Asian Roundtable on Corporate Governance

1. Asian Roundtable on Corporate Governance The White Paper on Corporate Governance in Asia Robert Zafft Senior Corporate Governance Specialist OECD Tokyo, Japan 20 November 2003 The views expressed in this paper do not necessarily represent the opinions of the OECD or its Member countries

2. The OECD and the World Bank organize and lead five regional roundtables to raise awareness of corporate governance and to develop regional self-assessments of corporate-governance successes and areas for further reform Regional Corporate Governance Roundtables OECD Principles of Corporate Governance Regional Corporate Governance Roundtables Global Issues • Asia, Russia, Latin America, Eurasia, South-eastern Europe Regions • Peer discussion among senior policy makers, academics and businessmen using the OECD Principles of Corporate Governance as a conceptual framework Format • Policy dialogue on realising the OECD Principles in the context of each country of the region • Self assessment and regional comparison of successes and areas requiring further effort • Knowledge sharing and networking among key regional decision makers Goals • White Paper or comparative paper describing state of corporate governance in region and identifying areas for further reform • Consensus document adopted by representatives from the region • Blueprint for future policy work and technical assistance Output

3. Between 1999 and 2003, the Asian Roundtable met five times to assess regional developments and to draft a White Paper identifying common policy objectives Asian Roundtable Meetings OECD Principles of Corporate Governance Regional Corporate Governance Roundtables Global Issues • Seoul, Korea – Regional Overview 1999 • Hong Kong China – Disclosure and Transparency 2000 • Singapore – The Responsibilities of the Board and the Role of Stakeholders 2001 • Mumbai, India – The Rights and Equitable Treatment of Shareholders 2002 • Kuala Lumpur, Malaysia -- White Paper drafting session and workshop on enforcement and implementation 2003

4. The White Paper on Corporate Governance in Asia puts forth six priority recom-mendations for corporate-governance reform and has thus far been welcomed or endorsed by the securities commissions of 75% of Asian-Roundtable countries Asian White Paper Priority Recommendations (www.oecd.org/corporate) • Training and education • Codes of conduct • Technical assistance Asian Roundtable Sponsors: Government of Japan, Global Corporate Governance Forum, ADB Raise awareness • Focus on public-service integrity and even-handedness • Increase regulatory and judicial resources and specialization • Use simpler and easier to enforce rules, as well as tools to augment resources (e.g., shareholder suits, whistleblowers) Improve enforcement • International Accounting Standards (IASB) • International Standards for Audit (IFAC) • International Organisation of Securities Commissions Principles Adopt International Standards and Practices • Institute training and codes of conduct • Tighten rules for “independent” directors and fiduciary duties for all directors • Promote director-accountability mechanisms (e.g., lawsuits, cumulative voting) Improve Board Performance • Strengthen ownership disclosure rules and enforcement • Explore categorical prohibitions on related-party transactions • Provide shareholders with private and collective rights of action Protect Minority Shareholders • Strengthen disclosure of ownership and financial interests • “Fit and proper” test for bank directors • Improve insolvency and creditor rights systems • Tighten regulatory oversight Improve Bank Governance

5. Focusing on the priority areas for reform identified by the White Paper, the next phase of the Asian Roundtable will address practical implementation and enforcement issues Roundtable Implementation and Global Issues Phase Implementation OECD Principles of Corporate Governance Regional Corporate Governance Roundtables Global Issues • Seoul, Korea, mid-2004 Implementation • International conference on issues recurring among several regional Roundtables where a global perspective is appropriate • e.g., Alternative dispute resolution and corporate governance (mid-2004) Global Issues