CORPORATE GOVERNANCE PART ONE01
First revision: Aug.17, 2018
Last change: Aug.20, 2018
- G20/OECD Principles of Corporate Governance help policymakers evaluate and improve the legal, regulatory, and institutional framework for corporate governance, with a view to supporting economic efficiency, sustainable growth, and financial stability.
- The purpose of corporate governance is to help build an environment of trust, transparency, and accountability necessary for fostering long-term investment, financial stability, and business integrity, thereby supporting stronger growth and more inclusive societies.
- The principles also address the rights of the many stakeholders whose jobs and retirement savings depend on the performance and integrity of the corporate sector.
- Corporate governance involves a set of relationships between a company's management, its board, its shareholders, and other stakeholders. Corporate governance also provides the structure through which the objectives of the company are set, and the means of attaining those objectives and monitoring performance are determined.
- The Principles are presented in six different chapters:
Chapter I: Ensuring the basis for an effective corporate governance framework;
Chapter II: The rights and equitable treatment of shareholders and key ownership functions;
Chapter III: Institutional investors, stock markets, and other intermediaries;
Chapter IV: The role of stakeholders;
Chapter V: Disclosure and transparency; and
Chapter VI: The responsibilities of the board.
I. Ensuring the basis for an effective corporate governance framework
The corporate governance framework should promote transparent and fair markets and the efficient allocation of resources. It should be consistent with the rule of law and support effective supervision and enforcement.
II. The rights and equitable treatment o shareholders and key ownership functions
The corporate governance framework should protect and facilitate the exercise of shareholders' rights and ensure the equitable treatment of all shareholders, including minority and foreign shareholders. All shareholders should have the opportunity to obtain effective redress for violation of their rights.
III. Institutional investors, stock markets, and other intermediaries
The corporate governance framework should provide sound incentives throughout the investment chain and provide for stock markets to function in a way that contributes to good corporate governance.
IV. The role of stakeholders in corporate governance
The corporate governance framework should recognise the rights of stakeholders established by law or through mutual agreements and encourage active co-operation between corporations and stakeholders in creating wealth, jobs, and the sustainability of financially sound enterprises.
V. Disclosure and transparency
The corporate governance framework should ensure that timely and accurate disclosure is made on all material matters regarding the corporation, including the financial situation, performance, ownership, and governance of the company.
VI. The responsibilities of the board
The corporate governance framework should ensure the strategic guidance of the company, the effective monitoring of management by the board, and the board's accountability to the company and the shareholders.
Sources and Narratives
01. from: G20/OECD Principles of Corporate Governance, OECD, 2015
