International codes and principles of corporate governance
摘要：-RelevanttopaperP1 Part2theContents Introduction Therearesixmainprinciples,buteachofthemainprincipleshasanumberofsupportingprinciples.(OECDPrinciplesof...
- Relevant to paper P1
Part 2– the Contents
Introduction
There are six main principles, but each of the main principles has a number of supporting principles. (OECD Principles of Corporate Governance – 2004 Edition, © OECD 2004)
Principle I: Ensuring the basis for an effective corporate governance framework
‘The corporate governance framework should promote transparent and efficient markets, be consistent with the rule of law and clearly articulate the division of responsibilities among different supervisory, regulatory and enforcement authorities.’
This principle is concerned with the framework for good corporate governance that is provided by the stock market and financial intermediaries, the regulation of the markets and the information that is available to investors about companies (‘transparency’ in the markets). It is useful to think about this principle in terms of countries that fail to provide transparency in markets, or stock markets that function efficiently, or markets in which the rule of law is fair and properly applied.
Principle II: The rights of shareholders and key ownership functions
‘The corporate governance framework should protect and facilitate the exercise of shareholders’ rights. This principle is concerned with the basic rights of shareholders, which should include the right to transfer the ownership of their shares, the right to receive regular and relevant information about the company, the right to vote at general meetings of company shareholders, the right to share in the company’s profits and the right to remove directors from the board.’
These basic shareholder rights might seem ‘obvious’. However, there are countries in which these rights do not properly exist, especially for foreign shareholders. For example the laws of a country may permit a company to insist that shareholders wishing to vote at a general meeting of the company must attend the meeting and cannot be represented by a proxy. This requirement in effect would remove the right to vote of most foreign investors, who do not have the time to attend general meetings in person in countries around the world.
Principle III: The equitable treatment of shareholders
‘The corporate governance framework should 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.’ Within the same class of shares, all shares should carry the same rights. Minority investors should be protected against unfair actions by the majority shareholders. Restrictions on cross-border voting should be eliminated. Insider trading should be illegal. Directors should be required to notify their company of material personal interests they have in transactions with the company.
These rights might also seem ‘obvious’. However, it is not uncommon in some countries for majority shareholders negotiating the takeover of their company by a buyer to arrange a higher price for their shares than the price that will later be offered to the minority shareholders.
Principle IV: The role of stakeholders in corporate governance
The corporate governance framework should recognise the rights of stakeholdersthat are established by law, or through mutual agreements. This will include, forexample, employment rights and agreements negotiated for employees with tradeunion representatives.
There should also be active co-operation between companies and their stakeholders‘in creating wealth, jobs and the sustainability of financially sound enterprises.’
Principle V: Disclosure and transparency
‘The corporate governance framework should ensure that timely and accuratedisclosure is made on all material matters regarding the [company], including thefinancial situation, performance, ownership and governance of the company.’
The disclosure of information to shareholders and investors is a critically importantaspect of corporate governance. This issue will be considered in more detail in alater chapter.
Principle VI: The responsibilities of the board
‘The corporate governance framework should ensure the strategic guidance of thecompany, the effective monitoring of management by the board and the board’saccountability to the company and the shareholders.’
This principle relates to many of the functions of the board described in an earlierchapter. It includes the requirement that ‘board members should act on a fullyinformed basis, in good faith with due diligence and care, and in the best interests ofthe company and the shareholders.’ The board should also apply high ethicalstandards and take into account the interests of the company’s stakeholders.
Content of the ICGN Principles
The ICGN Principles are consistent with the OECD Principles, and deal with issuessuch as disclosure and transparency, the rights and responsibilities of shareholders, and the role and structure of boards of directors.
An important objective of the Principles is to encourage the removal of bad corporate governance practices in countries where these still exist. Some of the Principles are listed below. It is useful to remember that the purpose of stating a principle is often to discourage different practices that are currently found in some countries.
Prepared by Golden ACCA R&D Center
December, 2012
Part 2– the Contents
Introduction
There are six main principles, but each of the main principles has a number of supporting principles. (OECD Principles of Corporate Governance – 2004 Edition, © OECD 2004)
Principle I: Ensuring the basis for an effective corporate governance framework
‘The corporate governance framework should promote transparent and efficient markets, be consistent with the rule of law and clearly articulate the division of responsibilities among different supervisory, regulatory and enforcement authorities.’
This principle is concerned with the framework for good corporate governance that is provided by the stock market and financial intermediaries, the regulation of the markets and the information that is available to investors about companies (‘transparency’ in the markets). It is useful to think about this principle in terms of countries that fail to provide transparency in markets, or stock markets that function efficiently, or markets in which the rule of law is fair and properly applied.
Principle II: The rights of shareholders and key ownership functions
‘The corporate governance framework should protect and facilitate the exercise of shareholders’ rights. This principle is concerned with the basic rights of shareholders, which should include the right to transfer the ownership of their shares, the right to receive regular and relevant information about the company, the right to vote at general meetings of company shareholders, the right to share in the company’s profits and the right to remove directors from the board.’
These basic shareholder rights might seem ‘obvious’. However, there are countries in which these rights do not properly exist, especially for foreign shareholders. For example the laws of a country may permit a company to insist that shareholders wishing to vote at a general meeting of the company must attend the meeting and cannot be represented by a proxy. This requirement in effect would remove the right to vote of most foreign investors, who do not have the time to attend general meetings in person in countries around the world.
Principle III: The equitable treatment of shareholders
‘The corporate governance framework should 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.’ Within the same class of shares, all shares should carry the same rights. Minority investors should be protected against unfair actions by the majority shareholders. Restrictions on cross-border voting should be eliminated. Insider trading should be illegal. Directors should be required to notify their company of material personal interests they have in transactions with the company.
These rights might also seem ‘obvious’. However, it is not uncommon in some countries for majority shareholders negotiating the takeover of their company by a buyer to arrange a higher price for their shares than the price that will later be offered to the minority shareholders.
Principle IV: The role of stakeholders in corporate governance
The corporate governance framework should recognise the rights of stakeholdersthat are established by law, or through mutual agreements. This will include, forexample, employment rights and agreements negotiated for employees with tradeunion representatives.
There should also be active co-operation between companies and their stakeholders‘in creating wealth, jobs and the sustainability of financially sound enterprises.’
Principle V: Disclosure and transparency
‘The corporate governance framework should ensure that timely and accuratedisclosure is made on all material matters regarding the [company], including thefinancial situation, performance, ownership and governance of the company.’
The disclosure of information to shareholders and investors is a critically importantaspect of corporate governance. This issue will be considered in more detail in alater chapter.
Principle VI: The responsibilities of the board
‘The corporate governance framework should ensure the strategic guidance of thecompany, the effective monitoring of management by the board and the board’saccountability to the company and the shareholders.’
This principle relates to many of the functions of the board described in an earlierchapter. It includes the requirement that ‘board members should act on a fullyinformed basis, in good faith with due diligence and care, and in the best interests ofthe company and the shareholders.’ The board should also apply high ethicalstandards and take into account the interests of the company’s stakeholders.
Content of the ICGN Principles
The ICGN Principles are consistent with the OECD Principles, and deal with issuessuch as disclosure and transparency, the rights and responsibilities of shareholders, and the role and structure of boards of directors.
An important objective of the Principles is to encourage the removal of bad corporate governance practices in countries where these still exist. Some of the Principles are listed below. It is useful to remember that the purpose of stating a principle is often to discourage different practices that are currently found in some countries.
Prepared by Golden ACCA R&D Center
December, 2012
