Eumedion welcomes the proposals of the International Auditing and Assurance Board (IAASB) to improve the audit quality. This is the core of Eumedion's comments on a consultation by the global audit standards setter.

The required disclosure of net short positions above 0.5% is valuable for institutional investors. This is stated in Eumedion's response to ESMA’s Call for Evidence on the functioning of the European Short Selling Regulation. 

Eumedion is positive about the Corporate Governance Action Plan, published by the European Commission in December 2012. It supports almost all the measures announced. This is the key message of a Eumedion letter sent today to the European Commission. 

One of the focal points (also known as its spearheads) of Eumedion is to reduce the amount of non-material disclosures in the financial reporting. Eumedion and the Confederation of Netherlands Industry and Employers VNO-NCW asked the Netherlands Authority for the Financial Markets (AFM) for its position in this matter. 

The joint Eumedion - VNO-NCW letter can be found here.

The AFM response letter can be found here.

Today, Eumedion published an update of its Corporate Governance Manual. The manual provides the institutional investors which are members of Eumedion with guidelines for taking part in and voting at the general meetings of the Dutch listed companies. The manual also offers an overview of the rights and responsibilities of shareholders of Dutch listed companies. The updated manual is applicable from January 1st, 2013 onwards and replaces the 2010 version.

Eumedion concurs with the International Accounting Standards Board (IASB) that the reporting on leasing should be improved. Therefore, Eumedion would welcome an appropriate accounting standard on this subject. This is the core of a Eumedion letter sent today to the IASB. 

Dutch institutional investors hold the majority of their shares in Dutch listed companies for a long period. More than 80% of the portfolio is held for 5 years or more and at least 55% of the investments are allocated to holdings of at least 10 years. These are the main results of a study, conducted by Tilburg University, on the duration of Dutch equity ownership by large Dutch pension funds and asset managers. The Dutch institutional investors investigated are the nation's largest pension funds ABP, Pensioenfonds Zorg en Welzijn, the pension fund for the care and welcare sector, PME, the industry-wide pension fund for metalektro, and Spoorwegpensioenfonds, the pension fund for the railway transport sector, as well as the Dutch asset managers Robeco (Hollands Bezit fund) and Teslin Capital Management. The study was commissioned by Eumedion and covered, roughly, the period 2003 to the first half-year of 2012.

Eumedion generally supports the initiative to develop a 'good practice guide' for engagement meetings between listed companies and investors in the UK market. Such a good practice guide can contribute to increasing the quality of the dialogue between listed companies and shareholders. This is the core of Eumedion's comments on the consultation document ‘Improving Engagement Practices by Companies and Institutional Investors’ of the UK Institute of Chartered Secretaries and Administrators (ICSA).

Eumedion criticises the working of accounting standard IFRS 8' Operating Segments'. This is the core of Eumedion's response to the International Accounting Standard Board (IASB) Post-implementation Review IFRS 8.

The strategic interests of both institutional investors and listed companies would benefit from a changing focus to “know more of less companies” instead of “know less of more companies,” speakers heard at the November 8th symposium in Utrecht of Eumedion, the Dutch corporate governance and sustainability forum, which includes most of the country’s biggest pension fund investors. The statement was strongly endorsed by the speakers, panelists and attendees. The theme of this year’s symposium was: “Long-term business strategy and long-term investors: it takes two to tango”.

More meaningful reporting by the supervisory directors and avoidance of boilerplate language in the Annual Report and Accounts are the main themes Eumedion participants will focus on during their dialogues with Dutch listed companies in 2013. The themes are incorporated in the so-called Eumedion Spearheads Letter 2013 that was sent to the 75 largest Dutch listed companies this week.

Eumedion is very much supportive of the International Auditing and Assurance Standards Board (IAASB) efforts to respond to the demand from users of financial statements, including investors, to make the statutory auditor's report more informative. Especially the proposal to insert an 'Auditor Commentary' in the auditor's report is, according to Eumedion, a step forward in increasing the relevancy and usefulness of the auditor's report for users. This is one of the key messages of Eumedion's comments to the Invitation to Comment (ITC) on IAASB’s indicative direction for the future auditor’s report. The comments were submitted today. 

A majority of listed companies in Europe appears larger than they are to investors. The consolidated financial statements include subsidiaries in full, even if these subsidiaries are only partly owned. Accounting standards require companies to do so.

