How can boards stay updated with the latest regulations as the complexity of corporate governance continues to grow?
In a recent presentation at the DEB executive chair summit, Marianne Ramel and Anna Berntorp of DLA Piper explored the most recent developments in corporate governance, providing valuable insights for board members and executives. Read our learnings from the event in this blog post.
Meet the Experts
Marianne Ramel is a partner in DLA Piper’s Corporate/M&A group and head of its China Desk. She regularly advises international and Swedish companies on M&A, joint ventures, and corporate governance, particularly in cross-border transactions. Marianne is also active in the firm's banking and finance group and has extensive experience in advising on project finance, real estate finance, sustainability-linked loans and bond finance. Marianne has worked for many years in the City of London, Beijing and Stockholm. Marianne is both a Swedish Advokat and English Solicitor.
Anna Berntorp is a partner in DLA Piper’s Regulatory and Government Affairs group, focusing on governance and compliance in private and public companies. She regularly advises Swedish and international companies on corporate governance and capital market compliance regulations as well as transactions on the capital market such as IPOs, takeovers and public capital raisings. Anna has extensive experience in advising on corporate governance, including board work, general meetings, and remuneration and incentive matters.
Our experts shared their insights during d.executive summit 2024. Read about our learnings here.
Companies Can Now Hold Digital Shareholder Meetings
Since January 1, 2024, companies can hold entirely digital shareholder meetings if stipulated in their articles of association. However, this is not permitted for companies adhering to the Swedish Corporate Governance Code.
The biggest advantage is that digital meetings can increase shareholder participation by removing geographical barriers, and reduce costs and negative climate impact associated with travel and venues. However, there are concerns about reduced opportunities for shareholders to interact directly with the board and management. Moreover, technical and confidentiality issues have also caused debate.
Companies should ensure robust digital platforms and clear guidelines for participation to mitigate these challenges.
Legal Trends in ESG
Our experts provided us with a list of trends in environmental, social, and governance-related (ESG) legal subjects:
Sustainability Principles: Corporate governance codes worldwide are increasingly incorporating sustainability principles.
Mandatory Reporting: Voluntary self-regulation in sustainability reporting is shifting towards mandatory disclosure requirements, with the CSRD being one example.
Litigation Risks: Sustainability risks bring new litigation and accountability challenges.
Stakeholder Pressure: There is growing pressure from stakeholders for boards to clarify their duties, including considering sustainability factors.
Diversity Requirements: There are heightened demands for ensuring diversity within boards, including new legislation on gender balance adopted within the EU.
Due Diligence: Enhanced due diligence in supply chains is becoming essential and mandatory with the adoption of the CSDDD.
New Corporate Forms: Emerging corporate structures are designed to balance various stakeholder interests more effectively.
Scrutiny of Foreign Direct Investments in Sweden
The global economy, geopolitics, and protectionism are driving increased scrutiny of foreign investments. National authorities wish to control risks when foreign actors acquire influence in companies that conduct protection-worthy activities.
FDI Act: The Swedish Foreign Direct Investments Screening Act (2023:560) aims to manage risks when foreign players acquire influence in Swedish companies involved in protection-worthy activities that may have a harmful impact on Sweden's security or on public order or public security in Sweden.
Security Protection Act: The Protective Security Act (2018:585) works in tandem with the FDI Act. The screening system under this Act covers organizations that conduct security-sensitive activities.
EU Regulation: The EU Regulation on Foreign Subsidies Distorting the Internal Market (2022/2560) lays down rules and procedures for investigating foreign subsidies that distort the internal market and for redressing such distortions.
Practical Advice: Companies and investors must navigate these regulations carefully, understand their obligations and the notification process to various authorities, including the Inspectorate for Strategic Products (ISP).
5 Practical bits of Advice for Boards
Given all the information we have received so far, what can board members do to improve sustainable growth for their companies?
Stay Informed: Boards must stay abreast of the latest regulatory developments and understand their implications on corporate governance.
Digital Transition: For companies considering digital shareholder meetings, invest in reliable technology and establish clear protocols to ensure smooth execution.
Embrace ESG: Incorporate sustainability into your corporate governance practices, ensure robust reporting, and address stakeholder expectations and thereby create stakeholder’s value.
Diversity and Inclusion: Actively work towards diversifying board composition, considering gender, ethnicity, and professional backgrounds to enhance board performance.
Navigate Foreign Investment Scrutiny: Understand the requirements of the Foreign Direct Investments Screening Act and Security Protection Act, and ensure compliance with all notification and due diligence obligations.
How to Deal with the Growing Legal Complexity?
The insights provided by Marianne Ramel and Anna Berntorp highlight the critical areas that boards need to focus on to navigate the evolving regulatory landscape effectively.
The increasing complexity of corporate governance demands that boards are proactive and well-informed. By staying updated on new laws and regulations, embracing digital transitions, and prioritizing ESG and diversity, boards can enhance their governance practices and ensure long-term success.
Thank you Anna & Marianne for sharing your expertise and developing Swedish board work together with us.