The Institute of Directors has recently published guidance and principles on corporate governance for unlisted companies in the EU. The guidance and principles are an initiative of the European Confederation of Directors’ Associations (ecoDa). There are fourteen principles of good governance in total: nine principles apply to all unlisted companies and the remaining five principles are aimed at larger or more complex companies. Examples of the first nine principles are:
- the size and composition of the board should reflect the scale and complexity of the company’s activities;
- the board should meet regularly to discharge its duties, and be supplied in a timely fashion with appropriate documentation;
- all directors should receive induction on joining the board and should regularly update and refresh their skills and knowledge; and
- family-controlled companies should establish family governance mechanisms that promote coordination and mutual understanding amongst family members, as well as organise the relationship between family governance and corporate governance.
Adherence to the principles is entirely voluntary but ecoDa hopes that the principles will provide a foundation upon which individual member states can develop country-specific principles. As regards UK companies, any such voluntary principles would be in addition to the usual statutory duties which already automatically apply to all directors and are now contained in the new Companies Act 2006.