Methodology for assessing the implementation of the G20/OECD principles of corporate governance

163 Pages·2017·2.61 MB·English

by  OECD

Methodology for Assessing the Implementation
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The G20/OECD Principles of Corporate Governance help policy makers evaluate and improve fo
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the legal, regulatory, and institutional framework for corporate governance, with a view to A
G20/OECD Principles
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supporting economic efficiency, sustainable growth and financial stability. They are one of the s
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Key Standards for Sound Financial Systems adopted by the Financial Stability Board (FSB). s
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The associated Methodology for Assessing the Implementation of the G20/OECD Principles of ing of Corporate Governance
Corporate Governance was developed by the OECD Corporate Governance Committee, with t
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the participation of the World Bank, to underpin an assessment of the implementation of the e Im
Principles in a jurisdiction and to provide a framework for policy discussions, for example in
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the context of the Reviews of Observance of Standards and Codes (ROSCs) or other country le
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assessments. This latest version incorporates changes that were made to the Principles
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Consult this publication on line at http://dx.doi.org/10.1787/9789264269965-en. a
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Isbn 978-92-64-26966-8
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26 2017 04 1 P

Methodology
for Assessing
the Implementation
of the G20/OECD
Principles of Corporate
Governance
This work is published under the responsibility of the Secretary-General of the
OECD. The opinions expressed and arguments employed herein do not
necessarily reflect the official views of OECD member countries.
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Please cite this publication as:
OECD (2017), Methodology for Assessing the Implementation of the G20/OECD Principles of
Corporate Governance, OECD Publishing, Paris.
http://dx.doi.org/10.1787/9789264269965-en
ISBN 978-92-64-26966-8 (print)
ISBN 978-92-64-26996-5 (PDF)
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FOREWORD

Foreword
The G20/OECD Principles of Corporate Governance help policy makers
evaluate and improve the legal, regulatory, and institutional framework for
corporate governance, with a view to supporting economic efficiency,
sustainable growth and financial stability. They are one of the Key
Standards for Sound Financial Systems adopted by the Financial Stability
Board (FSB).
The associated Methodology for Assessing the Implementation of the
G20/OECD Principles of Corporate Governance was developed by the
OECD Corporate Governance Committee, with the participation of the
World Bank, to underpin an assessment of the implementation of the
Principles in a jurisdiction and to provide a framework for policy
discussions, for example in the context of the Reviews of Observance of
Standards and Codes (ROSCs) or other country assessments. This latest
version incorporates changes that were made to the Principles during
the 2015 review as well as a number of additional clarifications.

3
METHODOLOGY FOR ASSESSING THE IMPLEMENTATION OF THE G20/OECD PRINCIPLES OF CORPORATE GOVERNANCE © OECD 2017

TABLE OF CONTENTS

Table of contents
Part A
Methodological issues and procedures
Introduction and background ....................................................................................... 11
The use and scope of this methodology ....................................................................... 11
How to assess outcomes ............................................................................................... 12
Making an informed judgement ............................................................................... 12
A qualitative assessment scheme .............................................................................. 14
The reviewer and the assessment process .................................................................... 18
The structure of this methodology ............................................................................... 19
Part B
The corporate governance landscape
Necessary institutional information ............................................................................. 23
The structure of ownership and control ........................................................................ 23
The legal and regulatory framework ............................................................................ 25
Historical influences on the current corporate governance system .............................. 25
Part C
Chapters of the Principles
Chapter I. Ensuring the basis for an effective corporate governance framework ... 29
Introduction .................................................................................................................. 29
Issues and assessment criteria ...................................................................................... 29
Principle I.A ............................................................................................................. 29
Principle I.B.............................................................................................................. 31
Principle I.C.............................................................................................................. 33
Principle I.D ............................................................................................................. 35
Principle I.E .............................................................................................................. 35
Principle I.F .............................................................................................................. 38
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METHODOLOGY FOR ASSESSING THE IMPLEMENTATION OF THE G20/OECD PRINCIPLES OF CORPORATE GOVERNANCE © OECD 2017
TABLE OF CONTENTS

Chapter II. The rights and equitable treatment of shareholders
and key ownership functions .................................................................... 39
Introduction .................................................................................................................. 39
Issues and assessment criteria ...................................................................................... 40
Principle II.A ............................................................................................................ 40
Principle II.B ............................................................................................................ 46
Principle II.C ............................................................................................................ 48
Principle II.D ............................................................................................................ 57
Principle II.E ............................................................................................................ 58
Principle II.F ............................................................................................................. 62
Principle II.G ............................................................................................................ 64
Principle II.H ............................................................................................................ 66
Chapter III. Institutional investors, stock markets and other intermediaries .......... 71
Introduction .................................................................................................................. 71
Issues and assessment criteria ...................................................................................... 72
Principle III.A ........................................................................................................... 72
Principle III.B ........................................................................................................... 73
Principle III.C ........................................................................................................... 74
Principle III.D ........................................................................................................... 75
Principle III.E ........................................................................................................... 77
Principle III.F ........................................................................................................... 78
Principle III.G ........................................................................................................... 79
Chapter IV. The role of stakeholders in corporate governance ................................. 81
Introduction .................................................................................................................. 81
Issues and assessment criteria ...................................................................................... 81
Principle IV.A .......................................................................................................... 81
Principle IV.B ........................................................................................................... 82
Principle IV.C ........................................................................................................... 83
Principle IV.D .......................................................................................................... 84
Principle IV.E ........................................................................................................... 85
Principle IV.F ........................................................................................................... 85
Chapter V. Disclosure and transparency ..................................................................... 89
Introduction .................................................................................................................. 89
Issues and assessment criteria ...................................................................................... 90
Principle V.A ............................................................................................................ 90
Principle V.B .......................................................................................................... 101
Principle V.C .......................................................................................................... 104
Principle V.D .......................................................................................................... 107
Principle V.E .......................................................................................................... 108
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METHODOLOGY FOR ASSESSING THE IMPLEMENTATION OF THE G20/OECD PRINCIPLES OF CORPORATE GOVERNANCE © OECD 2017
TABLE OF CONTENTS

Chapter VI. The responsibilities of the board ............................................................ 111
Introduction ................................................................................................................ 111
Issues and assessment criteria .................................................................................... 112
Principle VI.A ........................................................................................................ 112
Principle VI.B ......................................................................................................... 115
Principle VI.C ......................................................................................................... 116
Principle VI.D ........................................................................................................ 118
Principle VI.E ......................................................................................................... 129
Principle VI.F ......................................................................................................... 136
Principle VI.G ........................................................................................................ 138
Part D
Forming policy options and recommendations
Forming an assessment about policy options and priorities ....................................... 141

Annex A. Indicators of the corporate landscape ........................................................ 145
Measures of ownership concentration ........................................................................ 145
Estimating the free float ............................................................................................. 149
Control models ........................................................................................................... 151
Distribution of ownership among different categories of owners .............................. 152
Annex B. Instruments for separation between ownership and control ................... 154
The use of shares with different voting rights ............................................................ 154
Company groups ........................................................................................................ 155

Tables
1. Summary of assessment scheme ...................................................................... 17
B.1. The use of shares with different voting rights (Example) ............................. 158

Figures
B.1. Company groups (Example 1) ....................................................................... 159
B.2. Company groups (Example 2) ....................................................................... 159

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METHODOLOGY FOR ASSESSING THE IMPLEMENTATION OF THE G20/OECD PRINCIPLES OF CORPORATE GOVERNANCE © OECD 2017