A provision on country-by-country reporting has been added to a new draft text of the EU’s shareholder rights directive which is currently being revised by European lawmakers.
It appears in the final ‘compromise’ text approved by the European Parliament’s Economic and Monetary Affairs Committee, known as ECON in EU jargon, this week.
“Increased transparency regarding the activities of large companies, and in particular profit made, taxes on profit and subsidies received, is essential for ensuring the trust (underlined) of shareholders and other EU citizens in companies,” the text says.
“Mandatory reporting in this area can therefore be seen as an important element of the corporate responsibility of companies to shareholders and society.”
It has been proposed in the draft by Molly Scott Cato, a UK MEP and former economics professor.
The ECON group has now passed its text, in the form of an ‘opinion’, to the legal affairs committee (JURI) which is heading up the Parliament’s work on the ShareholderRights Directive revision, where it will be subject to further wrangling and, no doubt, compromise.
Whether the text as written will appear in the final legislation is doubtful, with some in Brussels seeing its inclusion as a ‘bargaining chip’ which can be sacrificed at a later date, given that country-by-country reporting is already included in the existing non-financial reporting directive. But it is a sign of pressure being brought by legislators on the issue.
The text from the ECON committee also includes a provision that the ratio between the pay of directors and employees in companies should be included in remuneration policies.
JURI will vote on a final text later this month. This will then go to the full Parliament’s plenary for a vote at a date to be decided, though it could be while Luxembourg holds the rotating Presidency of the government-level Council of the European Union in the second half of the year. The finalized revision to the Shareholder Rights Directive, Brussels insiders reckon, could be in place in around a year’s time. Link to ECON documents page.