Corporate governance: an essential foundation of the world economy Corporate governance is not just a business issue.

It concerns the well being of economies and populations and it is, par excellence, a business partnership.
William Witherell Centre for Tax Policy and Administration

For most of us, the term "corporate governance" refers to the codes of conduct, such as the famous Cadbury Code, that have emerged in recent years. These codes usually recommend that companies change the structures and procedures of their boards to better account for their activities to their shareholders. They often advocate increasing the number of independent directors on boards of directors, to separate the roles of Chairman and Chief Executive Officer, or create new committees, such as a committee of auditors. If corporate governance was limited to this, one might legitimately ask why an intergovernmental organization such as the OECD, whose mandate is to advise on issues of public policy, is concerned about . Corporate governance is not a business issue, as the name suggests? This is not the case. Governance goes beyond the functioning of boards and their procedures. It covers all the relations between the leaders of a company, its board, shareholders and other stakeholders such as employees and the communities in which it is located. The quality of governance depends directly on the framework established by the authorities. These play a vital role in developing the legal, institutional and regulatory framework within which systems of governance are established. That this framework is inadequate, and the terms of the corporate governance are likely as well. The institutional framework defines, among other things, shareholder rights under the law and their right of appeal when those rights are not respected. To give just two examples, it protects shareholders through regulations and provisions requiring companies to disclose full information about the risks. Many other factors influence the terms of the control, management and accountability of the company, and many of them are undoubtedly of public policy. THE ORIGIN OF A CRISIS

Several reasons lead us to ensure the quality of governance. First, poor governance can affect national economic performance and, ultimately, to global financial stability. The financial crises in Asia, Russia and elsewhere have amply demonstrated. Even if the circumstances were different, all these crises had in common: governance structures suffered from distortions detrimental to the efficiency of economic decisions. When imbalances have become so large they could no longer be ignored, they have led to strong reactions in financial markets, sometimes reducing to naught the efforts of developing nations and entire regions. The problems of each country have also played an important role. In Asian countries, interest groups associated with large financial institutions and even the state, ran huge conglomerates under conditions preventing any external control. Their links with the highest levels and the implied warranty of State allowed the conglomerates easy access to sources of credit and external capital, without submitting to the control measures that would normally be imposed. Neither minority shareholders - and foreign - nor the creditors have the information and the necessary powers to control their operations.The lack of transparency and accountability has led to distortions in the incentive structures, over-investment and a dangerously high debt firms. The situation was aggravated by the lack of information procedures and controls in the banking sector, which prevented early detection of the deteriorating financial situation of companies. In countries in transition from centrally planned and market economies, corporate governance must address the needs of different stages of reform. And in many of these countries have attributed the delay in restructuring after privatization the shortcomings of corporate governance. In other words, privatization has enabled the transfer of public enterprises to private actors, but the ambiguity of property rights and the inadequacy of the regulatory and institutional framework allowed "insiders" to easily take control such enterprises, while resulting in an opaque ownership structures and control. The rights of minority shareholders have been badly protected in many cases and, finally account, deficient corporate governance has undermined confidence in the markets, taking hostage the entire financial system. All countries have an interest in improving the operating procedures of their companies: the issue of improving governance does not arise only in emerging market economies and economies in transition. Even the most advanced economies are questioning their practices, challenge and strive to improve them. United States, the separation of Chairman and Chief Executive Officer is unusual, even if it is desired by many investors. In European countries, more and more voices are calling for better treatment of minority shareholders and greater transparency in mergers and acquisitions. In

Japan, efforts to revive economic activity require improvements in areas such as information disclosure and operation of boards of directors. In Australia, the United Kingdom, France, Germany and Sweden, significant efforts and long-term have been made in corporate law and regulation of takeovers. Hot money Capital is unfortunately more and more feverish. This is one of the consequences of the communications revolution and the increasing integration of the global economy.In their constant search for new investments, investors are quick to transfer their capital from one end to the other in the world. To attract and retain long-term capital from many investors, companies must offer structures of corporate governance credible and recognizable. Companies, like governments, must adapt. Of course, corporate governance does not only foreign investors, although it is often the first to come forward. Most of the investment from national sources in almost all countries. Strengthen investor confidence in companies and stock markets in their own countries is essential to ensure sustainable competitiveness for businesses and the health and vitality of national economies. Studies have shown, and there is nothing surprising that the countries where investors are less protected are generally also those with the capital markets are more limited and less liquid. It has been increasingly aware of the importance of corporate governance quality, and in this context that the OECD has developed a set of Principles of Corporate Governance. These principles represent a synthesis of the basic elements considered most important part of corporate governance. They are designed to be implemented with the flexibility to take account of the situation, culture and traditions of each country. They are non-binding. Their purpose is to serve as benchmarks for governments to reconsider and refine their systems in terms of corporate governance.Finally, they guide the stock exchanges, investors, private companies and national commissions of corporate governance in the development of best practices, rules of listing and codes of conduct. The OECD Principles cover five main areas: shareholder rights and their protection, fair treatment of all categories of shareholders, the role of employees and other stakeholders, transparency of structures and activities of company, and the dissemination of information in a timely manner and the responsibilities of the board vis--vis the company, shareholders and other stakeholders.

