Corporate Governance 6 BEST PRACTICES Best Practices Codes
Corporate Governance 6. BEST PRACTICES
Best Practices Codes • Extra-legal regulations to mitigate corporate governance dysfunctions • Authors – – international organizations market institutions private organizations companies • Basic approaches – to explain the idea – to give concrete suggestions – mixed approach • Level of pressure: – recommendations – “comply or explain” – compulsory in some situations 2
Important Codes • Cadbury Committee (The Committee on the Financial Aspects of Corporate Governance): Financial Aspects of Corporate Governance (The Cadbury Report), 1992 – Recommendations on the arrangement of company boards and accounting systems to mitigate corporate governance risks and failures • OECD: G 20/OECD Principles of Corporate Governance, 2015 – Ensuring the basis for an effective corporate governance framework – The rights and equitable treatment of shareholders and key ownership functions – Institutional investors, stock markets and other intermediaries – The role of stakeholders in corporate governance – Disclosure and transparency – The responsibilities of the board 3
Stock Exchange Codes • New York Stock Exchange – Recommendations: Corporate Governance: A Practical Guide • • • navigating the changing landscape of corporate governance selecting and developing a high-quality board implementing risk-management controls overseeing a succession plan for senior management communicating effectively with shareholders assembling a comprehensive ethics and compliance program – Requirements: NYSE Listed Company Manual (Section 3 Corporate Responsibility, Chapter 303 A. Corporate Governance Standards • • • independent member(s) of the board meetings commissions of the board corporate governance guidelines Code of Business Conduct and Ethics website requirements, etc. • Warsaw Stock Exchange – Comply-or-explain code: Best Practice of GPW Listed Companies • • • at least 50 per cent of independent members management remuneration disclosure possibility to sue them decisions of the general meeting auditors rotation fully independent special controller equal rights in selling shares, etc. 4
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