Only two line items in the financial statements reflect the actual ownership of subsidiaries: ‘net income to common shareholders’ and ‘common equity’. This is insufficient for investors to properly assess the value and risks of companies. The position paper ‘Full consolidation of partly owned subsidiaries requires additional disclosure’ issued today by Eumedion highlights this issue in detail.

The concept of engaged share-ownership became more important in the 2012 proxy season. This is reflected in the increase in the number of votes casted at the Dutch AGMs and the fact that shareholders are taking an increasingly critical look at the proposals for amendments to the executive board's remuneration policy and at the proposals for the (re)appointment of supervisory directors. These are the key elements of the 2012 Eumedion evaluation report of the Dutch AGM season, which was published today.

Eumedion is not convinced that there is sufficient supportive evidence for regulatory interference in the small and vulnerable proxy advisory market. Clearly, introducing prescriptive regulatory measures on the voting advisors would be too severe. If it is decided to take EU policy action, Eumedion has a strong preference for non-binding guidelines (code of conduct) or recommendations to promote the quality and integrity of proxy advisory firms. This is the key message of Eumedion's comments on ESMA's Discussion Paper ' An Overview of the Proxy Advisory Industry; Consideration on Possible Policy Options'. The comments were submitted today.

Eumedion is not in favour of a European legislative initiative to improve the gender balance in the boards of European listed companies. However, in the selection and appointment process for new board members, the executive search company should support a range of candidates who add to the broader diversity of the board without compromising board quality, effectiveness and cohesion. This is Eumedion's central message in its reaction to he European Commission's consultation on gender imbalance in corporate boards in the EU.

A harmonised EU private law redress system is needed to protect shareholders of EU listed companies against a breach of any EU company law regulation. This is one of Eumedion's suggestions for future EU priorities in the field of corporate governance and company law in its reaction on the EC consultation on the future of European Company Law.

Today, Eumedion suggested two proposals to amend the European Commission's proposal to modernise the Transparency Directive. The objective of the proposals is to make the new rules more useful and less burdensome for long term institutional investors.

Eumedion is concerned that some of the proposals for a regulation and a directive on markets in financial instruments ('MIFID II and MiFIR') will seriously harm long term institutional investors' interest and their returns to European citizens as being pensioners, policy holders and savers. Eumedion writes this in a today's sent letter to the European Parliament. Eumedion hopes that the suggestions for amendments will be taken into account in the negotiating process between the European Commission, the European Council and the European Parliament.

The Eumedion Thesis Prize is awarded annually to the best doctoral thesis on environmental, social and/or corporate governance aspects of investing (ESG) and/or corporate social responsibility (CSR). The Thesis Prize aims to support and encourage excellence in sustainability and governance research and writing at a graduate level. 

Eumedion highly appreciates the European Securities and Markets Authority (ESMA) for publicly raising its concerns on the lack of a consistent view on materiality by preparers, auditors, users and in some cases accounting enforcers, as Eumedion wonders which body would have otherwise raised these concerns. Eumedion sees the inconsistent views as a potential threat to the quality of the financial statements of listed companies and harmful for investor interests and confidence. However, Eumedion questions whether a securities regulator should issue guidance regarding the concept of materiality. Eumedion thinks that the an international organisation like the International Federation of Accountants (IFAC) would be better equipped. This the core of Eumedion's response to ESMA's consultation paper 'Considerations of materiality in financial reporting'.

Eumedion is in strong favour of adding an additional prudentional assessment criterion for bank takeovers to address concerns about the consequences of a bank takeover for the financial stability. This is one of the elements of Eumedion's reaction to the European Commission's consultation paper on acquisitions and holdings in the European financial sector.

Eumedion supports the Basel Committee's initiative to revise the supervisory guidance for assessing the effectiveness of the internal audit function in banks. This is the core of Eumedion's reaction on the Basel Committee's consultative paper 'The internal audit function in banks'.

Eumedion is in favour of retaining the current requirement of the Prospectus Regulation to produce an auditor report for profit forecasts and profit estimates. Eumedion therefore supports the draft technical advice of the European Securities and Markets Authority (ESMA) to the European Commission on this issue. Eumedion expressed its view in a letter that was sent to ESMA today.

