The Handbook of International Corporate Governance: A Definitive Guide, 2nd Edition (Institute of Directors)

Copyright......Page 3
Table of contents......Page 4
About the Editors......Page 14
Foreword......Page 16
Part 1: Models and Codes......Page 20
1.1 Global Corporate Governance Challenges for Public Companies and Their Shareholders in the 21st Century......Page 22
1.2 The Governance Premium......Page 30
1.2.1 Does Corporate Governance Affect Company Performance?......Page 31
1.2.2 Which Specific Provisions Are Most Important?......Page 33
1.2.3 What Is the Interplay between the Country-level Corporate Governance Framework and Specific Company Factors?......Page 35
1.2.4 Some Important Caveats......Page 37
1.3.1 Conflict of Interest......Page 42
1.3.2 The Rediscovery of Governance......Page 43
1.3.4 Controlling Shareholders......Page 44
1.3.5 Code Masters......Page 45
1.3.6 Scope for Convergence......Page 46
1.3.8 Pluses and Minuses......Page 47
1.4.1 The Principles......Page 49
1.4.2 The Mechanics......Page 50
1.4.3 Shareholder Engagement......Page 51
Part 2: Shareholder Rights......Page 54
2.1 Active Shareholders......Page 56
2.1.2 Governance in Practice......Page 57
2.1.4 Dialogue......Page 58
2.1.5 Going Forward......Page 59
2.2 Shareholders, Blockholders and Stakeholders......Page 61
2.3.1 European Developments......Page 67
2.3.3 Switzerland......Page 68
2.3.5 Italy......Page 69
2.3.6 The United Kingdom......Page 70
2.3.8 Japan......Page 71
2.3.9 Conclusion......Page 72
2.4 US Shareholder Litigation and European Investors......Page 74
2.4.1 Class Action Lawsuits......Page 75
2.4.2 Individual/‘Opt-out’ Actions......Page 78
2.4.3 Derivative Actions......Page 79
Part 3: Board Effectiveness......Page 82
3.1 The Role of Boards......Page 84
3.2 Board Composition......Page 90
3.2.1 Board Composition......Page 91
3.2.2 The Role of Chairman......Page 95
3.2.4 Matters Reserved to the Board......Page 97
3.2.5 Committees of the Board......Page 100
3.2.6 Improving the Board’s Performance......Page 102
3.2.7 Final Message......Page 103
3.2.8 International Board Structures......Page 104
3.3 Board Evaluations......Page 108
3.3.1 Methodology......Page 109
3.3.3 How the Board Conducts Its Business......Page 110
3.3.4 Critical Success Factors......Page 111
3.3.6 Conclusion......Page 112
Part 4: Control and Disclosure......Page 114
4.1 Business Risk Reporting......Page 116
4.1.1 Directors Responsible for Transparent RiskDisclosures......Page 117
4.1.2 Criticism Concerning Risk Disclosures......Page 118
4.1.3 Guidance on Risk Disclosures......Page 119
4.1.4 Twelve Practical Tips for Making Transparent Risk Disclosures......Page 121
4.1.5 Conclusion......Page 122
4.2 Corporate Governanceand Its Relevance to Audit Quality......Page 124
4.3 Unlocking Valuethrough Sustainability Reporting......Page 128
4.3.2 Eager Listeners......Page 129
4.3.3 Saying the Right Thing......Page 130
4.3.4 Measure to Manage, Manage to Change......Page 131
4.3.5 Steps to Take in Issuing a Sustainability Report......Page 132
Part 5: Directors......Page 134
5.1 Selection andNomination of Directors......Page 136
5.2 Non-executiveDirectors......Page 142
5.2.1 Prepare Early......Page 143
5.2.2 The Pitfalls......Page 144
5.2.3 Getting It Right......Page 145
5.2.4 Diversity......Page 147
5.3.1 Investigations Increase......Page 148
5.3.2 Lowering Costs of Litigation......Page 149
5.3.3 Calls to Action......Page 150
5.3.4 Accountability Abroad......Page 151
5.3.5 Looking Ahead......Page 152
5.4 Criminalization of the Business World......Page 153
5.4.1 The International Angle......Page 155
5.4.3 Is It All Too Risky?......Page 156
5.5 Director Development......Page 158
