6.3.3 Uncertainty about liability regulation for publication ofcorporate governance statement

Although differentiations in the legal embedding of the corporate governance codes and the comply or explain principle have proved not to be an issue, the legal comparative research (chapter 4) revealed that considerable uncertainty exists about the rules on the duty and liability for the publication of the corporate governance statement in accordance with the requirements of the directive. On 22 April 2004 the EU Directorate General for Internal Market and Services launched an on-line consultation on i.a. clarification of board members' responsibility for drawing up financial statements and key non-financial information and the introduction of a corporate governance statement. The consultation closed on 4 June 2004 and there was no support for a definition of the term ' responsibility' at European level; it would be too difficult to reach a community-wide definition. However, many respondents were in favour of ensuring that the board members' responsibility for key non-financial information should also include the corporate governance statement and the risk management system. Therefore, article 1(8) of Directive 2006/46/EC nowadays states that the Member States must ensure that the company board members have the duty to ensure that the corporate governance statement is drawn up and published in accordance with the requirements of the directive and must make sure that their liability regulations apply to this duty. Nevertheless, the directive leaves it up to the Member States to decide further on this matter, which has resulted in vagueness, as summarised in table 6.3.3 below.

Information in literature and jurisprudence is hard to find and the issue regarding liability for the publication of corporate governance statements in accordance with the requirements of the directive is often mixed up with the discussion on liability for false or misleading corporate governance statements. Therefore, legal doctrine and the underlying study argue for more clarity for the sake of legal certainty and as a preventive strategy. But how to reach such clarity in the Member States, whilst this is a matter the directive leaves up to the Member States themselves to decide on? The directive only states that Member States shall ensure that their liability laws, regulations and administrative provisions apply. In the case of some countries the applicable regulation was discussed when the directive was implemented, in other countries only legal doctrine discussed the matter and jurisprudence is awaited for clarification. It is questionable whether this involves just a differentiation in implementation or a lack of implementation. This issue of uncertainty could easily have been prevented: if only the Member States had mentioned which liability regulation applies to the publication of the corporate governance statements (for example in the governmental documents related to the implementation or in the implementation regulation itself). When, in the near future, the Member States hopefully implement the amendments to Directive 2006/46/EG proposed below (see section 6.3.5), they should actually mention, in the governmental documents concerning the implementation or in the implementation regulation itself, the liability regulation that applies to the members of the administrative, management and supervisory bodies concerning the publication of the corporate governance statement. During this renewed implementation procedure Member States can assess whether the current applicable liability regulation suffices in actual practice, or whether other regulation needs to be assigned. Directive 2006/46/EC states that laws, regulations and administrative provisions on liability can apply to the breach of duty. The Directive provides for a 'made to measure' approach. It has possibly been concluded that administrative provisions with a system of fines suffice more than civil liability regulation; which requires further research but this is beyond the scope of the underlying research. Obviously, the implementation of the proposed amendments to the Directive does not need to be awaited and governments, legal doctrine and jurisprudence are invited to provide clarity at short notice.

Recommendation 3: When implementing the proposed amendments to Directive 2006/46/EC in the near future, the Member States need to mention the liability regulation that applies to the members ofthe administrative, management and supervisory bodies concerning the publication of the corporate governance statement.