Institute of Company Secretaries India Keynote address corporate

Institute of Company Secretaries, India Keynote address : corporate governance + globalisation + the board Hong Kong, China 12 May 2008 Fianna Jesover Senior Policy Manager Corporate Affairs Division, DAF The views expressed in this presentation are those of the author and do not necessarily represent the opinions of the OECD or its Member countries 1

Background on the OECD n n An intergovernmental organisation with 30 developed democracies Membership : Mid-income like Turkey and Mexico to higher include like Japan, Australia and Europe. Globalisation : 70 -100 additional countries Corporate governance at the front-line : OECD Principles of Corporate Governance 2

Globalisation of capital markets, corporate governance and importance of Asia n n In 2007 -2008, emerging markets expected to account for more than half of world economic growth. Companies in BRIC countries accounted for 39% of money raised worldwide. Four of the 12 largest exchanges are in the emerging markets, all of them in Asia. However, they still only received 10% of global total capital flows. 3

Emerging markets still influenced by global developments n n n Increasing importance of activist/engaged investors And private equity, hedge funds, SWFs and rise of SOEs as international investors. So improving corporate governance, that is meant to under-pin economic growth in increasingly competitive markets, continues to be a priority. 4

Asia is well-positioned n n Portfolio investments from Europe and North America to Asia-Pacific surged from $1, 700 bn in 2002 to US $4, 000 bn in 2005. Recent reforms have helped to raise confidence in Asian markets and companies’ access to global capital markets. 5

However, still important challenges n n Increased call for credible shareholder rights, transparency corporate governance practices, and improved enforcement. Abusive related party transactions are at the cruxt of these issues, remain one of most serious breaches of corporate governance in Asia and around the world, example of Samsung case. 6

Strong demand to deepen dialogue between OECD and emerging markets n In May 2007, OECD Council at Ministerial Level invited India, Indonesia, China, Brazil and S. Africa to enhance engagement with the Organisation with a “view towards possible membership”. This shows : - These economies have a strong influence on the world economy - Mutual interest 7

The Six Chapters of the Principles(2004) The full text of the Principles can be obtained from our website: www. oecd. org/daf/corporate/principles I. Ensuring the basis for an effective corporate governance framework II. The rights of shareholders and key ownership functions III. The equitable treatment of shareholders IV. The role of stakeholders in corporate governance V. Disclosure and transparency VI. The responsibilities of the board 8

Boardroom Guide to the OECD Principles n n Board sets generic framework for best practice in corporate governance : directs affairs of the company Common themes: 1. Importance of judgement and diplomacy 2. Strong board leadership 9

OECD Principles VI. E - “the Chairman or lead director may, in some countries, be supported by a company secretary. ” n n Allison Dillon “the corporate secretary plays a key role to inform the board…a board with its own secretariat will be in stronger position to demand information…” Particularly important in making decisions on related party transactions. 10

Best practice report on RPTs n n During the next two days, OECD and decisionmakers from Asia will launch new initiative to develop “Best practice report on RPTs”. Asian Roundtable Task Force on RPTs likely to meet next in India, so “stay tuned”. 11

THANK YOU! Please feel free to contact me for further information : Fianna. jesover@oecd. org Or consult our website www. oecd. org 12