Title: The OECD Corporate Governance Principles, Shareholders Rights and Implications for the State
13rd Eurasian Corporate Governance
Roundtable Shareholder Rights, Equitable
Treatment and the Role of the State April
17-18, 2002 hosted by Securities and Stock
Market State Commission of Ukraine State Property
Fund of Ukraine PFTS with the support of The
Government of Japan
The Global Corporate Governance Forum
2The OECD Corporate Governance Principles,
Shareholders Rights and Implications for the State
- Introductory Address
- Mr. Rainer Geiger
- Deputy Director, Financial, Fiscal and Enterprise
Affairs - Kyiv, 17-18 April, 2002
3Objectives of the address
- Discuss the main aspects of the role of the state
in ensuring good corporate governance - Explore the role of the state with respect to
shareholder rights and equitable treatment of
shareholders -
4Structure of the address
- The role of the state in the transition to a
market economy - The corporate governance related role and
functions of the state - Institution building the state and capital
market development - Legal and regulatory functions of the state
- The role of enforcement
- Main issues of shareholders rights and equitable
treatment
5The role of the state in the transition to a
market economy
- Macro-economic and structural reform
- Institution building and legal reform
- Managing privatisation and residual state assets
6The State and Corporate Governance
- Corporate governance as a tool to achieve
economic performance and policy reform - OECD Principles on Corporate Governance
- The state and corporate governance in OECD
economies
7Corporate governance and the state
- The state has the following functions with
respect to corporate governance - Institution Building
- Legislative reforms
-
- Law enforcement
- Enforcement
8Corporate governance and the state (contd)
- In order to fulfil its role, the state needs to
- Clearly define its functions
- Provide for an efficient institutional
infrastructure - Act in a transparent, consistent and credible
fashion
9The rule of law Key elements
- The establishment of rule of law in the economy
depends on - adoption of a proper legal framework of property
rights, rules for trade, investment and finance,
and - a legal context for the establishment,
functioning and liquidation of private firms - integrity in government and public
administrations
10The rule of law as objectives
- The rule of law describes an economic and social
environment that is characterised by - Predictability
- Transparency of decisions
- A level playing field for all economic agents
- Reliability and accountability
- Clearly defined rights and fair dispute
resolution
11Institution Building
- The state policy on capital market development
- Stock exchanges in Eurasia need to improve their
technical and legal infrastructure - Low capitalisation and liquidity need to be
addressed
12Institution Building
- Lack of demand and supply is a problem
- Delays in the privatisation process
- Lack of interest from companies in being listed
13Institution Building (contd)
- Eurasian Stock Exchanges are still not able to
fulfil their traditional roles - as a source of funding for enterprises
- as a disciplining mechanism through the take-over
threat - to provide adequate information and fair
valuations
14Strengthening stock market development
- What could give an impulse to Stock Exchange
development in Eurasia? - The recently launched Pension Reforms
- Speeding up of the privatisation process IPOs
and secondary markets - Regional cooperation may constitute an option
15Law enforcement
- Discrepancy between the corporate governance
framework and practices - Insufficient capacity of the judicial and
administrative systems to enforce the law - Insufficient capacities of Securities Exchange
Commissions
16Main issues with respect to shareholders rights
- Access to information on ownership structure
- Information on shareholders meetings
- Clear provisions concerning voting procedures
during the AGM - Capacity for shareholders to vote in absentia, by
proxy or mail - Rights to receive dividends
17Main issues with respect to equitable treatment
- Dilution of minority stakes during capital
increases - Fair treatment of minority shareholders in case
of de-listing - Related parties transactions
- Insider dealing and self-trading
- Possibility of legal redress
18Strengthening the role of the judiciary
- Strengthen the capacity of the judiciary to deal
with commercial disputes - Streamline of the rules on jurisdiction over
commercial disputes throughout the region
19Challenges ahead
- Develop a corporate culture
- Strike a balance between regulation and
self-regulation - Strengthen corporate social responsibility
- Promote best practice through regional
co-operation