1. OECD (Organisation for Economic Co-operation & Development) Principles on Corporate Governance

2. OECD - Introduction
It is an organisation of those countries which describe themselves as Democratic and have Market economy.
Its HQ is in Paris, France and it is currently headed by Jose Angel Gurria (Secretary- General)

3. Headquarters of OECD, Paris, France
Jose Angel Gurria
Secretary General,
OECD

4. OECD - History
It was basically formed in 1948 as OECC (Organisation for European Economic Co-operation), and as the name suggests, it was only confined to European areas with the main motive to implement Marshall Plan. It also focused on matters like, nuclear energy, integrated education policies, etc. that time.
In 1961, it was re-formed as OECD to serve the mission on a global level. It had 20 countries as founding members. Currently, it has 34 countries and it is trying to include more countries.

5. OECD-Member Countries

6. Founding Members/ Countries
Added Later

8. Corporate Governance- Concept
The system by which business corporations are directed and controlled
A set of relationships between a company’s management, its board, its shareholders and other stakeholders
Spells out the rules and procedures for making decisions on corporate affairs
Provides the structure through which the company objectives are set, and the means of attaining those objectives and monitoring performance

9. Corporate Governance- Importance
“The cornerstone of the modern market-oriented economy”
It promotes the efficient use of scarce resources
It plays an important role in maintaining corporate integrity and managing the risk of corporate fraud, combating against management misconduct and corruption
It has a positive link to economic development and good corporate performance
“The cornerstone of the modern market-oriented economy”

10. “The cornerstone of the modern market-oriented economy”
Timeline
“The cornerstone of the modern market-oriented economy”
2014
Again up for review in 2014 and concluded in 2015.

11. “The cornerstone of the modern market-oriented economy”
Timeline
“The cornerstone of the modern market-oriented economy”
2014
Again up for review in 2014 and concluded in 2015.

12. OECD Principles of Corporate Governance
Ensuring the basis for an effective corporate governance framework
The rights of shareholders and key ownership functions
The equitable treatment of shareholders
The role of stakeholders in corporate governance
Disclosure and transparency
The responsibilities of the board
“The cornerstone of the modern market-oriented economy”

13. “The cornerstone of the modern market-oriented economy”

14. Ensuring the basis for an effective corporate governance framework
The corporate governance framework should promote transparent and efficient markets
Be consistent with the rule of law and clearly articulate the division of responsibilities among different supervisory, regulatory and enforcement authorities
“The cornerstone of the modern market-oriented economy”

15. Rights of shareholders and key ownership functions
Right to have shares registered and secure
Should be able to take part in shareholder meetings and in major decisions concerning the firm
Ability to elect board members of their choice, to table proposals, and ask questions of directors
“The cornerstone of the modern market-oriented economy”

16. Equitable treatment of shareholders
Equitable treatment of all shareholders, foreign and minority especially
Should not be abused by insiders
In presence of major shareholders, improve protection of minority shareholders
“The cornerstone of the modern market-oriented economy”

17. Role of stakeholders in Corporate Governance
Stakeholders include creditors, depositors and employees
Encourage active co-operation between between company and stakeholders
Performance enhancing mechanisms should be available
Redress for violation of legal rights
Access to relevant information
“The cornerstone of the modern market-oriented economy”

18. Disclosure and transparency
“Objective is to ensure meaningful and reliable disclosure, which allows markets to judge the fair value of a company”
Material foreseeable risk factors
Full financial disclosure
Governance structure and policies
Information should be prepared audited and disclosed in accordance with high standards of accounting, audit and non-financial disclosure
Regular disclosure
“The cornerstone of the modern market-oriented economy”

19. Responsibilities of the Board
Moves towards increasing not only the number of non-executive directors but also ensuring they are “independent”
Independence of judgement and independence from management
Remuneration including information on the structure of compensation schemes and termination conditions relevant not only for financial implications but also for assessing incentives and performance
“The cornerstone of the modern market-oriented economy”

20. Speciality of OECD Principles
Emphasise “functional equivalence” - the means used to achieve the desired outcomes might vary, depending on:
Legal and institutional frameworks
Economic conditions & market structures
Political and socio-cultural environment
Therefore, the Principles can be applied in any jurisdiction
Effect on overall economic performance, market integrity and incentives for market participants to be considered
Assessments require an evaluation of:
Scope and content of laws, regulations & voluntary codes
Company practices – how widespread is adherence to Principles?
Accessibility and effectiveness of remedies
Efficiency & effectiveness of regulatory supervision & enforcement