What are principles guidelines for corporate governance recommended in the Cadbury and OECD reports?
Ans. The.Cadbury and OCED reports present general principles around which businesses are expected to operate to ensure proper governance. The Sarbanes-Oxley Act is an attempt by the federal government in the United' States to legislate several of the principles recommended in the Cadbury and OCED reports. Some of these are as follows: (1) Rights of shareholders: The rights of shareholders which have been stressed as important for ensuring better corporate governance by all writers and organisations including the World Bank and APEC, include secure ownership or their shares, voting rights, the right to full disclosure of information, participation in decisions on sale or any change in corporate assets (including mergers) and new share issues. Shareholders have the right to know the capital structures of their corparation and arrangements that enable certain shareholders to obtain control disproportionate to their holding. All transactions should be at transparent prices and under fair conditions. Anti-takeover devices should not be used to shield management from accountability. Institutional shareholders should consider the costs and benefits of exercising their voting rights. (2) Equitable treatment of shareholders: The OECD and other organisations such as APEC have stressed the point that all shareholders including minority and foreign shareholders should get equitable treatment.
All shareholders should have equal opportunity for redressal of their grievances and violation of their rights.
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