5 September 2015: The Group of 20 (G20) Finance Ministers endorsed a set of G20/Organization for Economic Cooperation and Development (OECD) corporate governance principles. The G20/OECD Principles of Corporate Governance provide recommendations for national policymakers on shareholder rights, executive remuneration, financial disclosure, the behavior of institutional investors and how stock markets should function.

Developed by the OECD in 1999, the Principles have been adopted as one of the Financial Stability Board’s (FSB) key standards for sound financial systems, and serve as a standard for governments and regulators. In 2013, the OECD launched a review of the Principles, inviting all the G20 countries to participate on an equal footing. The Basel Committee, the FSB and the World Bank have also contributed to the review.

At the G20 finance ministers meeting on 4-5 September 2015, in Ankara, Turkey, Cevdet Yilmaz, Deputy Prime Minister of Turkey, stressed that “the demands of investors on companies are quite rational: more transparency, more accountability and more effective corporate governance,” adding that the G20/OECD Principles of Corporate Governance will contribute to the G20’s priority of facilitating companies’ access to finance through capital markets.

The Principles state that the corporate governance framework should: promote transparent and fair markets, and the efficient allocation of resources, be consistent with the rule of law and support effective supervision and enforcement; protect and facilitate the exercise of shareholders’ rights and ensure the equitable treatment of all shareholders, including minority and foreign shareholders; provide sound incentives throughout the investment chain and provide for stock markets to function in a way that contributes to good corporate governance; recognize the rights of stakeholders established by law or through mutual agreements and encourage active co-operation between corporations and stakeholders in creating wealth, jobs, and the sustainability of financially sound enterprises; 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; and 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.

The Principles stress that good corporate governance is not an end in itself, but a means to create market confidence and business integrity so companies can access equity capital for long-term investment and generate economic growth. [OECD Press Release] [Publication: G20/OECD Principles of Corporate Governance: OECD Report to G20 Finance Ministers and Central Bank Governors]