
Director –General of DG Internal Market, Alexander Schaub, outlined the proposals put forward by the Commission in 2004 as part of its company law action plan. These proposals, which would amend the 4th and 7th company law directives, have three strands:
- to promote greater transparency concerning off-balance sheet transactions and related party transactions;
- all EU listed companies to produce a corporate governance statement explaining their internal checks and
- board members to have collective duty to prepare and publish financial statements.
The Commission was also looking at proposals to lessen the regulatory burden on SMEs by widening their exemptions from accounting rules.
Who sets the standards
A panel discussion agreed with Mr Schaub that it was the job of the market to set standards and not the regulators. It was agreed that over-regulation could inhibit companies from taking risks. The key to investor protection was not to compel directors to make statements on compliance but to provide investors with the information to make their own decisions.