The  update of the corporate governance code for French listed companies published this month by AFEP/MEDEF has raised some telling questions about the governance of governance across the channel. Viewed against a backdrop of an agressive campaign on the part of French issuers seemingly aimed at censuring proxy research providers, the arrangements for the enforcement of the new code are particularly startling.

The creation of a "High Committee" whose job it is to "ensure the effective application of the fundamental governance rule of 'comply or explain'" will certainly have raised a few eyebrows among those investors who are used to the idea that the explanations are for their consideration. After all, are not the mechanisms of corporate governance chiefly to facilitate effective investor oversight? And if investor judgements about whether an explanation is acceptable or not become unimportant, what is the point of comply or explain in the first place?

This therefore begs the question, to whom are French companies likely to deem themselves more accountable - their own shareholders, or the High Committee? Well, that might depend on who's on the Committee. Let's take a look.

The code sets out that the seven member High Committee be composed of four individuals who are, or have been, executives of international size companies, and three representing investors or with sufficient legal knowledge to do the job. That makes a mjority of the Committee being of the 'issuer' persuasion. Just to be on the safe side, let's set down in stone that the Committee is also chaired by one of those with executive experience.

If I were a French chief executive faced with choosing between engaging meaningfully with shareholders whose opinions I may not always agree with, or obtaining a rubber stamp from a committee which was in the majority made up of my chums from corporate France, I know what my instinct would be. The acid test case of course will arrive where there's an explanation 'accepted' by the High Committee but considered inadequate by investors.

The real danger here is that investors may become disillusioned about the relevance of their input, causing constructive dialogue to dry out. It is well documented that, realistically, investors (and yes, even engagement providers!) have to focus the attentions of their engagement on those cases where they feel are likely to get most 'bang for their buck'. It is likely that a French issuer waving a High Committee rubber stamp for governance will be a good deal more difficult to win over in a dialogue about governance arrangements. And that, ultimately, would be to the detriment of shareholders and the development of flexible, pragmatic stewardship.