Presentation on theme: "Corporate governance: Asia Pacific. JAPAN The Japan corporate governance committee published its revised code in 2001. The Code had six chapters, which."— Presentation transcript:
JAPAN The Japan corporate governance committee published its revised code in 2001. The Code had six chapters, which contained 14 principles.
(i) Mission & Role of Board :- It contains 5 principles – Position & purpose of BOD Function & powers Organization of the BOD Outside directors & its independence Role of the leader of the BOD
(ii) Mission & role of committees estd within BOD:- The BOD is recommended to establish various committees including an audit, compensation & nominating committee. It should have atleast 3 directors & an outside director as chairman of the committee.
(iii) Leadership responsibility of the CEO:- Formulate management strategies Set up an executive mgt committee to assist him in conducting all aspects of the business
(iv) Addressing shareholder derivative litigation:- A litigation committee, comprised a majority of independent directors, may be estd to determine whether litigation action should be made against directors or executives against whom the co/shareholders may have claim
(v) Securing fairness & transparency for executive management:- Internal control disclosure
(vi) Reporting to the shareholders & communicating with investors:- The co’s executives are encouraged to meet analysts & others who can convey info to investors & shareholders about the co. Info should be posted on the Internet.
In 2004, the Tokyo Stock Exchange issued the principles of corporate governance for listed co’s. The legal framework in Japan, via the Commercial Code of Revision on Boards (2003), provides for two corporate governance structures :- (i) Corporate Auditor’s system- consisting of general meetings with BOD, auditors (ii) Board of corporate auditors & a committees system- general meetings of the shareholders, BOD & committees.
SOUTH KOREA The Korean committee was estd in March 1999, with funding from the Korea stock exchange, the Korea Securities dealers’ association, the Korea listed co. association, & the Korea investment trust co’s association.
The Code has 5 sections:- (i) Shareholders – rights & responsibilities (ii) BOD – setting corporate goals & strategies to achieve them, approving business plans & budgets, supervising risk management activities, ensuring appropriate information disclosure. Board meetings of the full board should be held regularly, at least once a quarter.
(iii) Audit Systems – All public corporations, govt. invested institutions & financial institutions, should establish an Audit committee composed of at least 3 board members, of which at least two- thirds should be outside directors; at least 1 member should have professional auditing knowledge. (iv) Stakeholders – appropriate means of redress for infringement of their rights.
(v) Management monitoring by the market – Corporations shall actively disclose matters of material importance to the decision making of shareholders, creditors & other interested parties.
MALAYSIA The Code has 4 parts :- (i) Broad principles of good corporate governance (ii) Best practices for companies (iii) Role of investors & auditors in corporate governance (iv) Explanatory notes
Directors – responsibilities will include (i) Strategic direction of the co. (ii) Ensuring proper mgt (iii) Identifying risks & their management (iv) Overall effectiveness of the internal control systems (v) Investor relations (vi) Training of directors
Director’s remuneration – there should be a committee to recommend remuneration levels for the executive directors. The remuneration of non-executive directors should be decided by the board as a whole & should reflect each non- executive’s experience & responsibilities in the company. Accountability & Audit – an audit committee should be estd, comprised of atleast 3 directors with majority being independent. Its role is:- (i) Reviewing financial statements (ii) Appointment of external auditor, his fee, nature & scope of audit (iii) Reviewing the scope & results of internal control
Shareholders - there should be an effective communication strategy b/w shareholders & board.
CHINA The Code is broadly based on the OECD Principles of Corporate Governance. It contain 7 main chapters :- It contain 7 main chapters :- (i) Shareholders & meetings :- they should be treated fairly & should have equal rights, redress thru legal action, proper communication channels.
(ii) Listed co’s & its controlling shareholders – This section of the code deals with a protocol for how the controlling shareholders should behave when an enterprise is being restructured or reorganized prior to listing. The controlling shareholders initially nominate the candidates for directors & supervisors on the basis of their professional skills, knowledge & experience. The controlling shareholders initially nominate the candidates for directors & supervisors on the basis of their professional skills, knowledge & experience. The listed company should be able to act independently of the controlling shareholders. The listed company should be able to act independently of the controlling shareholders.
(iii) Directors & BOD – they should ‘faithfully, honestly & diligently perform their duties for the best interest of the co. they should meet periodically & have a pre- set agenda, with timely & clear information about all agenda items being sent to directors. (iv) Supervisors & supervisory board – this board should comprise individuals with professional knowledge or work experience in such areas as law accounting. Duties are :- Supervising corporate finance Supervising directors’ & managers’ performance Protecting co’s & shareholders rights & interests
(v) Performance assessments & incentive & disciplinary systems – Performance should be assessed thru a fair & transparent procedure Compensation should be linked to both the co’s performance & the individuals performance. (vi) Stakeholders – the Code mentions that the co. should respect the legal rights of the various stakeholder groups & provide them with information as appropriate. (vii) Information disclosure & transparency
AUSTRALIA In 2003, ASX corporate governance council issued the principles of Good Corporate Governance & Best Practice Recommendations. 10 core principles:- (i) Recognize & publish the respective roles & responsibilities of Board & mgt (ii) Have a board of an effective composition, size & commitment to discharge adequately its responsibilities & duties
(iii) Promote ethical & responsible decision making (iv) Have a structure to independently verify & safeguard the integrity of the co’s financial reporting (v) Promote timely & balanced disclosure of all material matters concerning the co. (vi) Respect the rights of shareholders & facilitate the effective exercise of those rights
(vii) The system should identify, assess, monitor & manage risk & inform investors of material changes to the co’s risk profile (viii) Fairly review & actively encourage enhanced board & mgt effectiveness (ix) Ensure the level & composition of remuneration is sufficient & reasonable & that its relationship to corporate & individual performance is defined (x) Recognize legal & other obligations to all legitimate stakeholders