The OECD updates its Corporate Governance Principles

In September, the Organisation for Economic Cooperation and Development (OECD) published an updated version of its Corporate Governance Principles, last revised in 2004. Its aim was to reflect current priorities on the agenda of the G20 countries for defending good governance as a sound element driving growth and inclusive development.

The new principles maintain many of the recommendations from the previous version, but add significant new ones, reflecting general shifts in corporate governance following the world-wide financial crisis:

  • Basic standards for a good corporate governance framework: The document highlights the essential role of the corporate governance framework to promote fair, transparent markets and efficient resource allocation; the importance of the quality of supervision in the application of principles; and the fundamental role of the securities markets in promoting good corporate governance.
  • Rights and equitable treatment for shareholders: There are new principles regarding the right to information and shareholder engagement through the General Meeting in the important decisions regarding the company; information on control structures; the use of new technologies to encourage shareholder participation in General Meetings; regulation of procedures for approving related-party transactions.
  • Institutional investors, stock exchanges and other intermediaries (new chapter): ensuring the regulatory framework of corporate governance is in line with business realities; encouraging dialogue between institutional investors, the board of directors and the senior management; dissemination by institutional investors, of their voting and corporate governance policies, and how they manage conflicts of interest generated in the exercise of their rights.
  • The role of stakeholders in corporate governance: recognition of active cooperation between the company and stakeholders to defend and recognise their rights; duty to provide stakeholders access to information that is timely, comprehensive and sufficient.
  • Dissemination of information and transparency: identification of essential areas on which financial and non-financial information must be disclosed to the market.
  • Responsibilities of the board of directors: main duties of the directors, with special emphasis on the review of corporate strategy, risk management, tax planning and oversight of the internal audit; relevance of the training sessions for directors and assessment of their performance; constitution of specialist committees, at a minimum, board remuneration, audit and risks committees.