PRINCIPLES OF CORPORATE GOVERNANCE AS A TOOL FOR FINANCIAL STABILITY

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Evolving Principles for any emerging field is most tedious, time consuming and difficult to converge diverse interests, practices and cultures. There are essential factors for prudent investors to invest their scarce resources for achieving long-term returns through  accountable governance structures.
The Governance principles have been formulated and reformulated after rigorous consultations by the OECD in six key areas, namely rights of shareholders, interests of stakeholders, role of board, disclosure and discrepancy, basis for effective governance framework and  integrity and ethical behavior. These can also be clubbed both in precise and extended forms. Some of the commonly accepted principles can however be identified as:
11.  Sustainable Long-term vision- Optimizing performance, profitability and returns.
22.  Shareholder’s rights and responsibility- Corporate charter, majority voting standards, shareholders activism, access to Director’s nomination.
33.   Shareholder’s claims- Parity to all legitimate stakeholders with regard to legal and other obligation.
44. Accountability- Board’s responsibility to shareholders, directors easy access to management, independent Board with outside Directors, board’s oversight committees, seperate position of CEO and Chairman.
55.  Transparency- Transparent, fair and timely disclosures, regularity in governance reporting.
66. Executive and Director’s remuneration- Structure and component of remuneration, incentives, peer analysis, severance agreements, retirement plan, pay for non-executive Directors.
77.  Corporate culture- Code of ethics and conduct, whistle-blowers mechanism, compliance with laws.
88. Integrity in FinancialReporting- Adherence to international financial reporting standards, audit committee over-sight, related party transactions.
19.  Robust Independent Audit- Independent auditor’s role, enhance reporting to shareholders, auditors rotation, non-audit fee, internal audit mechanism.
210.  Risk oversight- Appropriate risk management policies, procedures, reporting and decision-making protocols.

311.Corporate Responsibility- Environmental, social and governance issues, sustainable  and beneficial to the greatest number of shareholder including various stakeholders development, human rights violations, political and charitable contributions.


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