Ethics and governance in the European Financial centers

A new version of the Luxembourg Code of Goverance.

“The Ten Principles of Corporate Governance of the Luxembourg Stock Exchange” has recently undergone a general revision and the new version is now available. This revised version has been validated by the board of directors of the Luxembourg Stock Exchange and enters into force on 1 October 2009.

The new version has maintained the original structure of the ten principles by continuing to rely on three sets of rules: principles (“ comply ”); recommendations (“ comply or explain ”), that is to say apply or explain if they do not apply; and finally guidelines.

These ten principles therefore represent a framework of corporate governance that is highly flexible and suitable for all types of businesses operating in Luxembourg.

Unfortunately they did not change the critical point for the 9^th principle

Integrity is not a principle but a recommendation: the 9th recommendation under the 9th principle, which requires "strict rules": all the companies that were involved in the scandals of the last years had "strict rules". The Luxembourg code of governance still allows company to find reasons why integrity of accounts should not be applicable.

Additionally the word "stakeholders" is only quoted in the preamble, but not in the core text. Especially, the 9^th principle states that « The board will establish strict rules, designed to protect the company’s interests, in the areas of financial reporting, internal control and risk management ». I thought, from a governance and CSR point of view, it was the stakeholders’ interest that had to be protected.

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