5.5.1 Board Development......Page 159
Part 6: Profiles of Corporate Governance in Leading Countries......Page 162
6.1.1 Legal Framework: Laws, Models and Codes......Page 164
6.1.2 Board Structure and Roles......Page 173
6.1.3 Shareholder Rights......Page 175
6.1.4 Disclosure and Transparency......Page 179
6.1.6 Directors......Page 180
6.1.7 Executive Pay and Performance......Page 181
6.2 China......Page 186
6.2.1 Distinctive Features of Chinese Corporate Governance......Page 188
6.2.2 The Chinese Governing Board......Page 190
6.2.3 Chinese Governance......Page 193
6.3.1 Background......Page 195
6.3.3 Board Structures......Page 197
6.3.5 Disclosure and Transparency......Page 198
6.3.8 Executive Pay and Performance......Page 199
6.3.10 Useful Contacts......Page 200
6.4.1 Legal Framework and Codes......Page 201
6.4.2 Board Structure and Roles......Page 202
6.4.3 Shareholder Rights......Page 205
6.4.4 Disclosure and Transparency......Page 206
6.4.5 Responsibility......Page 207
6.4.7 Executive Pay and Performance......Page 208
6.5.1 Framework of the German Corporate Governance Code......Page 210
6.5.2 Board Structures and Roles......Page 212
6.5.3 Issues Relating to Shareholder Rights......Page 215
6.5.4 Disclosure and Transparency......Page 217
6.5.6 Current Governance Issues Relating to Non-executive Directors......Page 218
6.5.8 Further Information......Page 220
6.6 The United Kingdom......Page 222
6.6.1 Corporate Structure and Ownership......Page 223
6.6.2 Legal Framework......Page 225
6.6.3 Codes, Standards and Good Practice Guidelines......Page 232
6.6.4 Legal, Regulatory and Institutional Bodies......Page 241
6.6.5 The Role and Structure of a Board of Directors......Page 246
6.6.6 Disclosure and Transparency......Page 260
6.6.7 Shareholder Rights and Stakeholder Relations......Page 271
6.6.8 Corporate Social Responsibility......Page 272
6.6.9 Director Development in the United Kingdom......Page 273
6.6.10 Useful Contacts......Page 275
6.7.1 Corporate Governance in France: Beyond Commonplaces......Page 276
6.7.2 Key Corporate Governance Trends......Page 278
6.7.3 Sources of Information......Page 284
6.8.1 Regulatory Framework......Page 286
6.8.2 Shareholders’ Meetings......Page 290
6.8.4 The Ownership Structure of Listed Companies and Its Evolution......Page 291
6.8.5 Pyramiding, Dual-class Shares and the Value of Voting Rights......Page 292
6.9.1 Concentrated Ownership, State Control and Rapid Expansion of Mergers and Acquisitions......Page 295
6.9.2 Concentration of Ownership......Page 297
6.9.3 Governing Bodies: Managing versus Governing......Page 299
6.9.4 Shareholder Rights......Page 301
6.9.5 Information Disclosure and Transparency......Page 302
6.9.7 Specific Areas of Disclosure......Page 303
6.9.8 Boards of Directors......Page 305
6.10.1 Legal Framework, Laws and Codes......Page 308
6.10.2 Main Regulators and Supervisors......Page 314
6.10.3 Board Structure and Roles......Page 318
6.10.5 The Role of Independent Directors......Page 322
6.10.6 The Role of Advisers......Page 323
6.10.7 Directors’ Conflicts of Interest......Page 324
6.10.8 Required Committees......Page 325
6.10.9 Shareholder Rights......Page 328
6.10.10 Disclosure and Transparency......Page 331
6.10.12 Directors’ Duties and Liabilities......Page 333
6.10.13 Remuneration: Executive Pay and Performance......Page 334
6.11.1 Introduction*......Page 339
6.11.2 Legal Framework: Laws, Models and Codes......Page 341
6.11.3 Board Structure and Roles......Page 343
6.11.4 Shareholder Rights......Page 345
6.11.6 Responsibility......Page 346
6.11.7 Directors......Page 347
6.11.8 Executive Pay and Performance......Page 348
6.12 The Development of Corporate Governance in Australia......Page 353
