Posts Tagged 'Corporate Governance Code'

Understanding Japan’s New Corporate Governance Code

by George T. Hogan for Investopedia

In December 2014, Japan’s Financial Services Agency (FSA) published a draft for public commentary of a new corporate governance code (hereafter referred to as “the code”). The voluntarily adopted code, which the government hopes will come into effect in June 2015, takes aim at a number of prickly issues such as the rights of shareholders, capital policy, cross-shareholdings, anti-takeover measures, whistleblowing, disclosure, board diversity and structure, just to name a few. Long viewed by investors as a global pariah for its poor treatment of corporate shareholders, the Japanese government hopes this new initiative will help improve the image of corporate Japan, and make its markets more palatable to foreign capital. But can it really work? This article aims to take a closer look. (To read of another initiative being undertaken by Japan’s government to improve the country’s economic standing, see article: Japan’s Strategy To Fix Its Deflation Problem.)

Corporate governance is defined as a system of rules, practices and processes by which a company is directed and controlled. It entails balancing the interests of the many stakeholders in a company, and involves a large array of parties, often with conflicting interests. Hence, what constitutes “good practice” in this context is very much a matter of perspective. In this article we make no secret that we are addressing this debate from the perspective of the shareholder, if for no other reason than that this is the very group of people whose concerns the code appears to address. (See video: Corporate Governance.)

Unfortunately, from this perspective the picture has generally been considered rather bleak. Though Japan is a global powerhouse in manufacturing and technology, with brands that are instantly recognizable almost anywhere in the world (e.g. Toyota (TM), Sony (SNE), Panasonic, Sharp, Hitachi, etc.), ask just about any long-term observer of Japan how they feel about the country’s governance record, and they won’t be short of negative anecdotes. Take Olympus as an example, where the company sacked its new foreign president after only six months when he began asking questions about management’s attempts to conceal massive investment losses dating back to the 1980’s. Read more here.

A New Spanish Corporate Governance Code For Listed Companies

by Inigo del Val and Antoni Valverde for JD Supra

The new Spanish Corporate Governance Code for listed companies, approved by resolution of the board of the National Securities Market Commission (CNMV) on 18 February 2015, dispenses with the recommendations that currently are legal rules, retains other recommendations that had already been included in the previous code, and incorporates some new recommendations regarding different subjects, based on the proposals made by the Committee of experts regarding corporate governance.

Main features

The Spanish Corporate Governance Code for listed companies (the Code), in contrast to its predecessors, is influenced by two unique circumstances: on the one hand, it was preceded by a broad reform of the Spanish Companies Act (Ley de Sociedades de Capital), a reform that made mandatory many of the rules that in the previous code were considered to merely be recommendations; on the other hand, the severe economic crisis that has afflicted the companies markedly increased the awareness of the convenience of improving the control and degree of transparency in the management of companies, specifically in the largest companies. Read more here.

The Real Referendum on Abenomics

by Nicholas Benes for The Wall Street Journal

Japanese Prime Minister Shinzo Abe has framed the Dec. 14 “snap election” as a referendum on Abenomics, yet the real referendum will come afterward. In the months ahead, international and domestic investors will vote with their money to answer one main question: Will the “third arrow” of Mr. Abe’s growth agenda deliver real reform, or is Japan’s ruling party still under the sway of labor and corporate interests that like things as they are?

Investors will have a clear litmus test to use. During the next four months, Japan’s Financial Service Agency and the Tokyo Stock Exchange (TSE) will be finalizing the country’s first corporate-governance code, which with the right components would mean real economic-reform progress. Read more here.

Adopting Corporate Governance Code key to share price rises for AIM-firms, study suggests

Megan Dunsby 3 June 2013, Growing Business

Shares in the top 100 companies on the Alternative Investment Market (AIM) perform better where companies have adhered to the UK Corporate Governance Code and utilised non-executive directors (NEDs).

An analysis of share price fluctuations over a three-year period suggested businesses that have a majority of NEDs on their board have an increased average share price of 22.3% per annum in contrast to businesses with a majority of executive directors who have a share price increase of 17% per annum.

The results of the research commissioned by the London-based executive search firm Edward Drummond also showed FTSE AIM 100 companies who hired a separate NED saw an average share price rise of 21% per annum against a 9% increase for businesses that did not Continue reading…

Revving up the Audit Committee Work Plan in 2013 – Bob Semple, FCA

Bob Semple, 7 January 2013, Chartered Accountants 

If the number of recent Financial Reporting Council (FRC) publications is any measure, Audit Committee Members can look forward to even greater expectations of them in 2013.  The purpose of this article is to summarise some of the more important recent developments and to suggest practical steps on how best Audit Committees should respond to them in the 2013 Audit Committee Work Plan – whether as a listed plc or simply striving for best practice. 

