Presented by -

Ankush Thathai

M.com (Honours) sem 4

UBS, Panjab University

Organisation for Organisation for Economic Cooperation Economic Cooperation 

and Developmentand Development

Organisation for Economic Organisation for Economic Cooperation and DevelopmentCooperation and Development

Principle Number 1

Ensuring the basis for an effective corporate governance framework

The corporate governance The corporate governance framework should be developed framework should be developed with a view to its impact on with a view to its impact on

overall economic performance, overall economic performance, market integrity and the market integrity and the

incentives it creates for incentives it creates for market participants and the market participants and the promotion of transparent and promotion of transparent and

well functioning markets. well functioning markets.

2. The legal and regulatory 2. The legal and regulatory requirements that affect corporate requirements that affect corporate governance practices should be governance practices should be consistent with the rule of consistent with the rule of

law, transparent and enforceable.law, transparent and enforceable.

The division of responsibilities among different authorities

should be clearly articulated and designed to serve the public

interest.

Stock market regulation should support effective corporate

governance

Cross-border co-operation should Cross-border co-operation should be enhanced, including throughbe enhanced, including through

bilateral and multilateral bilateral and multilateral arrangements for exchange of arrangements for exchange of

informationinformation

Principle Number 2

The rights and equitable treatment of shareholders

and key ownership functions

Basic shareholder rights should include

(1) secure methods of ownership registration

(2) convey or transfer shares

(3) obtain relevant and material information on the corporation on a timely and regular basis

(4) participate and vote in general shareholder meetings

(5) elect and remove members of the board

(6) share in the profits of the corporation.

1. Amendments to the statutes, or articles of incorporation or similar governing documents of the company

2. The authorisation of additional shares

3. extraordinary transactions, including the transfer of all or substantially all assets, that in effect result in the sale of the company

Shareholders should be sufficiently informed about,

● Shareholders should have the opportunity to participate effectively and vote in general shareholder meetings

● Shareholders should have the opportunity to ask questions to the board, including questions relating to the annual external audit, to place items on the agenda of general meetings, and to propose resolutions, subject to reasonable limitations.

● Effective shareholder participation in key corporate governance decisions, such as the nomination and election of board members

Impediments to cross border voting should be eliminated

Principle Number 3

Institutional investors, stock markets,

and other intermediaries

● Institutional investors acting in a fiduciary capacity should disclose their corporate governance with respect to their investments, including the procedures.

● The corporate governance framework should require that advisors, analysts, brokers, rating agencies and others that provide analysis or advice relevant to decisions by investors, disclose and minimise conflicts of interest.

Insider trading and market manipulation should be prohibited and the applicable rules enforced.

Stock markets should provide fair and efficient price discovery as a means to help promote effective corporate governance

Principle Number 4

The role of stakeholders in corporate governance

The rights of stakeholders that are established by law or through mutual agreements are to be respected.

Where stakeholder interests are protected by law, stakeholders should have the opportunity to obtain effective redress for violation of their rights.

Mechanisms for employee participation should be permitted to develop.

Where stakeholders participate in the corporate governance process, they should have access to relevant, sufficient and reliable informationon a timely and regular basis.

Stakeholders, including individual employees and their representative bodies, should be able to freely communicate their concerns about illegal or unethical practices to the board and to the competent publicauthorities and their rights should not be compromised for doing this.

Principle Number 5

Disclosure and transparency

Disclosure and transparency includes

1. The financial and operating results of the company.

2.Company objectives and non financial information.

3.Major share ownership, including beneficial owners, and voting rights.

4.Remuneration of members of the board and key executives.

5.Related party transactions.

Principle Number 6

The responsibilities of the board

Board members should act on a fully informed basis, in good faith, with due diligence and care, and in the best interest of the company and

the shareholders.

● Where board decisions may affect different shareholder groups differently, the board should treat all shareholders fairly.

● The board should apply high ethical standards. It should take into account the interests of stakeholders.

● Monitoring the effectiveness of the company’s governance practices and making changes as needed.

● Selecting, compensating, monitoring and, when necessary, replacing key executives and overseeing succession planning.

● Ensuring a formal and transparent board nomination and election process.

References

● http://www.oecd.org/daf/ca/Corporate-Governance-Principles-ENG.pdf

● http://www.oecd-ilibrary.org/governance/g20-oecd-principles-of-corporate-governance-2015_9789264236882-en

● http://www.oecd.org/corporate/DSG-Tamaki-CG-speech-4Dec2015.pdf

● https://www.google.co.in/url?sa=t&rct=j&q=&esrc=s&source=web&cd=8&cad=rja&uact=8&ved=0ahUKEwiI0ZqNmqDLAhUQA44KHbQqCuEQFghAMAc&url=http%3A%2F%2Fwww.tuac.org%2Fen%2Fpublic%2Fe-docs%2F00%2F00%2F11%2F0D%2Ftelecharger.phtml%3Fcle_doc_attach%3D5697&usg=AFQjCNHuiUQvn49OvhospWsDk4pSvvQcGg&sig2=Ks9ineoDliJ8wRX2xm1J1A&bvm=bv.115339255,d.c2E