Increased scrutiny of non-executive directors proposed by EC chief

14 June 2010

European companies may soon be set to see increased scrutiny of their non-executive directors.

Under proposals set out by Michel Barnier, the commissioner for the internal market for the European Commission (EC), regulators may attend board meetings of financial institutions in the future.

An EC green paper laying out the plan to improve governance standards stated: "Some supervisors [may] attend board meetings to assess if non-executive directors function effectively and are sufficiently challenging vis-a-vis management."

It was added that assessments of such meetings and those present in them may help boards function more effectively, reports eFinancial News.

However, some concerns have been raised about the policy, with an unnamed former fund manager telling the news provider that non-executive directors may end up feeling less motivated to perform well in their job if a supervisor is there.

Earlier this month, the EC stated that poor corporate governance at banks had played a role in allowing the financial crisis to take place, reported the Wall Street Journal.