The International Corporate Governance Network is emphasizing the need for strengthened governance practices and increased shareholder rights before global leaders gather next week in Washington, D.C., for the G-20 meeting.
“This is a real opportunity for governance,” said Peter Montagnon, ICGN chairman in a statement. “The ICGN has campaigned vigorously for shareholder rights. In particular, we have sought an ability to appoint and dismiss directors in the U.S. and to have a say on remuneration.”
The group represents investors holding approximately $15 trillion in assets.
The ICGN believes that stronger shareholder rights will make boards more accountable for the longer term consequences of their actions. With the increased rights, the ICGN notes there is the need for responsible behavior by shareholders. By being responsible, the ICGN believes that such care and consideration will validate the increase in shareholder rights.
The ICGN also named four main elements that apply to the internal governance of those involved in the investment chain:
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Oversight Governing bodies should have a structure and constitutions; voting decisions should be made in the interest of the beneficiaries and must not reflect other objectives of those involved.
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Transparency and accountability Regular disclosure to ultimate beneficiaries about material aspects of governance and organization; governing bodies should be critical in the selection of consultants.
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Conflicts of interest Those acting as agents should disclose all known potential conflicts of interest to principles and explain how these are dealt with.
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Expertise Decision makers should have adequate experience and skill.
The ICGN will further debate its statement at the ICGN’s conference in Wilmington, Del., on December 10th. The event will examine the future of capital markets after the credit crisis.