Global Corporate Governance Forum

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Global Corporate Governance Forum

• Better Companies, Better Societies

Corporate Governance Reform in SEE 10th CEI
Summit Economic Forum Sofia November 20, 2007
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Overview

• About the Global CG Forum
• What is Corporate Governance
• Why is Corporate Governance Important
• Corporate Governance Reform Priorities in SEE
• Our Tools and Impact Points

Overview Reform Tools
Conclusion
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Who We Are

• Founded in 1999 by World Bank Group and OECD
• IFC DFO/Multidonor Facility since July 2005
• Forums purpose
• Promote global, regional and local CG reform
  initiatives
• Improve institutional framework for good
  corporate governance
• Facilitate improved CG practices in developing
  countries
• Our donors

Overview Reform Tools
Conclusion
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Key Pillars
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• Raise awareness,
• build consensus
• understanding priorities and defining reform
  program

• Sponsor research
• relevant needs of developing countries

MANDATE

• Disseminate best practices
• utilizing the Forums expansive network globally

• Provide technical assistance,
• capacity building
• for implementation, key priority in second cycle

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Our Priority Low-Income Countries, Emerging
Markets
Overview Reform Tools
Conclusion
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What is Corporate Governance

• Corporate governance is the system by which
  companies are directed and controlled.
• This implies an effective relationship (trust)
  between the providers of capital and company
  managers.
• Transparency Directors must make clear to the
  providers of capital and other key stakeholders
  why every material decision has been made.
• Accountability Directors should be held
  accountable for their decisions and account to
  key shareholders submitting themselves to
  appropriate scrutiny.
• Fairness All shareholders should receive equal
  consideration by the directors and management
  with a sense of justice and avoidance of bias or
  vested interests.
• Responsibility Directors should carry out their
  duties with honesty, probity and integrity.

Overview Reform Tools
Conclusion
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Why is Corporate Governance Important?

• Good corporate governance practices lead to
  better companies and, in turn, better societies.
• Broad benefits include
• greater access to capital and lower capital costs
  
• more bank lending as a result of greater
  transparency and financial strength that
  corporate governance achieves
• greater financial sector stability
• faster corporate sector growth and job creation
• protection for all investors, including pension
  beneficiaries
• capital and financial market development
• stronger institutions and better enforcement

Overview Reform Tools
Conclusion
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Our Reform Approach
Catalyst for Policy Recommendations
Provide Leverage for Reforms
Build Expertise in Institutions
Support Local Capacity through Technical
Assistance
Overview Reform Tools
Conclusion
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Corporate Governance Reform Priorities for Reform
in SEE

• More Transparency
• Improved Media Reporting
• More Accountability
• More professionalism
• Better Understanding of Investor Expectations
• Better integration of EU CG Standards
• Effective Dispute Prevention
• Effective Dispute Resolution
• Improved Governance of SOE and Municipally owned
  Companies

Overview Reform Tools
Conclusion
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Our Reform Tools and Impact Points

• Corporate Governance Codes of Best Practice
• Director Professionalism (Institution building
  Capacity building)
• Media Training
• Dispute Prevention and Resolution
• EU Standards (Awareness Raising and Guidance
  Brussels, February 20 2008)

Overview Reform Tools
Conclusion
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Corporate Governance Codes

• Best of international practice
• Clear, comprehensive guidelines
• International expertise
• Practical policy reforms

The Forums expertise and experiences provided
Bulgaria with practical, relevant, insightful
counsel. Prof. Bistra Boeva Co-Chair, Bulgaria
CG Project
Overview Reform Tools
Conclusion
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Director Training Organizations

• Based on global best practices
• Practical guidance
• Solutions to meet local conditions
• Peer networking
• Sustainable institution building

Overview Reform Tools
Conclusion
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Board Leadership Kit

• Enhance directors skills
• Engage directors in value-based judgments
• Innovative
• Adult-learning strategies
• Interactive through cases
• Audio-visual aids
• High level of utility
• Focus strengthen director training techniques

This new approach in adult learning and case
study development will enhance my skills as a
trainer in educating company directors.
Participant, CG Leadership Program
Overview Reform Tools
Conclusion
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Training for Financial Journalists

• Vanguard for CG awareness
• Enhance understanding of CG and financial
  reporting
• Practical training
• Exposure to leading journalists
• Partnership with Reuters

Better informed journalists make for more
insightful reporting that benefits investors,
capital markets. Participant, Balkans Media
Project
Overview Reform Tools
Conclusion
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Corporate Governance Mediation

• New initiative
• Broad-based partnerships
• Business not stymied by disputes
• Enforces good CG practice
• Supports shareholder protection
• Facilitates Regulator Oversight
• Improves investor confidence
• Focus 4

Overview Reform Tools
Conclusion
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Our Opportunities and Challenges
Opportunities
Challenges

• Meeting Demand with Quality
• Reform Efforts Need Incremental, Multi-Year
  Commitments
• Balancing Global Mandate with IFCs Regional
  Focus
• Diversifying Donor Portfolio

• High Demand for Tools
• Replicability of Reform Tools
• Leveraging IFC Resources
• Accessing Private Sector Network
• Demonstrating Project Impact
• Using Technology for Scalability

Overview Reform Tools
Conclusion
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Our Way Forward
Overview Reform Tools
Conclusion
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THANK YOU
Marie-Laurence Guy Global Corporate Governance
Forum Telephone [phone] mguy_at_ifc.org www.g
cgf.org
Corporate governance is concerned with holding
the balance between economic and social goals and
between individual and communal goals. The aim
is to align as nearly as possible the interests
of individuals, corporations and society. Sir
Adrian Cadbury Corporate Governance Overview,
1999 World Bank Report