6.12.1 Development of Laws, Models and Codes......Page 354
6.12.2 Board Structure and Roles......Page 358
6.12.4 Disclosure and Transparency......Page 359
6.12.5 Corporate Social Responsibility......Page 360
6.12.7 Executive Pay and Performance......Page 361
6.12.9 Conclusions......Page 362
6.13.1 Corporate Governance Codes......Page 365
6.13.2 Relationship between the Codes and Regulation......Page 367
6.13.3 Legislative Framework for Corporate Governance: Recent Developments......Page 369
6.13.4 Regulators in the Corporate Governance Environment......Page 373
6.13.5 Board Structure and Roles......Page 376
6.13.6 Shareholder Rights......Page 377
6.13.7 Disclosure and Transparency......Page 379
6.13.8 Corporate Responsibility......Page 380
6.13.9 Director Development and Training......Page 381
6.13.10 Directors......Page 383
6.13.11 Executive Pay and Performance......Page 384
6.14.1 Regulatory Framework......Page 387
6.14.2 A Different Corporate Governance Structure......Page 389
6.14.4 Strong Ownership Powers......Page 390
6.14.5 Protection of Minority Rights......Page 392
6.14.6 Far-reaching Transparency Standards......Page 393
6.14.7 Future Challenges......Page 394
6.15.1 Legal Framework: Laws, Models and Codes......Page 396
6.15.2 Patterns of Ownership (eg Family Control, State Influence, Cross-shareholding)......Page 397
6.15.3 Regulators and Supervisors......Page 398
6.15.4 Board Structure and Roles......Page 401
6.15.5 Shareholder Rights......Page 404
6.15.6 Disclosure and Transparency......Page 408
6.15.7 Responsibility......Page 411
6.15.8 Directors......Page 413
6.15.10 Further Details......Page 416
6.16 Finland......Page 417
6.16.2 Shareholder Rights......Page 419
6.16.5 Board Remuneration......Page 421
6.17.1 General Principles......Page 424
6.17.3 The Role of Director – and ‘Acting Responsibly’......Page 425
6.17.4 Board Committees......Page 426
6.17.7 Shareholder Rights......Page 427
6.17.8 Corporate Responsibility......Page 428
6.17.10 Legal, Regulatory and Institutional Bodies......Page 429
6.17.11 Reform of the Legal Framework......Page 430
6.17.12 Useful Website Links and Publications......Page 433
6.18.1 Background......Page 435
6.18.2 The Legal and Regulatory Framework......Page 437
6.18.3 Rating......Page 438
6.18.4 Landscape of Listed Companies......Page 441
6.18.5 Culture Building in the Community......Page 446
6.18.6 Resources......Page 447
Part 7: Regions......Page 450
7.1 Corporate Governance in Asia......Page 452
7.1.2 Quality Counts......Page 453
7.1.4 Issues Remain......Page 454
7.1.5 Above the Law?......Page 455
7.1.6 Shareholder Activism versus Engagement......Page 456
7.1.8 Conclusion......Page 458
7.2 Corporate Governance in Europe......Page 459
7.2.1 Looking into the Future: The Rise of Politics......Page 466
7.3 The Middle East and North Africa......Page 470
7.3.1 Demonstrating Commitment to Corporate Governance......Page 472
7.3.2 Implementing Good Board Practices......Page 474
7.3.3 Building a Robust Control Environment and Processes......Page 477
7.3.4 Strengthening Transparency and Disclosure......Page 479
7.3.5 Protecting Shareholder Rights......Page 481
7.4 Corporate Governance in Latin America......Page 484
7.4.1 The Economic Background......Page 485
7.4.2 Differing Code Objectives......Page 486
7.4.3 Code Developments......Page 488
7.4.4 Main Actors......Page 489
7.5 Corporate Governance in the Commonwealth......Page 491
7.5.1 Benefits of Good Corporate Governance......Page 492
7.5.2 Commonwealth Business Council Business Principles (2007)......Page 493
Useful Organizations......Page 503
Contributors’ Contact Details......Page 516
Index......Page 521