OECD PRINCIPLES

THE ORGANISATION FOR

ECONOMIC COOPERATION
AND DEVELOPMENT(OECD)
 INDEX
 What is OECD??
 Principle no.1-Ensuring the basis for effective corporate
governance framework
 Principle no.2-The rights and equitable treatment of
shareholders
 Principle no.3-Institutional investors ,stock markets and
other intermediaries
 Principle no.4-The role of stakeholders in corporate
governance
 Principle no.5-Disclosure and transparency
 Principle no.6-The responsibilities of the board
 Conclusion
WHAT IS OECD??
 It is an organization which is one of the earliest non-
governmental organization
 OECD spells out principles and practices that govern
corporates to attain long-term shareholder value
 A useful step in creating corporate governance system
is to look at principles laid out by the OECD
 PRINCIPLE NO.1
Ensuring the basis for an effective corporate
governance framework

 The corporate governance framework should be

developed with view to its impact on overall economic
performance
 Disclosure and transparency
 Division of responsibilities should be clearly defined
 Cross-border-cooperation
PRINCIPLE NO.2
The rights and equitable
treatment of shareholders and
key ownership functions
 PRINCIPLE NO.3
The act of Institutional investors ,stock markets and
other intermediaries
 Institutional investors acting in fiduciary capacity
should disclose their corporate governance
 Insider trading and market manipulation should be
prohibited
 Stock market should provide fair and efficient price
discovery to help promote effective corporate
governance
 PRINCIPLE NO.4
The role of stakeholders in corporate governance
 The rights of stakeholders that are established are to be
respected
 Stakeholders should have opportunity to obtain
effective redress for violation of their rights
 Stakeholders participating in CG process should have
access to relevant ,sufficient and timely information
 Free communication about illegal and unethical
practices to the board
 PRINCIPLE NO.5
Disclosure and transparency

 The financial and operating results of the company

 Company objectives and non-official information
 Remuneration of members of the board and key
executives
 Related party transactions
 PRINCIPLE NO.6
The responsibilities of the board
 Board members should act on fully informed basis ,in
good faith and in best interest of company and the
shareholders
 The board should treat all shareholders fairly
 The board should apply high ethical standards
 Monitoring the effectiveness of company’s governance
practices
 Ensuring a formal and transparent board nomination
and election process
 CONCLUSION
 It would seem to show that without sound
corporate governance procedures ,including larger
institutional features ,economic crisis in developing
countries are likely to become more frequent
 Either create type of governance procedures
needed to participate in and take advantage of
globalization or seek to build defensive walls
around the economy!!
THANK YOU