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The Importance of Good Corporate Governance for State-Owned Enterprises. Daniel Blume, Principal Administrator, OECD. Presentation: two parts. 1. The role of the OECD and key conclusions emerging from its 2004 review of the OECD Principles of Corporate Governance.
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The Importance of Good Corporate Governance for State-Owned Enterprises Daniel Blume, Principal Administrator, OECD
Presentation: two parts • 1. The role of the OECD and key conclusions emerging from its 2004 review of the OECD Principles of Corporate Governance. • 2. Moto Yufu: How does the White Paper on Corporate Governance in Asia seek to put the Principles into practice in the Asian context? • Vietnam can usefully draw upon both.
The OECD as global standard-setter • OECD is a “club” of 30 developed democracies sharing common approach to market economy. • Consultation and co-operative programmes with 75-100 countries in nearly all regions of world. • Corporate governance work a good example: five regional roundtables in Asia, Latin America, Eurasia, Russia and Southeast Europe. Work also starting in the Middle East and North Africa. • OECD Principles of Corporate Governance promoted by Financial Stability Forum, World Bank Group, and international dialogue
Why does good corporate governance matter? • By reducing cost of capital and improving company management, increases economic competitiveness and contributes to private sector-led economic growth. • Lowers risk of financial crisis, contributing to global financial stability • Contributes to legitimacy of market economy
Core Elements of the OECD Principles • Ensuring the basis of an effective CG framework • The rights of shareholders • The equitable treatment of shareholders • The role of stakeholders including creditors and depositors • Disclosure and transparency • The responsibilities of the boards
Some key priorities emerging from the review of the Principles • New chapter in the Principles emphasises the need for overall framework to support implementation and enforcement. • Shareholder rights must be secure and must be exercised, supported by adequate disclosure, to strengthen corporate governance. • Boards play a critical role as the fulcrum between shareholders and professional management.
The AsianRoundtable on Corporate Governance • The OECD and the World Bank Group have combined their efforts to promote policy dialogue on corporate governance and have established the Asian Roundtable. • The Roundtable, launched in 1999, comprises policy-makers, regulators, academics and business leaders from 13 Asian countries/economies including Vietnam. • Roundtable participants representing diverse interests agreed on White Paper recommendations and priorities specific to the region in 2003. • The White Paper builds upon the OECD Principles of Corporate Governance.
The White Paper Six Priorities • Priority 1.Continued awareness raising regarding the valueof corporate governance; • Priority 2.Effective implementation and enforcement of corporate governance laws and regulations; • Priority 3.Convergence with international standards for accounting, audit and non-financial disclosure; • Priority 4.Developing effective boards of directors; • Priority 5.Protecting non-controlling shareholders; • Priority 6.Improving the regulation and corporate governance of banks.
Future Work of the Asian Roundtable • The next phase of the Roundtable focuses on implementation and enforcement issues; the stock-taking of developments and progress is scheduled in 2005. • 2 task forces concerning common challenges in Asia will be established to provide policy briefs for the next Roundtable (2005): - corporate governance of state owned enterprises - corporate governance of banks
Putting the OECD Principles into Asian context: The White Paper on Corporate Governance in Asia • Asia constitutes a diverse region in areas such as legal tradition and regulatory infrastructure. • Different jurisdictions may adopt different approaches to the same concerns based on their understanding of national conditions. • Based on these understanding, the White Paper distils common policy recommendations in Asia. • “National conditions may determine how corporate governance aspirations should be fulfilled,but these conditions do not excuse jurisdictions from fulfilling them.”
