OECD Principles of Corporate Governance

Origin. The OECD Principles of Corporate Governance were developed in conjunction with national governments, international organizations, and the private sector, as a result of an OECD Council meeting held on April 27-28, 1998. The Principles reflect the experiences of national initiatives within OECD Member countries, as well as work   previously carried out within the organization.   OECD organizations involved in the preparation process include the Business Sector Advisory Group on Corporate Governance, the Committee on Financial Markets, the Committee on International Investment and Multi-national Enterprises, the Industry Committee, and the Environment Policy Committee.

Purpose. The Principles are non-binding, and serve as a reference point. They are intended to assist efforts by Member and non-Member governments to evaluate and improve the legal, institutional, and regulatory framework for corporate governance.   They also provide guidance to stock exchanges, investors, corporations, and other parties that contribute to the corporate governance process. The Principles focus on publicly traded companies. They also may serve as a useful tool for improving governance within privately-held companies.

Critical Content. The Principles address governance problems that result from the separation of ownership and control in the modern corporation.    They identify the critical elements required for good governance.   Specifically, they focus upon:  

• Rights of Shareholders
• Equitable Treatment of Shareholders
• Role of Stakeholders in Corporate Governance
• Disclosure and Transparency
• The Responsibilities of the Board

Implementation.   I mplementation is the responsibility of governments and corporations.   The OECD calls upon them to decide how to apply the Principles within their own frameworks for corporate governance, taking into account the costs and benefits of regulation.   The Principles also are evolutionary in nature, and should be reviewed in light of significant changes in the business environment.  

To visit this code in its entirety please visit:  http://www.oecd.org/dataoecd/47/50/4347646.pdf

27.September 2002