To go straight to the point, we can say that the Principles are based on compliance with four core values: fair treatment, accountability, transparency and responsibility to be accountable. They define the values or principles that seem applicable in all countries and must be the basis for an effective governance framework, which would promote the development of a robust capital market. These values also establish a relationship between corporate governance and other important elements of governance in the broadest sense: the fight against bribery and corruption, accountability and business ethics, governance and public sector the regulatory reform. The objectives of governance requires coordinated efforts in all these interrelated areas, so that all nations can take full advantage of the global economy. Now that the principles were set out, the real work can begin. The main task is now up to the OECD is to encourage a process of review, dialogue and, ultimately, change. We strive to promote these governance reforms in close collaboration with other international organizations, including as part of a joint program with the World Bank with the participation also of the IMF, regional development banks and other bilateral partners. As part of this cooperative effort, the primary responsibility of the OECD is to hold a series of regional roundtables bringing together senior politicians and representatives of regulatory authorities and markets in the OECD. The aim is to enable them to better understand what corporate governance and help to develop proper and effective measures. Roundtables have been held in Asia, Latin America and Russia. Others are planned for Eurasia, mainly the CIS countries - with the exception of Russia - and Mongolia, as well as for Africa. Twenty-first century, stability and prosperity will depend on the strengthening of capital markets and the establishment of systems of corporate governance effective. It is encouraging to see emerging economies recover from the trauma What accounted for these financial crises of recent years, but it is important that the momentum of the reform of the corporate governance is maintained. The OECD is working alongside the national authorities, institutions, exchanges and other private sector worldwide to help them strengthen their economies. The Principles of corporate governance can contribute to this process. They will perhaps not completely avoid economic shocks, but compliance could prevent them from becoming crises.

Definitions T he implementation of governance in the company ensures a sustainable and effective process of value creation in line with all parties, internal and external stakeholders and in compliance with legal regulations, statutes and internal ethical principles . This opening sentence is a bit heavy it is true, but the project is not simple. Corporate Governance and Corporate Governance: the name has emerged in the business world as the new concept "trendy made in USA". The bosses have they lost the good manners that we hear so much of corporate governance?

Explicitly, the Corporate Governance rehashing two main themes: the organization of the decision within the company and the transparency of the salary of the bosses.

The first gives rise to many publications, codes of conduct or legislation organizing the responsibility of decision makers. This is to examine the relationship between the executive of a company and its board of directors, the presence of an independent director, the transparency of the decision. Relative transparency, which aims mainly to prevent slippage of one person ...

The second theme feeds the fantasies and critics. How many bosses earn? The fees employers are now pressed towards greater transparency. Some see it as a way to better control the business strategy and to distinguish self-interest of the leader of the shared interests of the company. Others interpret this trend as an unhealthy voyeurism.

Corporate Governance and the financial crisis The financial crisis revealed severe shortcomings in corporate governance. When most needed, existing standards failed to provide the checks and balances that companies need in order to cultivate sound business practices.

Towards better corporate governance In 2008, the OECD launched an ambitious action plan to develop a set of recommendations for improvements in priority areas such as remuneration, risk management, board practices and the exercise of shareholder rights. These recommendations also address how the implementation of

already-agreed standards can be improved. Completed in February 2010, this work was published in 3 phases: Corporate governance lessons from the financial crisis, February 2009 - a first overview of corporate governance shortcomings and the resulting challenges

Corporate governance and the financial crisis: Key findings and main messages, June 2009 - follow-up analysis providing the basis for the recommendations

Conclusions and emerging good practices to enhance implementation of the Principles, February 2010 recommendations to help companies and governments to overcome corporate governance weaknesses and support a more effective implementation of the OECD Principles on Corporate Governance

Principles of Corporate Governance

Introduction The integrity of business and markets is very important to the vitality and stability of our economies. As corporate-governance rules and practices governing the relationship between managers and shareholders of companies, and with whom they have interests in them as employees and creditors - contributes to growth and financial stability by strengthening confidence in the market financial market integrity and economic efficiency. Recent corporate scandals led to governments, regulatory bodies, companies, investors and the public focus their attention on the weaknesses of corporate governance systems and the need to address the problem. Principles of Corporate Governance OECD bring to legislators, regulatory bodies and market participants, targeting to improve the legal, institutional and regulatory that support corporate governance, focusing on companies that are traded traded. They also provide practical suggestions for stock exchanges, investors, companies and others who play a role in the process of developing good corporate governance. These principles were endorsed as one of the 12 key standards of the Financial Stability Forum, which are essential to financial stability. The OECD issued its Principles in 1999 and has since become the international benchmark on corporate governance, providing the basis for many reform initiatives by both governments and the private sector. In 2003 the Principles were revised to consider the advances that have occurred since 1999, through an extensive open consultation process and based on the work of the Regional Roundtables on Corporate Governance for countries that are not members of the Organization. In April 2004, the governments of OECD member countries accepted the new principles. This Policy Brief presents the most important of these principles and illustrates how they address key issues of corporate governance.

