IOSCO seeks to strengthen corporate governance in emerging markets

The Growth and Emerging Markets (GEM) Committee of the International Organisation of Securities Commissions (IOSCO) has released a report that seeks to strengthen corporate governance frameworks in emerging markets.

The report on ‘Corporate Governance in Emerging Markets’, according to the Vice Chair of the IOSCO Board and Chair of the GEM Committee, Ranjit Ajit Singh, identifie possible measures and regulatory approaches aimed at strengthening corporate governance in emerging market jurisdictions and aligning regulatory frameworks with internationally recognised standards in this area.

He explained that the report is the first review of its kind by securities regulators on current corporate governance practices in emerging markets benchmarked against the revised G20/OECD Principles of Corporate Governance (OECD Principles).

“The report is an important and timely assessment of the progress of emerging markets in aligning their regulatory frameworks and practices with global standards. It makes useful recommendations to address issues associated with corporate governance in emerging markets.

“It also demonstrates the commitment by emerging market regulators to enhance corporate governance standards and reinforce resilience in their markets.”

The Executive Chairman of CVM Brazil and Chair of the Task Force that conducted the work, Leonardo Pereira, explained that securities regulators on a daily basis are faced with problems that could be avoided or mitigated by the practical implementation of corporate governance principles and standards.

“In this sense, I expect the report to be a concrete opportunity for securities regulators to consider possible ways for improvements in their regulatory frameworks, favoring sounder conduct standards and more effective governance structures.”

The Report, according to him, focuses on three key areas: board composition and responsibility; remuneration and incentive structures; and risk management and internal controls.

He noted that the report was also based on a comprehensive survey across regulators, exchanges, listed companies, institutional investors and other stakeholders on corporate governance practices in emerging market jurisdictions.

“The Report reflects that the regulatory frameworks in emerging market jurisdictions are generally aligned with the recommendations of the OECD Principles.

“There is also broad agreement on the direction emerging market regulators should take to improve the quality and accountability of boards, ensure that remuneration and incentive structures are designed to create long-term value, and improve the risk management frameworks and internal controls of corporations.

“ In addition, the Report also identifies further initiatives and approaches for raising the bar regarding the implementation of best corporate governance practices, including encouraging greater board diversity and quality reporting of sustainability, social responsibility and cyber risks.”