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AMF proposes enhanced investor information when evaluating boards of listed companies
18 December 2023

AMF proposes enhanced investor information when evaluating boards of listed companies

In the 2023 edition of its report on corporate governance and executive compensation in listed companies, the AMF reviews the regulatory developments of recent months and assesses the quality of the information published. In a section dedicated to the assessment of boards of directors, the AMF makes recommendations to improve the information provided to the market and proposes ideas for the development of the AFEP-MEDEF Code and its Application Guide.

The AMF devoted the first part of its report to recent developments in corporate governance. It discusses the ongoing developments at European level regarding non-financial reporting obligations for companies through the Corporate Sustainability Reporting Directive (CSRD), which has just been transposed into national law, and corporate sustainability due diligence (the proposed CSDD Directive). As in previous years, sections are also devoted to the shareholders general meetings held over the past year, in particular the resolutions on climate change.

In the context of the digitalisation of the economy and the international development of shareholder engagement, the AMF once again calls on the various stakeholders to work together to enable the development of hybrid general meetings in France in the short term, allowing shareholders to vote remotely and live. As highlighted in its 2021 report, the AMF reiterates the importance of taking pragmatic steps, in consultation with the various stakeholders, to enable the development of live voting on the Paris Stock Exchange in the short term.

As part of its annual analysis of the information published by companies, the AMF has decided this year to devote a section to the evaluation of boards of directors. According to the AFEP-MEDEF Code, each board of directors should consider the suitable balance between its members and those of its committees, and should periodically consider the extent to which its organisation and operation are suited to its tasks.

Of the 50 companies in the sample analysed by the AMF, 92% carried out an evaluation of their board in 2022, devoting at least one item on their agenda to a discussion of its operation. The vast majority go beyond the provisions of the AFEP-MEDEF Code each year by asking directors to complete self-evaluation questionnaires or, more rarely, by organising dedicated interviews. However, 16% do not specify whether they have evaluated the individual contribution of each director over the previous three years. Furthermore, information on the follow-up to these evaluations is often incomplete.

In practice, the evaluation of the operation of the board by the companies surveyed involves not only an evaluation of the processes in place, but also an evaluation of the board's ability to consider important issues by ensuring that directors have received adequate information and training.

Recommendations and ways forward for the AFEP-MEDEF Code

In its report, the AMF makes a number of recommendations and identifies areas for discussion with a view to improving the AFEP-MEDEF Code. For example, it recommends that listed companies engage an external consultant to evaluate the board at least once every three years and ensure that the consultant is independent of the company and its officers. The AMF calls on the AFEP and the MEDEF to amend the Code to include recommendations on the use of an independent external consultant, the holding of one-on-one interviews and the publication of questionnaires allowing companies to select the questions they consider relevant to evaluate the board.

In order to provide investors with quality information, the AMF also presents good and bad practices, in particular to improve information on the results and follow-up of evaluations.

Given the frequency of resignations or early departures of directors, the AMF recommends that companies systematically consider whether information on such departures is privileged, particularly when the departure is due to strategic disagreements. Whenever information is likely to have an impact on the share price, it should be disclosed to the market as soon as possible.

In addition to the evaluation of the board of directors, the AMF report makes a number of observations on corporate governance and the compensation of officers. Once again this year, the AMF notes that some companies consider directors who have been with the group for more than twelve years to be independent, without providing a convincing and detailed explanation. It calls for clarification of the Code's definition of independence. 

Finally, the AMF will ask the High Committee for the Financial Markets in Paris (HCJP) whether it would be appropriate to clarify the law concering the possibility and, where appropriate, the procedure for a company to withdraw a resolution on the agenda of a general meeting.

In light of this work, the AMF has updated its recommendation 2012-02 to take into account the new recommendations and areas for discussion issued this year.

About the AMF

The AMF is an independent public authority responsible for ensuring that savings invested in financial products are protected and that investors are provided with adequate information. The AMF also supervises the orderly operations of markets.Visit our website

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