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OECD Principles - Organization of Economic Cooperation and Development

The Organization of Economic Cooperation and Development (OECD) released its first set of corporate governance principles in 1999. A revised version was then released in 2004.

The principles were developed and endorsed by the ministers of OECD member countries in order to help OECD and Non-OECD governments in their efforts to create legal and regulatory frameworks for corporate governance in their countries.

The six OECD Principles are:

  1. Ensuring the basis of an effective corporate governance framework

  2. The rights of shareholders and key ownership functions

  3. The equitable treatment of shareholders

  4. The role of stakeholders in corporate governance

  5. Disclosure and transparency

  6. The responsibilities of the board


1.Ensure the basis of an effective corporate governance framework

The corporate governance framework should promote transparent and efficient markets, be consistent with the rule of law and clearly articulate the division of responsibilities among different supervisory, regulatory and enforcement authorities.


2.The rights of shareholders and key ownership functions

The corporate governance framework should protect and facilitate the exercise of shareholders’ rights.

Basic shareholder rights should include the right to:

  1. Secure methods of ownership registration;

  2. Convey or transfer shares;

  3. Obtain relevant and material information on the corporation on a timely and regular basis;

  4. Participate and vote in general shareholder meetings;

  5. Elect and remove members of the board; and

  6. Share in the profits of the corporation.


3.The equitable treatment of shareholders

The corporate governance framework should ensure the equitable treatment of all shareholders, including minority and foreign shareholders. All shareholders should have the opportunity to obtain effective redress for violation of their rights. The principles also state that:

  • All shareholders of the same series of a class should be treated equally

  • Insider trading and abusive self-dealing should be prohibited

  • Members of the board and key executives should be required to disclose to the board whether they, directly, indirectly or on behalf of third parties, have a material interest in any transaction or matter directly affecting the corporation.


4.The role of stakeholders in corporate governance

The corporate governance framework should 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.


5.Disclosure and transparency

The corporate governance framework should 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.


6.The responsibilities of the board


The corporate governance framework should 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.





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