The OECD Principles of Corporate Governance Introduction The integrity of business and markets is central to the vitality and Stability of our Economies. So good corporate governance - the rules and practices That Govern the Relationship Between the Managers and Shareholders of Corporations, as well as stakeEmployees like Creditors and holders - Contribute to growth and Financial Stability by underpinning market confidence, financial Economic efficiency and market integrity. Recent corporate Have the scandals focussed minds of Governments, Regulators, Companies, Investors and the general public on Weaknesses in corporate governance systems and the Need to Address This Issue. The OECD Principles of Corporate Governance Provide specific guidance for policymakers, Regulators and Market Participants in

Improving the Legal, Institutional and Regulatory Framework That underpins corporate governance, focus on With A Publicly traded companies. They Also Provide Practical suggestions for stock Exchanges, Investors, Corporations and other parties to Have That role in the process of Developing good corporate governance. They Have Been Endorsed as one of the Financial Stability Forum's 12 key standards essential for Financial Stability. The OECD Principles Were Issued in 1999 and originally Have since Become the international benchmark for corporate governance, forming the basis for a number of Reform Initiative, Both by Governments and the private sector. The Principles Were revised in 2003 to take Into account Developments since 1999, through to process of Extensive Consultations and open, and drawing on the work of the Regional Corporate Governance Roundtables for non-OECD COUNtries. The new Principles by OECD governments AGREED Were in April 2004. This Policy Brief outlines the salient features of the Principles and How They illustrated key corporate address Governance issues What are the Principles and what issues They do address? The Principles cover six key areas of corporate Governance - Ensuring the basis for an Effective Corporate governance framework, the rights of Shareholders, the Equitable Treatment of Shareholders, the role of stakeholders in corporate governance, disclosure and Transparency, and the Responsibilities of the board (See Box 1) . There are explanatory annotations for Each area Also Indicate That the range of policy meaWhich Have PROVED sures in Achieving Them Useful. Key to the success of the Principles Is That They Are Principle-based and non-prescriptive so That They Retain Their relevance in varying legal, Economic and social contexts. The Basic Requirements of the Institutional and legal / Regulatory framework needed to support Effective an integrated corporate governance are part of the Principles. The text includes Principles for Developing Such a framework and addresses the Need for Laws Both and Regulations Which are enforceable and are Effective backed by enforcement agencies. Experimental

Around the world shows encephalo That although the powerful concept of a listed company Has Been Introduced successfully in Many Countries, the Accompanying Legal and Regulatory System Has Often lagged, leading to abuse in Some cases of minority Shareholders and to Reduce growth prospects when to Financial Markets Lose Credibility - or fail to Achieve it in the first place. Other areas are cover by the Principles Aimed at Establishing an Effective system of checks and Between balance boards and management. Professional managers, for example, Have a key role to play in the modern listed company or widely-Held, But to Avoid possible misuse of Their position requires, inter alia, Effective monitoring by the board. The Principles Such stress That Should not Involve monitoring day-toBut Rather Ensure day Strategic management guidance of the company and the Oversight of internal controls. Who monitors the monitors But? The board in turn is accountable to Shareholders Who, The Principles Maintain, Should Be Able to Exercise Their fundamental ownership rights, and appointing Including Removing Board Members, and Should Be Treated by equitably the company. Effective use of ownership rights to Influence and monitor the board Requires basic stanTransparency and disclosure of Biological Standards, Another area Which is considered. Reality is, howeve, Often more and Their Complex with management companies controlled by a dominant shareholder - A Somewhat Different case for monitoring, But One That Is Also Covered by the Principles. Finally, if the enterprise is To Be Successful, Will Also Have the board to Consider Such stakeholders as Creditors and Employees Who supply the firm with resources and Who Also Need Timely and relevant access to information. Attention to stakeholders is a unique feature of the Principles. The OECD Principles are relevant to a number Highly of recent high-profile cases of corporate failure. For example, in a number of cases, boards to Appear

Have Been to dormant or Even Have Become a part of management, Rather Than an active monitor of STIs performance. In other cases, boards act to Appear Simply as rubber stamps, Responding to the wishes of a dominant shareholder. Shareholders Appear to Have Either passive or ineffective Been at sanctioning the board and in a number of cases controlling shareHave Pursued Their holders at the expense of Interests minority Shareholders. Complex Financial Institutions complex corporate and Structures Around the World Also Have Thrown Into stark relief the question of Conflicts of Interest, Which Have Been MOST Apparent Some brokerage in research and in fund management. The Principles Have Addressed These issues always, But the revised version more emphasis Gives Them. How to Strengthen the ownership role of Shareholders? The significant Increase in the shareholdings of institutional tional Investors in Many Countries in recent years is Often Thought To Have led to the formation of a large and powerful constituency in Favour of monitoring companies. In Fact, Institutional Investors, Especially Those acting in a fiduciary role as collective Such Schemes and pension funds investment, continue to play a limited role in corporate governance as owners of companies. The central policy issue is not necessary They Should Have sarily whether additional rights as shareholders, But Rather That They Do not make Informed use of rights They Already have. This is of course to the detriment of the investor Who has Entrusted funds to Theses Institutions. The general approach is taken by the Principles That the decision to Exercise voting rights in an Mann report is related The Costs to bother and Benefits of voting, so in Many instances it is the incentive to vote Which Needs to Be Improved, in part-through Policy Initiative. The Principles do not oblige Institutional Investors acting in a fiduciary capacity to vote Their shares, But They Do Them to call on voting Disclose Their Policies. When These Policies include use of active ownership rights, That the Principles also recommend Institutional

