By 10 June 2019, Romania should have implemented European Directive 828/2017 on the exercise of certain shareholders’ rights in publicly traded companies, but the document is still under public debate. The Directive brings new provisions concerning the involvement of shareholders in relation to the remuneration granted to directors of companies in which they have invested and new requirements for making available to the public a detailed set of information on amounts granted to these persons.
The Directive aims to increase the involvement of shareholders with regard to the remuneration of directors, by means of voting on the Remuneration Policy applicable to the latter and by means of the Remuneration Report attesting how the policy has been applied. The Directive also aims to increase the transparency of the amounts received by these persons by providing a legislative framework binding companies to make available to the public the exact amounts received by the directors of listed companies.
In this context, KPMG Romania has launched an analysis of new legislative requirements on the remuneration of directors of listed companies.
This analysis includes a detailed description of these new legislative requirements stemming from the implementation of the Directive in Romania’s national legislation, a summary of the national and European legislative framework, as well as an analysis of the current degree of transparency on remuneration of persons covered by the Directive (what type of information is available to the public, the degree of comparability and how to show such information), as well as to what degree the current policies and practices on remuneration of directors are in accordance with the new provisions introduced by the Directive.
“At present, companies make available to the public a low level of information. Of the 16 companies surveyed, there is no company that fully meets the requirements of the Remuneration Policy Directive. As regards the Remuneration Report, even though some companies do not prepare a formal remuneration report, they observe some of the requirements of the Directive on the publication of information on the remuneration of directors. There are even two companies whose remuneration reports fully comply with the requirements of the Directive”, explains Mădălina Racovițan, Tax Partner and Head of People Services, KPMG in Romania.
Corporate governance of companies in the European Union is an area of interest to the European Commission, and this is why the Directive aims to ensure a consolidated legislative framework, made uniform at EU level, which would result in an increase in the long-term sustainability of European companies, more effective monitoring, greater transparency on decision-making processes, more active involvement by shareholders and the discouragement of practices and decisions that generate an artificial increase in revenues in the short term.
Thus, the means of remunerating the directors of listed companies and the alignment of their interests (through the remuneration received) to the interests of the shareholders, as well as making this information transparent for the market are key-issues in the new regulations.
“Our analysis aims to represent a useful and reliable guide for those interested in the transparency level of the companies listed on the Bucharest Stock Exchange, as well as for companies which are listed or intending to become listed, which should help in identifying the aspects to be considered with regard to the remuneration of directors”, adds Racovițan.
Racovițan concludes: “After the entry into force of the amendments to Law no. 24/2017 on issuers of financial instruments and market operations, we expect a period during which companies listed on the Bucharest Stock Exchange will become compliant with the new requirements. Although the new Directive brings more stringent compliance requirements, with additional administrative burdens involving additional costs and resources which will have to be allocated by listed companies, the Directive aims to provide a coherent legal framework at the European Union level, which encourages dialogue between all stakeholders, ensures the long-term sustainability of European companies and results in better monitoring and practices in the Member States of the European Union.”
About KPMG
The KPMG is an international network of member firms providing Audit, Tax and Advisory Services in 153 countries, with 207,000 professionals worldwide. Independent members of the KPMG network are affiliated to KPMG International Cooperative (“KPMG International”), a Swiss entity. Each member of the KPMG network is a standalone and legally separate entity.
In Romania and Moldova, KPMG has six offices located in Bucharest, Cluj-Napoca, Constanța, Iași, Timișoara and Chișinău.
Additional information:
Maria Stancu
Marketing Director
Tel: +40 (372) 377 800
Mobile: +40 (744) 631 102
Fax: +40 (372) 377 700
e-mail: mstancu@kpmg.com
