2003 Jeju - Corporate governance
Note: This policy statement was issued on the 29th of October of 2003 during the 19th CACCI Conference in Jeju, South Korea.
1. Good corporate governance is a fundamental pillar of the competitive, liberal market economy.
2. CACCI and its member organisations consider good corporate governance to be a virtue of itself, an asset to business, and essential to the credibility of commerce and industry in the communities, societies and nations in which they operate.
3. By corporate governance we mean the structures through which the objectives of the company are set, the means by which those objectives are attained, the monitoring of performance and the ways it can be improved. Good corporate governance is the responsibility of the board of directors and management in the pursuit of the long-term interests company.
4. The absence of good corporate governance is likely to result in diminished consumer, investor and public confidence in business, less competitive and efficient firms, weaker national and international econo mic performances, and add to pressure for greater government regulation of the affairs of commerce and industry.
Good Corporate Governance
5. Good corporate governance policies, practices and processes are essential to ensure efficient and well-functioning markets. They enhance the integrity of capital markets, whether for equity or debt instruments. They are essential to promote interests of shareholders, employees, customers, suppliers and the community in which the company operates, within the framework of law.
6. Deficient or poor corporate governance policies and practices compromise the capacities of capital markets, diminish the confidence of savers and investors, and provide comfort for those advocating greater government regulatory interventions in the conduct of commerce and industry.
7. Good corporate governance practices are also essential to ensure necessary disciplines over management, by providing an efficient means of assessing and benchmarking the performance of existing management and identifying others who may do better.
8. In this context, continuing disclosure of material information to markets, and its dissemination and evaluation by analysts, shareholders and investors, acts as a discipline on boards and management to act in the best interests of shareholders and other interested parties. Where necessary, industry self-regulation, mediation and arbitration are to be preferred to government intervention in corporate governance practices.
9. Effective systems of corporate governance are also essential to ensuring robust markets for corporate control.
10. The potential for a takeover places real commercial pressure on existing directors and management to continually improve corporate performance, both against past practice, relevant competitors and industry benchmarks.
11. If equity and financial markets, and those for corporate control, are not well-informed, such that poorly performing businesses are not exposed to the potential for takeover, then market pressures are diminished, resulting in less competitive and efficient firms, and economies.
12. Commerce and industry recognises public confidence in business has had setbacks due to recent high-profile corporate failures around the Asia Pacific region, and elsewhere in the world.
13. However, CACCI and its member organisations do not automatically accept that all corporate failures are evidence of deficiencies in corporate governance.
14. Companies can fail despite the best corporate governance standards and practices, for example changing market conditions, poor economic and regulatory policy settings by government, and the vagaries of the world economy.
Characteristics of Good Corporate Governance
15. CACCI and its member organisations recognise there is no single, uniform model of corporate governance which can be applied around the Asia Pacific region, or indeed the world, reflecting the different commercial and economic histories and cultures of countries, and their standards of corporate, economic and legal development.
16. Nevertheless, CACCI and its member organisations have identified a number of important characteristics of good corporate governance that warrant careful consideration by those championing competitive and efficient market economies. These characteristics are:
a. A preference for self-regulatory approaches to corporate governance matters, ahead of heavy-handed government- mandated intervention;
b. Transparency in corporate governance arrangements, including ongoing disclosure of material information, especially financial information, to markets and to shareholders;
c. Clear statements of the rights and responsibilities of shareholders and other interested parties, and independent corporate regulatory agencies, operating within a rule of law, to ensure the necessary enforcement of corporate law including effective penalties for substantive breaches of corporate governance laws;
d. Effective Boards and senior management teams, committed to growing the enterprise for the long-term benefit of shareholders and other interested parties, while giving due consideration to the interests of employees, customers and suppliers, and showing leadership within their businesses, and integrity in their business conduct;
e. Commitment to sustainable corporate development and continuing high ethical standards and corporate and social values in business and society and in the broader context of the communities in which they operate.
17. CACCI and its member organisations reiterate our fundamental support for competitive market systems as the best way to generate economic development and growth, and raise standards of living for populations as a whole.
18. Ethical, sound and transparent corporate governance arrangements, both for the private and public sectors, are an essential pillar of healthy market economies.
19. Business has the primary responsibility of identifying, reaching and then maintaining these high standards. Where they fall short, governments can legitimately intervene through well-designed and proportionate corporate law and regulation.
* Mr. Bakrie (General Chairman of KADIN) suggests the revision of paragraph 3 to read as follows:
3. By corporate governance we mean the structures through which the objectives of the company are set, the means by which those objectives are attained, the monitoring of performance and the ways it can be improved.
Good corporate governance principles are:
a. To maximize corporate and shareholder value by enhancing transparency, accountability, reliability, responsibility, and fairness in order to strengthen the company’s competitive position both domestically and within the Asia Pacific region, and to create a sound environment to support investment.
b. To encourage the management of the company to behave in a professional, transparent, and efficient manner, as well as optimizing the use of and enhancing the independence of the board of directors, the executing management and the general meeting of shareholders.
c. And to encourage shareholder, members of the board of directors and the executing management to make decisions and to act with the strict adherence to morality, in compliance with the prevailing regulations in the country of the member of the Confederation of Asia – Pacific Chambers of Commerce and Industry (CACCI), and in accordance with their social responsibility towards the various stakeholders and the protection of the environment.
In the pursuit of the long – term interests of the company, the board of directors and the executing management shall be responsible to carry out the above principles.
Mr. Yussuf Abdullah Harun
The Federation of Bangladesh Chambers of Commerce and Industry
Sheikh Abas Sheikh Mohamad
National Chamber of Commerce and Industry Brunei Darussalam
Oknha Sok Kong
Phnom Penh Chamber of Commerce
Mr. Tong, Kwok Wah
Kowloon Chamber of Commerce
Shri R. S. Lodha
Federation of Indian Chambers of Commerce and Industry
Mr. Aburizal Bakrie *
Indonesian Chamber of Commerce and Industry
Amb. Micho Mizoguchi
The Japan Chamber of Commerce and Industry
Mr. Park Yong-sung
The Korea Chamber of Commerce and Industry
Mr. Sambuu Demberel
Chairman & CEO
Mongolian National Chamber of Commerce and Industry
Mr. Ravi Bhakta Shrestha
Federation of Nepalese Chambers of Commerce and Industry
Mr. Nigel Gould
The New Zealand Chamber of Commerce and Industry, Inc.
Mr. Michael Mayberry
Papua New Guinea Chamber of Commerce and Industry
Mr. Sergio Ortiz-Luis, Jr.
Philippine Chamber of Commerce and Industry
Mr. Primakov Evgeny Maximovich
Chamber of Commerce and Industry of the Russian Federation
Mr. Stephen Lee
Singapore Business Federation
Mr. Tilak de Zoysa
Ceylon Chamber of Commerce
Mr. Theodore M. H. Huang
Chinese National Association of Industry and Commerce
Amb. Jeffrey L. S. Koo
Chinese International Economic Cooperation Association
Mr. Doan Duy Thanh
Vietnam Chamber of Commerce and Industry