The Private Sector and Building Effective Demand for Corporate Governance

1. www.cipe.org The Private Sector and Building Effective Demand for Corporate Governance Caribbean Corporate Governance Forum September 2003

2. Supply Securities Commissions Stock Exchanges Other Regulatory/Fiscal Authorities OECD Demand Companies Shareholders Investors Banks Supply and Demand

3. Phases of Developing Demand Initial Assessment Organizational Development Making the Case  Building Human Capital Public Policy Reform Consolidation

4. Key Institutions Must Function Well • Procedures for bankruptcy • Property rights • Contract enforcement – judicial system (s) • Enforcement mechanisms • Securities markets • Free press – financial press • Ratings agencies et al • Other systemic checks and balances

5. 1. Initial Assessment • Assess corporate governance failures • Rate country standards vs. best practice • Adapt OECD principles (+ national needs) • Build awareness at senior business and policy levels • Identify stakeholders

6. 2. Organizational Development • Private sector associations • Institute of Directors • Investor protection associations (s) • Think tanks and other private sector institutes • Create corporate governance within civil society, business, and regulatory bodies (coalitions, national task forces)

7. 3. Making the Case • What is Corporate Governance – country by country • Codes and tool kits adapted for the country • Ratings systems for investors • Benefits to stakeholders – investors, block shareholders, family firms, employees, banks • Impact on economic performance (cost of non-compliance)

8. 4. Building Human Capital • Training and certification programs for managers and directors (IOD) • Investor education • Firm level programs • Journalism education • Professional development programs for Parliamentarians, regulators, judiciary, accountants, etc.

9. 5. Public Policy Reform • Policy seminars and conferences • Policy papers and research • Provide experts / case histories • Make specific policy recommendations • Draft legislation, regulation, standards • Advocacy campaigns: key contacts, opinion editorials, public events, petitions, grassroots

10. 6. Consolidation • Further strengthen shareholder rights groups and Institutes of Directors, • Risk ranking by ratings agencies. • Reports on Standards and Codes (ROSC) • Legal and institutional enforcement – tracking and reporting performance by public and private sector. Evaluation of impacts

11. Case Study: Columbia Confecamaras Phase One • Corporate Governance Code • Corporate Governance Survey • Corporate Governance Training • Legal Advocacy • Government Advisors • Diffusion Tools

12. Case Study: ColumbiaConfecamaras Phase Two • Corporate Governance: Face to face program • 10 companies have been helped to adopt Corporate Governance • Developing Literature • White Book of Corporate Governance: Respond to the lack of literature in Spanish • Diffusion Tools • Website, E-Bulletin: 4000 subscriptions • Documentary Center • Corporate Governance Contest • Legal Advocacy • Corporate Governance for Mutual Funds • Labor Law • Training Programs • Cali, Medellín and Bogotá • Work with MBA´s of University of Andes

13. Case Study: PolandToo Much competition? • Competing interest groups • Insiders:Stock Exchange and Large Firms • Outsiders : Think tank, Investors • Competing codes • “Rush to judgment” –premature ratings • Unclear outcome

14. CIPE Program for Latin America and Caribbean • New effort supported by USAID • Training • Intra-regional Networking • Small Grants for Institutes and Business-led initiatives.