Investors Disclose How They Implement These Policies, They Including the set-aside resources For This purpose. The Principles call for impediments Also to crossborder voting to be Eliminated and for companies to Avoid making it unduly expensive to vote or apologetic. With Respect to exercising ownership rights, the Principles advocate That Shareholders Should Have the right to remove Board Members to Participate in and Nominating Them. Shareholders Should Be Able to ask questions of the board at the general meeting and to place items on the agenda. The Principles call for the Disclose to ask yourself and board remuneration policy to for Board Members and key executives, Highlighting Between the remuneration and performance link. Shareholders Should Be Able To Make Their views Known about this policy and Any equity component, Such as share options, subject to Their Should Be Approval. Even for Institutional Investors, the Report Use of ownership rights is costly. In Many instances, institutions tional Investors Feel That Their stakes in individual companies are not large enough to justify These costs. To Overcome this situation, the Principles recommend That the Authorities allow institutions or Even Encourage munications (and other Shareholders) to co-operate and Their co-ordinate actions. Howeve, There is an important tant caveat Such co-operation That is not Aimed at Obtaining Manipulating the market or control of the Without Going Through company accepted takeover procedures. Better co-ordination in Nominating and electing Board Members, Placing on the Proposals schedule and holding discussions Directly With A company are all welcome as valid Methods of improv ng corporate governance. Overall, the Principles take The View That The Costs of dog ownership and Effective Should be reduced. As part of ITS approach to participation by Institutional Investors, the Principles call on country clubs to lift unnecEssary Regulatory Barriers to A Continuing Dialogue Between Investors and companies. At the Same time, Such close relations Recognising That Can degenerate

Into abuses, particularly in Situations Where There are Inherent Conflicts of Interest, the Principles reward That mend disclosure of general information to the Should Remain the market practice. Any additional information released by a company to Institutional Investors Should Be Aimed at helping Understand Them Such background to the published information. How do the Principles Deal With Conflicts of interest? One of The Most Striking lessons of recent years is That Widespread Conflicts of Interest and dog are Often Behaviour detrimental to lead to shareholders, researchtors and stakeholders. Since take Conflicts of Interest They Are Many Different forms Dealt with in Several Different sections of the Principles. As a general approach, the Principles advocate Both full-Disclosed sure an explanation and by the parties as to Involved how the conflict of interest is Being managed. Managing Conflicts of Interest is particularly important tant with Respect to external Auditors, Whose independent dence is crucial for Financial Market Integrity. The Principles support the Principles of Auditor Oversight Issued by the International Organisation of Securities Commissions (IOSCO) in 2002. These recommend Creating a body, acting in the public interest, to Provide Oversight of the quality and Implementation of Audits. The OECD Principles Recognise the imporProvisions of recent tanca Introduced by Many Countries to Deal With the skewed incentive structure That's When the external auditor arised Provides nonaudit services or when to have Might Be Involved in auditing His own work. Managing the Relationship with the external auditor so as to Ensure a high-quality Also independent audit is the Principles Identified by as a key duty of the board. An Effective corporate governance framework Needs to be backed by Effective Ways to Ensure the integrity Such as Those of Financial Analysts, brokers and rating That agencies or advice Which Provider Information Could Influence Investors' decisions. This is NECESSARY Relationships Between since service providers close

Their client companies and introduces the Potential for Conflict of Interests. It is important for the market to know whether the company is run with due Regard to the Interests of all STI investors. To this end, the Principles state That It is essential for the company to Fully Disclose Any matematerial related-party transactions from. Such Transactions are Typically the company and Between Entities in Which it Have An STD management or interest, or with significant shareholders, Including Their close relatives and associates. The Principles call for the Beneficiary of Such a transaction to be Obliged to inform the board, Which in turn make a disclosure to Should the market. This Should not, howeve, absolve the firm from mainTaining Its Own monitoring. The Principles emphasis the Need to Protect Minority shareholders, notably MOST Where There are controlShareholders Whose Interests Might ling diverges from Those of the Others. This is particularly a source of JURISDICTIONS WHERE Concern in the legal and Regulatory framework for minority protection is weak. The Principles reaffirm That It is reasonable for Investors to expect the abuse of insider That power, by Including controlling shareholders, Will be prohibitive. In cases WHERE Such overuse are not specifically forbidden by Legislation is not or WHERE Effective enforcement, the Principles call on policymakers to Consider Measures Such gaps to fill. How do the Principles Strengthen help Company Accounting Oversight by boards? The company board as the fulcrum That Serves balances the ownership rights enjoyed by shareGranted With The holders discretion to managers. Good corporate governance That Requires the board, STI whatever structure, focus on long-term issues, Assessing Such as corporate strategy, and Activities That Might Involve a change in the nature and direction tion of the company, Rather Than Taking on day-to-day Operational Responsibilities. Howeve, boards as a Individual Members and Their whole must-have Clearly-defined incentives and Duties to Ensure That

