The Code of good governance of listed companies in Spain

The Unified Code of Good Governance of Listed Companies (hereinafter the Unified Code) was passed in Spain in May 2006, as a unified document. In June 2013, a partial revision of the Unified Code was approved, with the purpose of adopting various legislative initiatives that have affected several of its recommendations.

In recent years, initiatives related to good practices with regard to good governance have proliferated. Spain is not foreign to this movement and has achieved significant progress in the field of good governance. In particular, it has expanded the framework of good governance in Spain, with the goal of improving efficiency and responsibility in the management of Spanish companies and, at the same time, setting national standards at the highest level of compliance with respect to international criteria and principles.

The new Code of Good Governance of Listed Companies (the Code of Good Governance), of the CNMV of 18 February 2015, fully responds to the following objectives:

• To ensure the adequate functioning of the governing and managing organs of Spanish companies to lead them to the highest level of competiveness;
• To generate trust and transparency for national and foreign shareholders and investors;
• To enhance the internal control and corporate responsibility of companies; and
• To assure the adequate distribution of functions, tasks and responsibility within companies, from the perspective of maximum precision and professionalism.

In this respect, the Commission of experts began to differentiate those questions that were proposed to improve the existing regulatory framework, which resulted in Law 31/2014, of 3 December 2015, modifying the Capital Companies Act to improve corporate governance, from those that constituted recommendations for monitoring voluntary subjects at the beginning of the complying or clarifying period, which are contained in this Code of Good Governance.

Revision of the Code of Good Governance of Listed Companies

The new Code of Good Governance presents certain developments which deserve to be highlighted.

• The Code of Good Governance adapts a new format that sets out to distinguish and identify the principles that, in each case, inspires the concrete and specific nature of the recommendations.

Those principles are gathered in the form of paragraph II of the Code of Good Governance.

• A good number of the recommendations of the Unified Code of 2006 have been incorporated as legal rules (in issues such as the exclusive competences of the general meeting of shareholders or of the board of directors, the separate voting agreements, the splitting of votes, etc.), and therefore do not form part of the Code of Good Governance.

In the same sense, the definitions of the distinct categories of directors have been contained, firstly, in Regulation ECC/461/2013, of 20 March 2013, and, more recently, in the Capital Companies Act, and as such are not included in the Code of Good Governance.

• Lastly, the incorporation of specific recommendations on the subject of corporate social responsibility must be noted.

Nevertheless, the importance of social corporate responsibility of a company is a fact that is becoming more and more settled which demands adequate attention on the part of corporate governance of companies and, therefore, cannot stay on the margin of the Code of Corporate Good Governance recommendations.

Source: Comisión Nacional del Mercado de Valores (CNMV)

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