OECD GOOD GOVERNANCE C.

The division of responsibilities among different

Objective of corporate governance
- Help policy makers evaluate and improve
 Legal
 Regulatory
 Institutional framework for corporate
governance
With a view to supporting economic efficiency,
sustainable growth and financial stability
- Help build an environment of trust, transparency and
accountability necessary for fostering long-term
investment, financial stability and business integrity
OECD Principles
- Intended to help policymakers evaluate and
improve the legal, regulatory, and institutional
framework for corporate governance and financial
stability.
Principles are intended to be:
 Concise
 Understandable
 Accessible
authorities should be clearly articulated and
designed to serve the public interest
o Governance requirements and practices
are typically influenced by an array of legal
domains
o Influenced by human rights and
environmental laws
D. Stock market regulation should support effective
corporate governance
o Stock markets can play a meaningful role in
enhancing corporate governance by
establishing and enforcing requirements
that promote effective corporate
governance by their listed issuers
E. Supervisory regulatory and enforcement authorities
should have the authority, integrity and resources to
fulfil their duties in a professional and objective
manner. Ruling should be timely, transparent and
fully explained
F. Cross-border-co-operation should be enhanced,
including through bilateral and multilateral
arrangements for exchange of information

What is corporate governance?

- Involves a set of relationships between a company’s

management, its board, its shareholders and
stakeholders
- Provides structure through which the objectives of
the company are set

Ensuring the basis for an effective corporate governance

framework

- Should promote transparency and fair markets, and

efficient allocation of resources. It should be
consistent with the rule of law and support effective
supervision and enforcement
 Requires a sound legal, regulatory and
institutional framework that the market
participants can rely when they
establish private contractual relations.

A. Develop with a view to its impact on overall

economic performance, market integrity and the
incentives it creates for market participants and the
promotion of transparent and well-functioning
markets
o Corporate form of organization of
economic activity is a powerful force for
growth
o Policy makers also have a responsibility to
put in place a framework that is flexible
enough to meet the needs of corporations
operating in widely different circumstances,
facilitating their development of new
opportunities to create value and to
determine the most efficient deployment of
resources.
B. The legal and regulatory requirements that affect
corporate governance practices should be
consistent with the rule of law, transparent and
enforceable.
o If new laws and regulations are needed,
they should be designed in a way that
makes them possible to implement and
enforce in an efficient and even handed
manner covering all parties
o Effective enforcement and sanctioning
powers to deter dishonest behavior and
provide sound corporate governance
practices