Effectively board exercises the functions STI. The Principles Specify Responsibilities Clearly-defined That for the board include Establishing a code of corporate ethics, Ensuring compliance with Laws and standards, and Oversight of internal control systems for Financial Reporting. Also Should the board be Formulating and responsible for disclosing the remuneration That policy ation highlights the link entre remuneration and performance for key executives and board members. Many country clubs now regard 'as best practice the creation of a remuneration Committee with independent directors. Since the board and Its Members Have a fiduciary duty to the company and all STI shareholders, the Principles embrace a general notion of board Independence and objectivity, Rather Than Referring Simply to Independence from management. When a company is part of a group, the board's duty is to the company, not the group. Should Boards review related party transactions from using independent board members and confidential Provide access for whistleWho blowers May be in a position to Identify unethical Conduct and abusive Transactions. Although board Such tasks as Committees for audit, remuneration and Have spread in the nomination FEW years past, the Underlying concepts are not always well Understood remove and serve Committees Often in Different roles Different companies. To Avoid confusion and to inform Investors, the Principles advocate That the composition tion, Mandate and remit of Committees be Clearly Fully Disclosed and defined. How can governments use the Principles? Although a number of features by the advocate Principles require action by boards, and Investors Others, There Is Also an important role for Governments to play. For example, boards Usually Will be Able to Adopt A structure Consistent with Effective Effective management and supervision of accountAbility to Shareholders. Howeve, Desire features Such as Cooperation Between Investors and protection tion of minority Shareholders May depend to a great

Extent action to remove on Government Regulatory Barriers and to enforce rights. In Addition, private Might not alone actions lead to corporate Desirable governance practices. Where management is entrenched and capital markets are weak, for example, boards continue to Avoid Their Apr responsible sibilities unless remedial action take the Authorities. The Principles offer broad guidance for governments When reviewing whether to follow Their corporate governance framework is Compatible with Establishing the corporate governance They Want. PolicyEncouraged to Develop makers are the governance framework with a view to STI Impact on Overall Economic performance, market integrity and the Creates incentives for it and the market Participants promotion of transparent and efficient markets. This Should help reduce the Risk of Costly over-regulation Minimise and the unintended consequences of policy measures. To underpin market integrity, the legal and Regulatory Requirements That Affect Corporate Governance practices Should Be Consistent With The rule of law, transparent and enforceable. The Principles cover the types of Also mecanismos That Should Be ESTABLISHED for parties to Protect Their rights. Supervisory, Regulatory and enforcement Authorities Should Have The Authority, integrity and resources to FulFil Their Duties in a professional and Objective Manner. Howeve, where, Institutional resources are constrained, the Legal and Regulatory Requirements Could be adjusted. For example, where, more courts are weak reliance Might Have to be Placed on other shareholder Mechanisms to Protect Such rights Thresholds for as low calling Shareholding Proposing meetings and Board Members or high Thresholds for major voting decisions. Should Rulings Be Timely, transparent and Fully Explained. Box 2 Discusses in detail how the OECD Helps Govern-

ments to Improve corporate governance. How was the review of the Principles Carried out? OECD Ministers in 2002 Call for an Assessment Principles of the OECD by 2004, Earlier Than year Intended Previously, in the wake of a series of corpoThat rate scandals Undermined confidence in the HAD integrity of Corporations, Financial Institutions and markets. To support this work, the Ministers Request a survey of corporate governance Developments in OECD countries with a view to Identifying Lessons Learned and Implications for possible the Principles. The Assessment Carried out under the WAS ResponsioBility of the OECD Steering Group on Corporate With The active participation Governance of Observers key from International Institutions, notably the Bank for International Settlements, International Monetary Fund, World Bank, Financial Stability Forum, International Organisation of Securities Commissions and the Basel Committee. Leading business and Labour representative tives, notably the Business and Industry Advisory Committee to the OECD and the Trade Union Advisory Committee to the OECD Also Participate in the Steering Group's meetings on an ad hoc basis The Steering Group Sent to questionnaire to member Requesting Information about corporate Countries governance issues, the forces at work and proper policy measures. The responses, together With A review of practices in OECD member Countries Formed the basis of a report Entitled Corporate Governance: A Survey of Developments in OECD Countries and report The discussions of the Steering Group. In undertaking STI review, the Steering Group organComprehensive and transparent Consultations ised. The Assessment process included consultation-Extensive munications With The Private Sector, Labour and Civil Society at large. Three major Consultative Meetings with broad Held in conjunction participation Were With The Steering Group meetings. In Addition, the OECD Secretary-General convene informal two roundtable

