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The 2006 Asian Roundtableon Corporate GovernanceEnforcement Revisited/Boardroom PracticesMotoyuki YUFU Principal AdministratorOutreach Unit for Financial Sector ReformOECDSession 2Implementation and Enforcement of Rules; Progress Made and Challenges AheadBangkok, Thailand14-15 September 2006The views expressed in this paper are those of the author and do not necessarily represent the opinions of the OECD or its Member countries or the World Bank

outline
Outline

Background; The Stock-Take Report

1. Regulatory Enforcement

2. Shareholder-Initiated Enforcement

3. Implementation; CG Codes, Principles and Guidelines

the stock take report of the white paper
The Stock-Take Report of the White Paper
  • The White Paper 2003 agreed on a stock-taking in a few years
  • Purpose: reference source for Roundtable economies and public to assess progress of implementation of 2003 White Paper Priorities
  • Not intended to rank or rate Roundtable economies
  • Based on 25 responses to Questionnaire (and further public information). Also discussed at previous Roundtable meeting in Bali
  • Progress made January 2003 – March 2005 (and some updated information available)
the stock take report of the white paper cont
The Stock-Take Report of the White Paper (Cont.)

The Report follows six priorities for reform of the White Paper

  • Awareness Raising
  • Implementation and Enforcement of Laws and Regulations
  • Convergence with International Standards for Accounting, Audit and Non-Financial Disclosure
  • Function of Boards of Directors
  • Protection of Non-Controlling shareholders
  • CG of Banks
1 regulatory enforcement
1. Regulatory Enforcement

Often involves many organisations; For instance,

  • Justice Ministry
  • Finance/Treasury Ministry
  • Commerce/Industry Ministry
  • Company Affairs Ministry
  • Company Registrar
  • SEC or FSA
  • Stock Exchange
  • Central Bank
  • Police
  • Public Prosecutors Office
  • And more…
1 regulatory enforcement cont
1. Regulatory Enforcement (Cont.)

Coordination among relevant organisations for better law enforcement

  • China; Bureau for Investigation of Securities Crime (Ministry of Public Security, on the premises of CSRC)
  • Malaysia; High-Level Committee on CG Enforcement (Securities Commission, Royal Malaysian Police and Companies Commission)
  • Thailand; Department for Special Investigation (DSI) (and the WG system among DSI, SEC, Public Attorney and Bank of Thailand)
2 shareholder initiated enforcement
2. Shareholder-Initiated Enforcement
  • The White Paper recommends shareholders be permitted derivative and/or class-action suits
  • “No consensus has emerged from the Roundtable on the derivative versus class-action issue.” (White Paper #148)
  • Among 13 economies 10 had provided for Derivative suits

while 8 for Class Action suits (White Paper 2003)

  • After the publication of the White Paper, the OECD Principles were revised. Revisions include putting more emphasis on shareholders’ suits.
2 shareholder initiated enforcement cont
2. Shareholder-Initiated Enforcement (Cont.)
  • Derivative Suits
    • Hong Kong; legislation to provide for statutory derivative suits
  • Class-Action Suits
    • Korea; Class-action suits legislation was adopted and came into force.
    • Thailand; Draft class-action suits legislation has been proposed.
    • Chinese Taipei; A law established the Investor Protection Centre; it has filed 41 class-action suits (as of May 2005)
3 implementation cg codes principles and guidelines
3. Implementation; CG Codes, Principles and Guidelines

Since 2003…

  • Bangladesh; Voluntary Code (Bangladesh Enterprise Institute) and mandatory Code (SEC)
  • Hong Kong; Revised Listing Rules to introduce Code (Stock Exchange)
  • Indonesia; Revised 2001 Code (National Committee for Governance)
  • Korea; Revised Code (Committee on CG)
  • Pakistan; Manual for the 2002 Code (SECP)
  • Singapore; Revised Code (MoF)
  • Thailand; Revised Principles (Stock Exchange)
3 implementation cg codes principles and guidelines cont
3. Implementation; CG Codes, Principles and Guidelines (Cont.)

Efforts continue and most Roundtable economies now have CG Codes or equivalent.

Further improvements on this could be…

  • “Comply or Explain”
  • Public Consultation
  • Revision and Update; CG is evolutionary in its nature
thank you
Thank you
  • The Stock-Take Report will be made public next month.
  • Also, check the OECD web site for the Policy Brief on CG of Banks in Asia (June 2006)