OECD governments ratify governance code

According to a report by EDGEvantage.co.uk, the 30 member-governments of the Organization for Economic Co-operation and Development (OECD) have ratified - with modest changes - a controversial code of corporate governance that would give shareholders stronger rights in most of the member countries. When the draft was circulated in January its call for shareholders to be able directly to nominate directors sparked opposition. The draft suggested, "Shareholders, including institutional shareholders, should be allowed to consult with each other on issues concerning their basic shareholder rights as defined in the principles above, subject to some possible exceptions to prevent abuse." (emphasis added). The words "some possible" were dropped from the final text. Provisions to protect whistle-blowers, a call on institutional investors to disclose their voting policies and steps to reduce conflicts of interest throughout the investment process remain intact.

However, the code is only a recommendation. Donald Nordberg, reminds his readers "the previous OECD code, from 1999, was used mainly in developing countries outside the OECD area. But this code goes beyond many of the measures adopted in the major industrial powers that belong to the organization, even codes put in place after the Enron and WorldCom affairs sparked global interest in governance."