Meetings with Representatives from key senior international Organisations, Business and Labour. Consultations with non-member partners Were first undertaker-through meetings of the five Regional Corporate Governance Roundtables. Additional input Obtained from a special WAS meeting Attended by 43 non-member Countries Organised in co-operation With The Global Corporate Governance Forum. In January 2004 a draft of the revised Principles WAS posted on the Internet for comments from the general public. Some 75 submissions from private Were Received Individuals, professional Associations, business and trade unions and, WHERE WAS Given permission, They Were posted on the OECD website for public access. What Happens Next? The Principles Should Be Considered a living document ment. It is an OECD priority to make sure That They Are Actively Disseminated and widely used. This Will Continuing include policy-dialogue with policy-WHERE makers, Regulators and standard-setters Will Be Able to exchange experience of Implementing the Practical Principles. The OECD Will continue to monitor Also Identify new trends and Developments and Challenges That Deserve Attention. As an important part of future work, the OECD Will host an international multistakeholder dialogue on corporate governance. This Dialogue among Corporations, Investors, service providers, labor and Others Will Be as inclusive as Provide an important and possible to Opportunity Ensure That the Principles and are relevant REMAIN Actively Used in the private sector. Beyond the Principles, eleven the Guidelines for Corporate Governance of State-Owned Enterprises are AGREED They Will Also Become an aspect of the dialogue. As for non-OECD countries, the next stage of the Regional Roundtable is Already Underway process. In the case of the Russian Roundtable, the Participants Have AGREED to create two ad hoc Task Forces to examine policy options in two priority areas: the Internationally Recognised Financial Transition Towards reporting standards, and Problems Arising from

related-party transactions, Transparency of beneficial ownership and control. The Asian, Latin American and Southeast Europe Roundtables Will Also focus on Implementation and enforcement of White Paper recommendations. The Eurasian Roundtable Will Shortly issue a Comparative Overview of corporate governance in the region, Containing Priorities for Further action to be Pursued in the follow-up phase

rinciples of Corporate Governance

The Board believes that Delta's corporate governance practices provide a sound basic framework to help it fulfill its responsibilities. These principles of corporate governance have been approved by the board. They will be reviewed annually or more frequently if deemed necessary or appropriate. Delta activities are managed under the supervision of the Board, elected by the shareholders. The board of Delta represents the interests of shareholders to maximize financial returns in the long term while addressing, in a timely manner, the concerns of other interested and involved parties, including employees, customers, suppliers, employees and the public at large . The directors advise the management team and monitor its performance and compliance with corporate standards. Activities are performed by Delta employees, directors and executives, led by the CEO. Select the links below to view the detailed principles of corporate governance in Delta: y Selection and composition of the Board y Operation of the Board y Committees y Meeting Procedures y Evolution and management oversight

Selection and composition of the Board

Criteria for membership on the Board The Board strives to select as managers / directors of the individuals with the skills and experience to assist management in managing the operations of Delta. The Board reviews annually the obvious needs of the Board at this time. The criteria for membership on the board include: business experience, character, judgments, diverse experience, skills and flair, international experience and other criteria related to the expectations and objectives of the board.Independence, culture and financial experience and ability to focus heavily on board activities and development of knowledge related to the activity of Delta are also factors considered for membership on the board. Each Director / Director will devote the time and attention necessary to meet its obligations, attend board meetings and committee meetings which he / she is a member and study materials which have been sent before the meetings. Managers / directors will also attend the annual meetings of shareholders. Selection for membership on the Board The Board, acting through its Corporate Governance Committee is responsible for appointing directors to fill board positions, new or existing, at the right time, to recommend nominees for submission to shareholder vote . The committee will review and propose possible candidates each year, including asset managers and candidates proposed by shareholders, pursuant to

Article II, Section 8 of the Statutes of Delta. The committee will consider either the candidates proposed by shareholders and other designated persons. Orientation and Continuing Education Director The board and management will be responsible for orientation of new directors to familiarize them with Delta, its strategies, values, including ethics, financial matters, corporate governance and other key policies and practices. The new directors will review the reference materials supplied by the management of Delta, and Delta for the airline industry, meet with management and tour facilities in Delta. The Board also recognizes the importance of continuing education for its members. The management and corporate governance committee are obliged to inform the directors of continuing education opportunities, and managers are encouraged to take advantage of these opportunities. Top

