Organisation for Economic Co-operation and Development

OECD Principles

• Report rights infringement
• published: 17 Mar 2016
• views: 2040

There is no easy way or quick fix method to learn the OECD principles. You simply have to sit down, read the principles and ensure that you understand the material. You need to understand the purposes of the OECD principles. How is structured? And who the target audience is. In other words, who is it written for? Is it aimed at companies or directors? The answer is NEITHER. The OECD principles are actually directed towards government and legislatures who in turn write up the laws and regulations within specific jurisdictions. These principles are aimed at providing international best practices which will serve as a bench mark for individual legislatures to ensure that new requirements are aligned with these best practices. There are six core principles. These include: the basis for an effective corporate governance framework; the rights of shareholders and key ownership functions; the equitable treatment of shareholders; the role of stakeholders in corporate governance; disclosure and transparency; and the responsibilities of the board. For each principle, you need to understand the intention. In other words, what is the end goal and desired result? You also need to be familiar with the actual recommendations itself, in other words, how are the goals of each core principle going to be achieved? Let’s look at the core principle 2 as an example. The intention of this principle is to protect shareholder entitlements and also empower shareholders in relation to influencing corporate behaviour. So how does this principle achieve its intended purpose? From a high level overview of core principle 2, there are three important things. These include basic rights, The right to be informed and the right to participate and vote. Now we can expand on these by asking, so what are the basic rights. We are not referring here to freedom of speech, and other basic rights but rather to the basic rights related to their shareholding. To recap, the OECD principles comprises six core principles. You need to not only read them, but also be able to understand the intention behind each core principle and critically analyse how each principle is to be achieved.