Corporate Governance Flashcards
I. 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 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. (A)
The corporate governance framework should be developed with a view to its impact on overall economic performance, market integrity, and the incentives it creates for market participants and the promotion of
transparent and efficient markets.
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. (B)
The legal and regulatory requirements that affect corporate governance practices in a jurisdiction should be consistent with the rule of law, transparent and enforceable.
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. (C)
The division of responsibilities among different authorities in a jurisdiction should be clearly articulated and ensure that the public interest is served.
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. (D)
Supervisory, regulatory, and enforcement authorities should have the authority, integrity, and resources to fulfill their duties in a professional and objective manner. Moreover, their rulings should be timely, transparent, and fully explained
II. THE RIGHTS OF SHAREHOLDERS AND KEY OWNERSHIP FUNCTIONS
The corporate governance framework should protect and facilitate the exercise of
shareholders’ rights.
The corporate governance framework should protect and facilitate the exercise of
shareholders’ rights. (A)
Basic shareholder rights should include the right to: 1) secure methods of ownership registration; 2) convey or transfer shares; 3) obtain relevant and material information on the corporation on a timely and regular basis; 4) participate and vote in general shareholder meetings; 5) elect and remove members of the board; and 6) share in the profits of the corporation
The corporate governance framework should protect and facilitate the exercise of
shareholders’ rights. (B)
Shareholders should have the right to participate in, and to be sufficiently informed on, decisions concerning fundamental corporate changes such as: 1) amendments to the statutes, or articles of incorporation or similar governing documents of the company; 2) the authorisation of additional shares;
and 3) extraordinary transactions, including the transfer of all or substantially all assets, that in effect result in the sale of the company.
The corporate governance framework should protect and facilitate the exercise of
shareholders’ rights. (C)
Shareholders should have the opportunity to participate effectively and vote in general shareholder meetings and should be informed of the rules, including voting procedures, that govern general shareholder meetings:
1. Shareholders should be furnished with sufficient and timely information concerning the date, location and agenda of general meetings, as well as full and timely information regarding the issues to be decided at the meeting.
2. Shareholders should have the opportunity to ask questions to the board, including questions relating to the annual external audit, to place items on the agenda of general meetings, and to propose resolutions, subject to reasonable limitations.
3. Effective shareholder participation in key corporate governance decisions, such as the nomination and election of board members, should be facilitated. Shareholders should be able to make their views known on the remuneration policy for board members and key executives. The equity component of
compensation schemes for board members and employees should be subject to shareholder approval.
4. Shareholders should be able to vote in person or in absentia, and equal effect should be given to votes whether cast in person or in absentia
The corporate governance framework should protect and facilitate the exercise of
shareholders’ rights. (D)
Capital structures and arrangements that enable certain shareholders to obtain a degree of control disproportionate to their equity ownership should be disclosed.
The corporate governance framework should protect and facilitate the exercise of
shareholders’ rights. (E)
Markets for corporate control should be allowed to function in an efficient and transparent manner.
1. The rules and procedures governing the acquisition of corporate control in the capital markets, and extraordinary transactions such as mergers, and sales of substantial portions of corporate assets, should be clearly articulated and disclosed so that investors understand their rights and recourse.
Transactions should occur at transparent prices and under fair conditions that protect the rights of all shareholders according to their class.
2. Anti-take-over devices should not be used to shield management and the board from accountability.
The corporate governance framework should protect and facilitate the exercise of
shareholders’ rights. (F)
The exercise of ownership rights by all shareholders, including institutional investors, should be
facilitated.
1. Institutional investors acting in a fiduciary capacity should disclose their overall corporate governance and voting policies with respect to their investments, including the procedures that they have in place for deciding on the use of their voting rights.
2. Institutional investors acting in a fiduciary capacity should disclose how they manage material conflicts of interest that may affect the exercise of key ownership rights regarding their investments.
The corporate governance framework should protect and facilitate the exercise of
shareholders’ rights. (G)
Shareholders, including institutional shareholders, should be allowed to consult with each other on issues concerning their basic shareholder rights as defined in the Principles, subject to exceptions to prevent
abuse.
III. THE EQUITABLE TREATMENT OF SHAREHOLDERS
The corporate governance framework should ensure the equitable treatment of all
shareholders, including minority and foreign shareholders. All shareholders should
have the opportunity to obtain effective redress for violation of their rights.
The corporate governance framework should ensure the equitable treatment of all
shareholders, including minority and foreign shareholders. All shareholders should
have the opportunity to obtain effective redress for violation of their rights. (A)
All shareholders of the same series of a class should be treated equally.
1. Within any series of a class, all shares should carry the same rights. All investors should be able to obtain information about the rights attached to all series and classes of shares before they purchase. Any changes in voting rights should be subject to approval by those classes of shares which are
negatively affected.
2. Minority shareholders should be protected from abusive actions by, or in the interest of, controlling shareholders acting either directly or indirectly, and should have effective means of redress.
3. Votes should be cast by custodians or nominees in a manner agreed upon with the beneficial owner of the shares.
4. Impediments to cross border voting should be eliminated.
5. Processes and procedures for general shareholder meetings should allow for equitable treatment of all shareholders. Company procedures should not make it unduly difficult or expensive to cast votes.