Financial innovation has led to the creation of new types of financial instruments that give investors economic exposure to publicly listed companies, commonly referred to as cash settled instruments. Those instruments can be used to acquire secret stocks in companies, which could give a false picture of economic ownership of publicly listed companies. In order to ensure that issuers and investors have full knowledge of the structure of corporate ownership, the notification requirement for substantial shareholdings in Dutch listed companies has been extended to cash settled financial instruments from 1 January 2012 onwards. Below you will find the details of the mandatory introduction of the notification requirement for cash settled instruments and of a policy rule regarding the calculation methodology of cash settled instruments.

The proposed framework for integrated reporting by  the International Integrated Reporting Council (IIRC) is a good start for the development an international reporting standard that really integrates a company’s financial and non-financial performance. Eumedion welcomes the IIRC’s proposals concerning forward looking statements and tangible environmental, social and governance targets.
Eumedion would have liked some suggestions on the auditor’s role in the assurance of an integrated report and some guidance on the status of the annual accounts in relation to an integrated report.
Eumedion, the corporate governance forum representing 69 institutional investors, submiitted its response to the IIRC discussion paper 'Towards Integrated Reporting - Communicating Value in the 21st Century' today.

Most of the proposed amendments to the Transparency Directive can rely on Eumedion's support, according to a today's published Eumedion position paper. This relates in particular to the European Commission's proposal to extend the scope of the Transparency Directive to certain cash settled financial instruments, and to the proposal for maximum harmonisation of the regime for the notification of a major holding.

The most important projects that previsously were added to the IASB agenda (contract revenues, leases, financial instruments) as well the revision of IFRS 8, are among the most pressing financial reporting needs, according to Eumedion's comment letter to the IASB Agenda Consultation 2011.

Eumedion is not in favour of the proposed Directive implementing a Financial Transaction Tax (FTT). If enacted, most transactions in financial instruments involving a financial institution are likely to become subject to the FTT from 2014 if at least one party is established in the European Union. In a position paper, Eumedion explains why she rejects the proposed Directive.

Eumedion informs the British Department of Business, Innovation and Skills (BIS) about its experiences with the binding vote on (amendments to) the remuneration policy of the management board of Dutch listed companies and with the works council's right to present its opinion on the proposed remuneration policy as part of the BIS consultation on its discussion paper on executive remuneration.

In its response to ESMA's call for evidence on empty voting, Eumedion shares its experiences with empty voting in the Dutch market. In the letter, Eumedion differentiates between i) vote borrowing, ii) certificates of shares, iii) anti-takeover foundations, iv) financing preference shares and v) employee stock ownership plans. Eumedion also presents some measures to mitigate the negative effects of empty voting.

Eumedion annually sends what is known as its ‘spearheads letter’ to the 75 largest Dutch listed companies. The spearheads letter comprises subjects that Eumedion participants would like to bring to the attention of the boards of the Dutch listed companies, which they may then put forward in the discussions outside and/or at the shareholder meeting. The spearheads for 2012 relate to risk (management) disclosures and the explanatory notes to the nomination for (re)appointment of the external auditor.

Most of our newsitems and press releases are published in Dutch. Please contact our office at info@eumedion.nl or +31 20 708 5888 for English.

In this year’s shareholder season, much time was again spent on discussion about remuneration and bonuses. Many Dutch shareholders showed their concerns in their dialogues with listed companies. In the United Kingdom, a comparable concern is growing, as the Financial Times describes in its article of October 2, 2011. 'Escalating executive pay levels and the mismatch between remuneration and company performance are causing increasing concern among shareholders, regulators, the general public and even politicians.'
Eumedion's executive director was also quoted in this article.

Today, Eumedion’s General Board has appointed Mr. Frederik van Beuningen (Teslin Capital Management) as Vice Chairman of Eumedion. He succeeds Ronald Florisson, who left Eumedion at the beginning of September, because he resigned from Robeco to start his own company.

Dutch institutional investors increasingly use environmental, social and governance information in their investment process. This so called ESG performance is also input for voting at shareholders meetings. But as the current quality of sustainability and governance information does not meet the information demands of institutional investors, research companies and analysts still send long questionnaires to listed companies. That is one of the conclusions form Eumedion's report "KPIs and Sustainability Performance". The Rotterdam Erasmus School of Economics and Shareholder Support did the research.