Greece recently finalized full implementation of Shareholder Rights Directive II and updated the legal framework about corporate governance through Law 4706/2020. The most salient items include the following:
- Director category: the text provides definitions of non-executive directors and executive directors and establishes criteria to qualify for independence.
- Board composition: the law specifies that directors are either executive, non-executive, or independent non-executive. One third of board directors should be independent, and in any case at least two.
- Board leadership: the chairman should be a non-executive board member. In case an executive director chairs the board, the latter must appoint a non-executive deputy-chairman.
- Audit committee: the committee must include at least three members and can comprise (i) non-executive directors only; (ii) a mix of NEDs and third parties (non-directors); or (iii) third parties only. In any case, the committee should be majority independent. The committee chairman must also be independent from the company.
- Remuneration and nomination committees: in addition to the audit committee, the company must also establish split or combined remuneration and nomination committees. Only non-executive directors can apply for these committees membership. Furthermore, they shall be majority independent, comprising at least two I-NEDs, and chaired by an I-NED.
- Diversity: companies must develop a suitability policy regarding their board members, which must be approved by shareholders. When recruiting directors, the board must ensure that each gender shall represent at least 25 percent of directors. The Hellenic Capital Market Commission is expected to publish guidelines about the implementation of the aforementioned provisions.
- SRD II: incorporation of SRD II provisions into national legislation, including those relating to the identification of shareholders, the transmission of information, the facilitation of the exercise of shareholder rights, the engagement policy of asset managers and institutional investors, and the transparency of asset managers and proxy advisors.
By Ioannis Vamvakas, Analyst, ISS Governance Research & Voting