Operation of the Board

Executive Board The board has no policy determining whether the roles of CEO and chairman should be separated or not. When these positions are combined, the board shall elect a director to fill the external position of president and chair the sessions of the board which does not attend the executive director and to perform other functions deemed appropriate by the board. Board size The Board will normally consist of nine to eleven members, it can still expand to accommodate the availability of an outstanding candidate or adjust its size, in accordance with the parameters established by the statutes, to function effectively as advice. Independence of members A significant majority of directors be independent and unrelated material with Delta (either directly or as a partner, shareholder or representative of an organization with such ties with Delta), as defined in the official list of standards the New York Stock Exchange (NYSE) and theindependence standards of management adopted by the board, which are included in these principles. Each director must inform the chair of corporate governance as soon as possible for every situation or condition that might affect its independence. Directors changing responsibilities / limits membership on the board outside It is expected of a manager he / she proposes to submit his resignation when celui-ci/celle-ci no longer in the main post he / she occupied at the time of his election to the board. Managers employed full time at Delta should resign from the board when they leave full-time employment.External board members are encouraged to limit their number of memberships on boards of other companies. The Delta executives including the CEO, may not be members of the board of only one other public company. Retirement and time limit No external director can not claim for re-election after age 72. The Board believes that it is not necessary to establish a time limit for directors. Although time limits ensure the provision of new views and ideas on the board, they also have the disadvantage of losing the contribution of directors who were able to develop, over time, increasing the prospects in Delta and its operations, and take so much from the board. In place strict limits of these periods, the corporate governance committee will formally review and extension of an annual membership to the Board of each director. It will also provide an opportunity for each director to confirm, in a timely manner, his desire to remain part of the board. Remuneration of the Chief

The Board will periodically review the remuneration of the director by comparing to other companies, positioned similarly to ensure that the remuneration of the Board and the Committee is reasonable and competitive. The directors of Delta employees also will not be paid separately.Compensation will pay outside directors in proportion to the work required by a company the size and scope of Delta, will have to pay on a par with the interests of directors and long-term interest of shareholders and the structure Compensation should be transparent and understandable to shareholders. Loans to directors and senior Personal loans to directors and senior managers are excluded from the policy of Delta, with the exception of those who comply with the Sarbanes-Oxley Act of 2002 and any regulation or interpretation of the SEC pertaining thereto. Directors Shareholding Directors are encouraged to have a significant stake in Delta, within a reasonable time after their first election to the Board, and maintain that equity as they are members. In order to align more closely the interests of directors and shareholders of Delta, the directors will be partly paid in the form of shares. Executive Sessions The board will result in planned and regular executive sessions without the presence of the Chief Executive or any other house. Access to external advisors The Board and each committee may hire at any time, at the expense of Delta, advisors in finance, law, compensation or other advisors deemed necessary. Access to Management Board members have full access to the management of Delta. They are supposed to use their judgments to ensure that contacts with management does not divert the business operations of Delta and the Chief is properly informed. Annual evaluation of Board performance The Board and each committee will conduct an active self-evaluation at least once a year to determine whether it and its committees function effectively. The purpose of the evaluation is to improve the effectiveness of the Board and committees and of each member. Council's relations with investors, the press, customers and other Each may, from time to time, meet or communicate with various parties related to Delta. Board members are still expected to speak on behalf of Delta, provided that management is informed and, in most cases, at the request of management. Transactions between directors and Delta Any payment for any reason, including for goods or services, by Delta or its subsidiaries in the main commercial affiliation with a director or of a direct member of the family of a director must be made in the ordinary course of business and in conditions similar to those existing in comparable transactions with non-affiliates. Any payment for any reason, including for goods or services, Delta or its subsidiaries by a director, a direct member of the family of a director, the main commercial affiliate of a director or that of a direct member of the family of a director, must be made in the ordinary course of business and under conditions substantially similar to those existing in comparable transactions with non-affiliates. The term "primary business affiliation" refers to an entity whose principal or a direct member of the family is a main frame or higher, or in which the Director or a direct member of the family owns at least 5% equity . Top

Committees

Types of Committees Board committees are currently active include: control, corporate governance, finance and personnel and compensation. The Council may from time to time, a new committee or disband an existing committee. Each committee has a charter that active review annually. The committee charters are available in the Corporate Governance . Independence of members of certain committees The Audit Committee, the Corporate Governance Committee and the Staff Committee and Compensation Committee will be composed exclusively of independent directors as defined by applicable law, standards of official symbols of the New York Stock Exchange (NYSE) and Director Independence Standards adopted by the board. Any other active committee will be composed solely of outside directors to management. The corporate governance committee will recommend annually the responsibilities of active committees to the board. The regular rotation of membership of the committees will be considered. Frequency and duration of meetings Committee chairs in consultation with the Secretary General, will determine the frequency and duration of meetings. Committee financial expert control At least one member of the Audit Committee will be appointed by the Board as "audit committee financial expert control," as defined by the SEC (Securities and Exchange Commission), unless another board. Top

Meeting Procedures
Conduct of Meetings Board meetings and committee meetings will be conducted to ensure open communication, meaningful participation and timely resolution of problems. Wherever possible, managers will receive support on issues to be considered before the relevant meeting to allow directors to prepare the discussion of various points of the meeting. Presentations related to specific topics are usually sent to the Board in advance to save time during board meetings and focus discussions on issues the board. In case of very sensitive subject, the presentation will be provided at the meeting. Choice Agenda The President and the CEO (if the posts are not cumulative) set the agenda for each board meeting. Board members may suggest to include questions on the agenda for board meetings special. Some points will be recurring, such as committee reports and an annual review of the business plan a year of Delta and its long-term strategic plan, its fleet plan and its financial goals. Top

Evolution and management oversight

Evaluation of the Chief The outside directors will evaluate the performance of the CEO at least once a year. The latter will provide a self-assessment in specific areas such as strategic planning, finance and management.The outside directors will meet in an executive session to discuss the evaluations and will also meet with the Director General on the evaluations. Statement of account of the Chief The President of the Staff Committee and Remuneration will, from time to time, review the bills of costs submitted by the Director General.

