The Organisation for Economic Co-operation and Development (OECD) Principles of Corporate Governance
1999
describe the basic elements of an effective corporate governance framework for
corporations that seek to attract capital from equity investors. Specifically,
they focus upon:
a. Rights of Shareholders,
b. Equitable Treatment of Shareholders,
c. Role of Stakeholders in Corporate Governance,
d. Disclosure and Transparency and
e. The Responsibilities of the Board
The
first principle states that ‘the corporate governance framework should protect
the rights of shareholders’.
The
second principle states that ‘the corporate governance framework should ensure
the equitable treatment of all shareholders including the minority and foreign
shareholders and that all shareholders should have the opportunity to obtain
effective redress for violation of their rights’.
The
third principle states that ‘the corporate governance framework should
recognize the rights of stakeholders as established by law and encourage active
cooperation between corporations and stakeholders in creating wealth, jobs and
the sustainability of financially sound enterprises’.
The
fourth principle states that ‘the corporate governance framework should ensure
that timely and accurate disclosure is made on all material matters regarding
the corporation including the financial situation, performance, ownership and
governance of the company’.
The
fifth principle states that ‘the corporate governance framework should ensure
the strategic guidance of the company, the effective monitoring of management
by the board as well as the board’s accountability to the company and the
shareholders’.
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