Gouvernement d’entreprise : l’AFG renforce ses recommandations sur le fonctionnement des conseils d’administration et l’information des actionnaires

On 25 January 2023, the Association Française de la Gestion financière (AFG) published the yearly update to its Recommendations on corporate governance (only available in French) ahead of the general meetings season of listed companies, which are intended to help management companies in the exercise of their votes.
To guide the members of the AFG in the exercise of voting rights, the AFG Board of Directors has decided in 1997 about the creation of the Commission of Corporate Governance, chaired until 2018 by Jean-Pierre Hellebuyck, assigning him in particular the task of developing a code of corporate governance. His works led to the publication in 1998 of these Recommendations on corporate governance, regularly updated since. The present 2023 document is the twenty-first version of these recommendations.
These recommendations constitute criteria intended to guide shareholders when voting on resolutions, in particular asset managers being members of the AFG . The present 2023 version of the Recommendations on corporate governance incorporates as main changes the following 3 points:
STRENGTHENING THE ROLE AND RESOURCES AVAILABLE TO DIRECTORS
An increased role for specialized committees:
– Exchanges between members of the audit committee free of interest and auditors to the accounts once a year at least, without the presence of the representatives of the company, are desirable.
– The audit committee must exercise control over extra-financial information communicated by the issuer, beyond the control of the accounting information and financial.
– The audit committee must ensure a structured capital allocation strategy enabling it to contribute to improving the creation of long-term value for the society.
– It is desirable for the appointments committee to be able to rely on a matrix of skills based on a formal process.
An autonomous budget for the board of directors:
– The board of directors should have an autonomous budget whose commitment and control would be placed under the responsibility of the non-executive chairman or lead director.
A GENERAL MEETING ATTENTIVE TO THE MESSAGES CONVEYED BY THE SHAREHOLDERS IN
THE EXPRESSION OF THEIR VOTE
– In the event of the rejection of a regulated agreement by the shareholders, they must to be aware of the consequences that the board intends to give to this rejection, particularly in terms of modifying these agreements.
– The issuer faced with significant opposition to a resolution must communicate to its shareholders the measures taken consecutively at the latest before the next general meeting.
– AFG recommends that the general meeting discuss the issues written submissions from shareholders, beyond the responses provided on the website of the issuer, and that the chairmen of the specialized committees can present their main works and answer specific questions, if necessary.
APPROPRIATE AND TRANSPARENT COMPENSATION
– AFG considers that the executive compensation policy should not provide for the possibility of exceptional remuneration.
– The compensation of the Chairman of the Board, particularly in the case of a former CEO, should be reviewed regularly in order to adapt to the evolution of its responsibilities. AFG is not in favor of maintaining long-term plans for a dissociated chairman, these having to be at least prorated.
– It is desirable that shareholders be informed ex post of the level achievement of each variable compensation criterion for executives in addition to the proportion set for these criteria.
The main axes of corporate governance are well known and widely discussed and represent a consensus among multiple European governance codes. The AFG invites small and medium-sized listed companies to make their best efforts to comply progressively with these Recommendations on corporate governance. From provisions for which a proportionate approach is possible, one can cite the separation of powers as well as for companies with a limited board of directors, the existence of specialized board committees on the selection of appointments and remunerations, whose functions could, initially, be exercised by directors free of conflicts of interest and particularly competent in the respective fields.
Finally, the AFG is particularly attached to maintaining a close link between the right to vote and the final shareholder, hoping that any reform of the law titles at European level preserves this link in the context of future developments, which plays a primordial role to ensure the maintenance of the rights available to shareholders in France.