“Corporate Governance Code[i]” and “Guidance on Audit Committees[ii]” – the new ‘Bibles’

Issued in September 2012, these documents are, in effect, the new ‘Bibles’ for Audit Committee Members.  In replacing previous guidance, each document represents more of an evolution rather than a revolution; indeed, the Code Preface makes the point that “much more attention need[s] to be paid to following the spirit of the Code as well as its letter”.  For all the talk of “spirit” however, the FRC is not shy in referring to a substantial body of complementary guidance, including:

  • “Internal Control: Guidance to Directors[iii]”
  • “Going Concern and Liquidity Risk: Guidance for Directors of UK Companies 2009iii
  • “UK Stewardship Codeiii
  • “Boards and Risk iii
  • “Board Effectiveness iii

not to mention ISAs, FSA Rules, Codes of Ethics, company legislation and more.

The consequence could present a quandary for the Audit Committee: religiously apply detailed rules or take the initiative to apply principles using skillful judgement and insight?  More of that anon.  For now, what are the key changes – over and above the already onerous programme of work for Audit Committees[iv]? Continue reading…

IFC Develops Corporate Governance Code with Association of Banks of Georgia

by The Financial, September 23, 2009.

Tbilisi, Georgia, IFC, a member of the World Bank Group, cooperated with the Association of Banks of Georgia and the Georgian Stock Exchange to develop a voluntary corporate governance code to help banks introduce international best practices and increase confidence in the country’s banking sector.

IFC, the Association of Banks of Georgia, and the Georgian Stock Exchange presented the code at a ceremony in Tbilisi to representatives of leading Georgian banks and recommended it as the basis for corporate governance policies for all banks  belonging to the association. The voluntary code sets higher standards of corporate governance than those  stipulated in Georgian  law, meaning that Georgian banks participating in the code are demonstrating their commitment to elevate their corporate governance standards to build trust among investors.

IFC will follow up with a public awareness campaign and hold introductory roundtables to broaden awareness of the code’s potential to influence Georgian businesses in a positive manner…(continue reading)

Global Corporate Governance Forum, a progress report: winter 2008

Forum Donor Steering Committee Chairman Thierry Buchs outlines 2008 priorities. n Bulgaria launches a new Corporate Governance Code. n The Corporate Governance Board Leadership Training Resources moves towards completion following a successful roll-out in Mauritius. n A new Focus publication examines how boards can use mediation and other alternative dispute resolution mechanisms to resolve conflicts. n A toolkit on mediation will be provided in 2008. n A conference in Istanbul brought together more than 125 academics and private sector representatives from 31 countries to review corporate governance research in emerging markets. n Forum Head Philip Armstrong spoke before Brazil’s Institute of Corporate Governance on sustainability and corporate governance. n By disseminating “lessons learned” on initiatives to advance corporate governance best practices, the Forum is helping to build capacity, particularly in developing countries. n The Private Sector Advisory Committee Chairman Peter Dey discusses the value of private sector counsel.
Our Mission:
Established in 1999, the Global Corporate Governance Forum is an IFC multi-donor trust fund facility located in the Corporate Governance and Capital Market Advisory Department. Through its activities, the Forum aims to promote the private sector as an engine of growth, reduce the vulnerability of developing and transition economies to financial crises, and provide incentives to corporations to invest and perform efficiently in a socially responsible manner.
The Forum sponsors regional and local initiatives that address the corporate governance weaknesses of middle- and low-income countries in the context of broader national or regional economic reform programs.
Our Fococus:
• Raising awareness, building consensus
• Disseminating best practices
• Sponsoring research
• Funding technical assistance and capacity-building
Our Donors:
• Canada
• France
• Luxembourg
• The Netherlands
• Norway
• Sweden
• Switzerland
• International Finance Corporation
Our Founders:
• World Bank
• Organization for Economic Cooperation and Development
Winter 2008
A Progress Report

by the Global Corporate Governance Forum, January 10, 2008.

Forum Donor Steering Committee Chairman Thierry Buchs outlines 2008 priorities. Bulgaria launches a new Corporate Governance Code. The Corporate Governance Board Leadership Training Resources moves towards completion following a successful roll-out in Mauritius. A new Focus publication examines how boards can use mediation and other alternative dispute resolution mechanisms to resolve conflicts. A toolkit on mediation will be provided in 2008. A conference in Istanbul brought together more than 125 academics and private sector representatives from 31 countries to review corporate governance research in emerging markets.

Forum Head Philip Armstrong spoke before Brazil’s Institute of Corporate Governance on sustainability and corporate governance. By disseminating “lessons learned” on initiatives to advance corporate governance best practices, the Forum is helping to build capacity, particularly in developing countries. The Private Sector Advisory Committee Chairman Peter Dey discusses the value of private sector counsel…

To read more please click here.


Blog coordinator

Cefeidas Group

Archives

cgl-med-linked-in

cgl-med-linked-in
free counters