Management Succession In general, the board will consider policies and principles for selecting the CEO and policies related to succession in the case of an emergency or retirement of the CEO. It will review annually with the CEO succession planning and development management. The Director General will also be able to make recommendations on a regular basis, the choice of the person who will succeed him in case he / she would become invalid.

CODE OF CORPORATE GOVERNANCE

The Code of Corporate Governance, adopted in 2007 and updated by the Board of Directors on March 24, 2011, describes the composition and outlines the functions of bodies responsible for the government - as participants in the handler function - Unipol Group Financial SpA and its operating subsidiaries, directly or indirectly, by Parent. In particular, the collective bodies are described the composition, powers and operating rules, while for the individual organs are described in the rules of appointment and powers.

he concept of corporate governance is the set of principles and rules governing the design, integration and operation of the governing bodies of the company, as are the three powers within a society: Shareholders, Directors and Senior Management. Good corporate governance provides the incentives to protect the interests of the company and shareholders, monitoring value creation and efficient use of resources to provide transparency of information. The concept appeared decades ago in most developed countries of western Europe , in Canada , the United States and Australia , due to the need of the minority shareholders of a company to know the status of your investment , ie wanted to know what he was doing with their money and what the future expectations. This made the majority shareholders of a business and its directors, initiate a process of openness of information, while of professionalism and transparency in the handling. Worldwide, the stock market , pension funds, corporations mutual , insurance companies , venture capital companies and the like, are an important part of the financial system needs information about your investment have been incorporated in the final companies with the best corporate practices call. The Organization for Economic Cooperation and Development (OECD) issued in May 1999 and revised in 2004 his "Principles of Corporate Governance" in which are the basic ideas that shape the concept that is used by member countries and some others in the process of becoming. OECD Principles provide that the GC framework must:

Protect the rights of shareholders . Ensure equitable treatment for all shareholders, including minority and foreign. All shareholders should have the opportunity to obtain effective reparation of damages for violation of their rights . Recognize the rights of third parties and to promote active cooperation between them and the societies in creating wealth, generating jobs and businesses achieve financial sustainable. Ensure there is adequate and timely disclosure of all relevant matters of the company, including financial situation, performance, shareholding and management. Ensure the strategic guidance of the company, effective monitoring of the management team by the board of directors and the responsibilities of the Board and its shareholders. The OECD and the World Bank through the International Finance Corporation , together with the Global Corporate Governance Forum has established a comprehensive program of dissemination of the concept of corporate governance in the world. This program includes panel discussions by geographic region and in Latin America have been conducted in eleven Latin American roundtable GC. The first was held in 2000 in So Paulo , Brazil, the second in 2001 in Buenos Aires , Argentina, the third in 2002 in Mexico City , the fourth in 2003 in Santiago de Chile , Chile, the fifth in 2004 Rio de Janeiro , Brazil, the sixth in 2005 in Lima , Peru, the seventh in 2006 again in Buenos Aires, Argentina, the eighth in 2007 in Medellin , Colombia, the ninth in 2008 again in Mexico City, the tenth in 2009 Santiago de Chile and eleventh again in Rio de Janeiro, Brazil in 2010. The city chosen to host the next meeting is Lima, Peru in October 2011. Today is as important as corporate governance and efficient financial performance. It is said that about 80% of investors would pay more for a company with a good GC, since this element gives more security to your investment ensuring healthy business practices. The greater transparency and more information is available, the greater the confidence of investors in the market. Therefore the CG far from fashion as a concept necessary for the sustainability and growth of companies.

Perspectives on Corporate Governance

We can identify two main types of corporate governance: Shareholder value In the first system that focuses on creating value for the shareholders (shareholder value in English), the company seeks to maximize the market price of the shares held by shareholders. Align executives'

interests with those of shareholders and investors finance. The organization's board of directors and regulatory transparency, and executive compensation are defined for this purpose. Stakeholder value In a second system, we value more value creation for all stakeholders (stakeholder value in English). In this case, we seek to create wealth among the various human and material resources in cooperation with different types of stakeholders : customers , suppliers, employees, shareholders , local authorities ,...). Performance is measured against all the partners. This type of governance will encourage the development of two types of capital: financial capital but also human capital (knowledge, skills, innovation). It is interesting to note here that we find the values of the nineteenth century French utopian developed by French (Proudhon, ...) or more of Catholics (from master ...)