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Presented by:
Sanjeev kumar jha
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¢ Ôhe OECD originated in 1948 as the Organization for European

Economic Co-operation (OEEC), led by Robert Marjolin of
France, to help administer the Marshall Plan for the
reconstruction of Europe after World War II. Later, its
membership was extended to non-European states.
¢ In 1961, it was reformed into the Organization for Economic Co-
operation and Development by the Convention on the
Organization for Economic Co-operation and Development. Most
OECD members are high-income economies with a high Human
Development Index (HDI) and are regarded as developed
countries.
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Ôhe OECD is an international economic organization of 33
countries founded in 1961 to stimulate economic progress and
world trade.
It was one of the earliest non-governmental organizations to
work on and spell out principles and practices that should govern
corporate in their goal to attain long-term shareholder value. In
summary, they include the following aspects of corporate
governance:
1. Ôhe rights of shareholders
2. Equitable treatment of shareholders
3. Ôhe role of stakeholders in corporate governance
4. Disclosure and transparency
5. Ôhe responsibilities of the board
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  Protection of shareholders¶ rights and the

capability of shareholders to influence behaviour
of the corporation are pillars of good corporate
governance
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Î Secure ownership and registration,

Î Participation in decisions on sale,

Î Full disclosure of information,

Î Voting rights

Î Modification of corporate assets, mergers and

new share issues.
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Ôhe OECD is concerned with protecting minority
shareholders rights by setting up systems that keep
insiders, including managers and directors, from
taking advantage of their roles. For example,
Insider trading is explicitly prohibited and
directors should disclose any material interest
regarding transactions.
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 Ôhe rights of stakeholders that are established by law or through
mutual agreements are to be respected.
 Where stakeholder interests are protected by law, stakeholders
should have the opportunity to obtain effective redress for violation
of their rights.
 Performance-enhancing mechanisms for employee participation
should be permitted to develop.
   


 Where stakeholders participate in the corporate governance
process, they should have access to relevant, sufficient and
reliable information on a timely and regular basis.
 Stakeholders, including individual employees and their
representative bodies, should be able to freely communicate
their concerns about illegal or unethical practices to the board
and their rights should not be compromised for doing this.
 Ôhe corporate governance framework would be complemented
by an effective, efficient insolvency framework and by
effective enforcement of creditor rights.
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  * strong financial and non financial disclosure regime is the heart of
corporate governance
  Ôhe 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.
 Financial and operating results
 Company objectives
 Ownership and control structure
 Board and executive information and recommendation
 Foreseeable risk factors
 Stakeholder information
 Governance information

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  Ôhe corporate governance framework should
ensure the strategic guidance of the company,
the effective monitoring of management by the
board, and the board¶s accountability to the
company and the shareholders.
  Ôhe OECD guidelines provide a great deal of
details the functions of the board in protecting
the company and its shareholders. Ôhese
include concerns about corporate strategy, risk,
executive compensation and performance as
well as accounting and reporting systems.
  Board members should act on a fully informed basis, in
good faith, with due diligence and care, and in the best
interest of the company and the shareholders.
  Where board decisions may affect different shareholder
groups differently, the board should treat all shareholders
fairly.
  Ôhe board should apply high ethical standards. It should
take into account the interests of stakeholders.
  Ôhe board should be able to exercise objective independent
judgment on corporate affairs.
  In order to fulfill their responsibilities, board members
should have access to accurate, relevant and timely
information.
  Often there is a tension between markets vs.. the
law. Ôhe Principles do not address this issue. Ôhey
provide a conceptual framework of issues. Ôhese
are taken up in the OECD/World Bank Round
tables and discussed in all the regions of the
world. So these regions can provide their own
agenda for reform and improvement of corporate
governance.
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  Countries should be required to establish independent share registries. *ll too
often, newly privatized or partially privatized firms dilute stock or simply fail to
register shares purchased through foreign direct investment
  Standards for transparency and reporting of the sales of underlying assets need to
be spelled out along with enforcement mechanisms and procedures by which
investors can seek to recover damages
  Ôhe discussion of stakeholder participation in the OECD guidelines needs to be
balanced by discussion of conflict of interest and insider trading issues.
  Property rights and their protection
  Internationally accepted accounting standards should be explicitly required and
national standards should be brought into alignment with international standards
  Internal company audit functions and the inclusion of outside directors on audit
committees need to be made explicit. Ôhe best practice would be to require that
only outside, independent directors be allowed to serve on audit committees
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