Transcript Document

OECD Russia Corporate Governance Roundtable
Moscow, 22-23 October 2013
Interaction between the
new code and new listing
requirements
Dr. Jochen Biedermann
OECD Russia Corporate Governance Roundtable
Moscow, 22-23 October 2013
Disclaimer: The views expressed in
this presentation are those of the
author and do not necessarily
represent the opinion of the OECD
Russia Corporate Governance
Roundtable, the OECD or its Member
countries, or of the Moscow
Exchange.
Why consider including Corporate Governance
requirements into listing rules
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CG report (e.g. declaration of conformity) becomes part of the annual reporting, thus increasing
transparency for investors
Exchange can directly monitor and sanction missing/late reports or lack of transparency/clarity
Companies with a high grade of conformity can be emphasized, e.g. by a premium segment
membership
Corporate Governance Requirements
within Stock Exchange Listing Rules
National Corporate Governance Codes
OECD Principles of Corporate Governance
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International comparison does not provide a clear
picture how to implement Corporate Governance rules
Country
CG Law
US
CG Code
Sarbanes-Oxley Act
UK
CG as part of Listing Rules*
NYSE CG Rules, Nasdaq Listing Rules 56xx
UK CG Code
Germany
FSA Listing Rules
Aktiengesetz**
German CG Codex
Loi de sécurité financière
AFEP-MEDEF CG Code
Netherlands
Act Frijns
Tabaksblat Code
Switzerland
(Obligationenrecht)
Swiss Code
SIX Richtlinie
Austrian CG Codex
Wiener Börse Regelwerk Prime Market
France
Austria
Poland
Code of Best Practice for WSE Listed Comp.
Turkey
CMB CG Principles for ISE Listed Companies
India
Clause 49 of SEBI Listing Rules
China
CSRC Sec. CG Guidelines
South Africa
King Code on CG for S-A III
JSE Listing Requirements
Brazil
IBGC Code of Best Practice
BM&FBOVESPA Novo Mercado Rules
* set by the listing authority (regulator or stock exchange), at least for a premium segment
** referencing German CG Codex
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“Living the code” rather than “obeying the law”
Fulfilling legal requirements
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Qualifying for a (premium) listing segment
Focus on compliance:
○ Reducing legal and resulting
financial risks for the company
○ Avoiding penalties or fines
Transparency vis-à-vis relevant authorities
○ CG reports are not necessarily
public
●
Over-fulfilling of CG requirements does not
make sense
○ Efforts and impact on existing
governance are minimised
National scope of legal requirements
○ Might differ significantly from
international CG best practice
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CG as cost factor
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Focus on investor communication:
○ Demonstrating superior governance
to ease capital market financing
○ Creating and maintaining trust
Transparency vis-à-vis investors, in
particular existing shareholders
○ CG reports become part of annual
company reporting
Over-fulfilling of CG requirements can
make lots of sense
○ Achieve outstanding position among
peers
International best practice of CG rules
○ Exchanges compete globally for
listings of leading international
companies - their reputation is at risk
CG as important differentiator
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Corporate Governance as a process:
Requirements have to be constantly adapted to a
changing world
Example:
Social Networks and Corporate Governance
Analysis of hidden relationships suggests to introduce a completely different definition of
independence in board of directors (www.sonean.com/sna-based-services.html,
www.top1000funds.com/conversation/2013/08/14/social-networks-in-the-investment-web)
“Say, for example, you have an independent director who is actually closely connected to
the rest of the board. Their efforts to maintain independence might be compromised by
having been recommended to the board by an executive director with prior social ties or
sharing the same mindset – these kind of ties could be disastrous if they are unable to
see a problem in time.”
(Murat
Ünal, SONEAN)
Exchanges can usually adapt listing rules much faster than lawmakers, who often have to wait for
crisis to be able to sell major changes to the public.
Exchanges must take the leadership role in the marketplace in every field of work, including governance and listing.
It is a responsibility to society, and also very good business, the right way to work.
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Thank you for your attention!
Спасибо за Ваше внимание!
Dr. Jochen Biedermann
Independent Exchange Industry Expert
E-mail: [email protected]
Mobile:
+49 172 4549484