Organisation for

Economic Cooperation
and Development
 Organisation for Economic
Cooperation and Development
 Principle Number 1

Ensuring t he basis f o r an e f f ectiv e

c o r p o r a t e governance f r a m e w o r
 The corporate governance
f ra me work should be d eve lope d
with a view t o its impact on
overall economic p e r f o r m a n c e ,
m a r k e t i n t e g r i t y and t h e
incentives i t c r e a t e s f o r
mark e t par t i c ipant s and t h e
pr o motio n o f t r a nspa re n t and
well f u n c t i o n i n g m a r k e t s .
 2 . T h e legal and r e g u l a t o r y
r e q uire men t s th at a f f e c t cor po r a t e
governance practices shoul d be
consisten t wit h th e rule of
law, t r anspar e n t and e n f or c e able .
T h e d ivision o f r e sponsibilitie s
among d i f f e r e n t authorities
shoul d be clea rly ar t i c ulat e d and
designed t o serve t h e public
interest.
St o ck mar k e t r e g ulation should
support effective corporate
governance
Cr os s - bo r d e r co - ope ra tio n should
b e enhanced, including through
bilateral and multilateral
a r r a n g e m en t s f o r exchange o f
information
 Principle Number 2

T h e rig hts an d e q uita ble t r e at m e n t

o f shareholders
and key ownership f u n c t i o n s
 Basicshareholder 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.
 Shareholders should be sufficiently
informed about,
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 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
I mpe d ime n t s t o cross bo r d e r vot i n g
should b e eliminated
 Principle Number 3

I n s t i t u t i o nal inve s t o r s , st o ck
markets,
and o t h e r 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 an d mar k e t
manipulatio n should be pr o hibi t e d
an d t h e applicable r u le s e n f or c e d .
Stock markets should p r o v i d e f a i r
and efficient price discovery as a
means to help promote effective
c o r p o r a t e governance
 Principle Number 4

T h e r o le of sta ke hold e rs in
c o r p o r a t e governance
T h e rights o f stakeholders t h a t a r e
e sta blished by law or t h r o ugh mutual
agreements are t o be r esp ect ed .
Where stakeholder interests are
protected by law, stakeholders should
have the o p p o r t u n i t y t o obtain effective
redress f o r violation o f t h e i r r i g h t s .
Mechanisms f o r employee p a rtic ip a tio n
should be p e r m i t t e d t o d e v e l o p .
Wher e st akeholder s p a rt icipate in t he
c o r p o r a t e governance process, they
should have access t o r e l e v a n t ,
sufficient and reliable i n f o r m a t i o n
on a t imely and r eg ular basis.
Stakeholders, including ind ivid ual emp lo yees
and t heir r epr esent at ive bodies, shoul d be
able to freely communica te t heir conce rns
about illegal o r unethical practices t o the
b o a r d and t o the c om p e t e n t publicauthorities
and t h e i r rig hts should n o t be compromised f o r
doing this.
 Principle Number 5

D isclosure and t r a nspar e ncy

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

T h e r e sponsibilit ies of t he boar d

Boar d members should a c t on a f u l ly
i n f o r m e d basis, in g o o d f a i t h , with
d u e diligence and c a r e , and in the
b e s t i n t e r e s t o f t h e company and
t h e 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-Princip
les-ENG.pdf
● http://www.oecd-ilibrary.org/governance/g20-oecd-princi
ples-of-corporate-governance-2015_9789264236882-en
● http://www.oecd.org/corporate/DSG-Tamaki-CG-speech-4
Dec2015.pdf
● https://www.google.co.in/url?sa=t&rct=j&q=&esrc
=s&source=web&cd=8&cad=rja&uact=8&ved=0ahUKEwiI
0ZqNmqDLAhUQA44KHbQqCuEQFghAMAc&url=http%3A%2
2Fwww.tuac.org%2Fen%2Fpublic%2Fe-docs%2F00%2F00
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%3D5697&usg=AFQjCNHuiUQvn49OvhospWsDk4pSvvQcGg
sig2=Ks9ineoDliJ8wRX2xm1J1A&bvm=bv.115339255,d.
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