Regulatory Dualism as a Development Strategy

by R. Christopher Small, for The Harvard Law School Forum at Harvard Law School, March 15, 2010.

In our paper Regulatory Dualism as a Development Strategy: Corporate Reform in Brazil, the U.S., and the EU, which was recently made publicly available on SSRN, we examine the promise of regulatory dualism as a strategy to diffuse the tension between future growth and the current distribution of wealth and power. Countries pursuing economic development confront a fundamental obstacle. Reforms that increase the size of the overall pie are blocked by powerful interests that are threatened by the growth-inducing changes. This problem is conspicuous in efforts to create effective capital markets to support economic growth. Controlling owners and managers of established firms successfully oppose corporate governance reforms that would improve investor protection and promote capital market development.

Regulatory dualism seeks to mitigate political opposition to reforms by permitting the existing business elite to be governed by the old regime, while allowing other firms to be regulated by a new parallel regime that is more efficient. Regulatory dualism goes beyond similar but simpler strategies, such as grandfathering and statutory menus, by incorporating a dynamic element that is key to its effectiveness, but that requires a sophisticated approach to implementation…(continue reading)

TAG-College and IFC Sign Cooperation Agreement in Corporate Governance

by Arabian Business, March 15, 2010.

A cooperation agreement between Talal Abu-Ghazaleh College of Business- the first college of its kind to represent a partnership between the private and the public sectors in the Arab world and the International Finance Corporation (IFC) – a member of the World Bank Group, was signed today at Talal Abu-Ghazaleh College of Business (TAG-College).

The two parties agreed to cooperate in the delivery of corporate governance training in Jordan and some Arab countries.

Mr. Talal Abu-Ghazaleh, chairman and CEO of  Talal Abu-Ghazaleh Organization (TAG-Org) said “The project will provide corporate governance training to trainees in Jordan and the region according to international standards.”

Mr. Abu-Ghazaleh expressed his happiness and satisfaction with the agreement stating “We are very happy to cooperate with IFC and hopefully we will continue working in the future in other fields.”

Meanwhile, IFC’s Resident Representative and Head of Mission in Jordan Dr. Ahmed Ali Attiga said “IFC is delighted to cooperate with Talal Abu-Ghazaleh Professional Training Academy in this important and vital area, which will develop best standards in corporate governance for the private sector in the Region.”

The Bank Governance training program is designed for board chairs, board members, directors, senior executive officers, and top management of banks and financial institutions in the MENA region…(continue reading)

How to look at “Corporate Governance” – Indian Corporate Law

by V. Durga Rao, for Desi Toob, March 15, 2010.

Company Law is very very complicated and interesting. If we look at all the corporate regulations or law, it is very clear that it focuses mainly on the interests of the shareholders. The liability of the members is limited in limited companies and as such the shareholders will be clueless often when their investment in the Company is not properly managed.

While the professionals use the term “Corporate Governance” with its relevance, many use the term “Corporate Governance” generally and emphasizing on good governance. While it is true that the “Corporate Governance” is meant to provide “Good Governance” in the Company, there is a specific way to understand the term “Corporate Governance”.

The term “Corporate Governance” is used in Listed Public Companies as they need to comply with the “Corporate Governance” commitments agreed with the Stock Exchanges. The term “Corporate Governance” is specifically used under clause 49 of the model listing agreement to be entered into with the Stock Exchanges and the violation of which may lead an action by the Stock Exchange to de-list the company’s shares.

While we look at the logical understanding and analysis of “Corporate Governance”, we need to look at the corporate set-up in brief and have an understanding of the law or the regulations governing different kinds of companies. While the provisions of Companies Act, 1956 provides certain kinds of companies like company limited by shares, company limited by guarantee, an unlimited company, a company incorporated under section 25 and a producer company etc; the concept has become vague with describing companies based on certain elements like “Family Companies”. For the purpose of getting a basic understanding as to the law or regulations governing the Companies in India, we can consider following kind companies…(continue reading)