Questions & Answers
Is the general meeting to be considered as an ‘administrative, management and supervisory body’? The general meeting is usually a company’s highest decision-making body. However, it seems that the general meeting is not mentioned once in any of EFRAG’s materials, such as Q&As, and the focus is on the Board of Directors, its committees and the CEO.
- Categorisation of the general meeting
Background
Annex II of the ESRS defines ‘administrative, management and supervisory bodies’ as follows: ‘The governance bodies with the highest decision-making authority in the undertaking including its committees. If in the governance structure there are no members of the administrative, management or supervisory bodies of the undertaking, the CEO, and if such function exists, the deputy CEO, should be included. In some jurisdictions, governance systems consist of two tiers, where supervision and management are separated. In such cases, both tiers are included under the definition of administrative, management and supervisory bodies.’
In contrast, the general meeting is a mandatory annual meeting in which an undertaking’s shareholders or owners exercise their decision-making powers. Matters within the decision-making power of the general meetings include the matters provided for in law or the articles of association, such as the remuneration and appointment of directors and auditors, adoption of the company’s financial statements, distribution of assets, discharge from liability of the executives, amendments to the articles of association and decisions relating to the company’s shares or share capital.
The Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings makes a clear distinction between the general meeting (or shareholder meeting) and the administrative, management and supervisory bodies and their committees.
Additionally, national Corporate Governance Codes make a similar distinction and provide guidance and recommendations regarding best practices for both the general meeting and the administrative, management and supervisory bodies.
Answer
No, the general meeting should not be considered an ‘administrative, management and supervisory body’. It is a separate governance body with specific powers attributed to shareholders or owners. The general meeting is not addressed by ESRS but instead by the Accounting Directive using, however, the term ‘shareholder meeting’ with respect to the Corporate Governance Statement and by the national Corporate Governance Codes.