Mongolia National Corp Gov Implementation RT presentation_20april2012_dy
RECOMMENDATIONS FOR MONGOLIA NATIONAL CG POLICY REFORM IMPLEMENTATION PRIORITIES Mongolia National Corporate Governance Policy Implementation Round Table April 20, 2012 Ulaanbaatar, Mongolia Dr. Demir Yener Senior Corporate Governance and Finance Sector Advisor Business Plus Initiative
How Has Mongolia Strengthened Investor Protections— or Not? DB Year Reform DB 2012 No reform DB 2011 No reform DB 2010 No reform DB 2009 No reformPlease see Doing Business reports for prior years, at http://www.doingbusiness.org .
Strength Of Investor Protection Index Source: World Bank Doing Business database, 2012
The Strength Of Investor Protections In MongoliaIndicator DB2009 DB2010 DB2011 DB2012Rank .. .. 28 29Extent of disclosure index (0-10) 5 5 5 5Extent of director liability index (0-10) 8 8 8 8Ease of shareholder suits index (0-10) 6 6 6 6Strength of investor protection index (0-10) 6.3 6.3 6.3 6.3Source: World Bank, Doing Business database, 2012
Summary Of Scores For Protecting Investors Indicators East OECD Asia & high Indicator Mongolia Pacific incomeExtent of disclosure index (0-10) 5 5 6Extent of director liability index (0-10) 8 5 5Ease of shareholder suits index (0-10) 6 6 7Strength of investor protection index (0-10) 6.3 5.4 6 Source: World Bank Doing Business database. 2012
1- Reform Priorities: Business CasePriority 1: Build the business case for good corporate governance among companies, board members, shareholders and other interested parties including professional associations. – Observance of stakeholders’ rights. – Effective protections against retaliation to whistle blowing. – Public outreach programs for stakeholder education. – Mechanisms encouraging active co-operation between companies and employees. – Skilled securities regulators, stock exchanges, SROs and investor groups – Effective disclosure requirements and understanding of its importance
2- Reform Priorities: Enforcement CapacityPriority 2: The Company Law, Corporate Governance Code and all related legal and regulatory frameworks must be actively enforced.Priority 3: FRC, MSE, MoJ, Tax Authority and other enforcement institutions should be adequately resourced and coordinated so as to ensure credibility and accountability.Priority 4: The FRC and Mongolian investigative institutions should be supported by an efficient judicial system
3- Reform Priorities: DisclosurePriority 5: The quality of disclosure should be enhanced and made in a timely and transparent manner.Priority 6: FRC should promote the adoption of emerging best practices for non-financial disclosure.Priority 7: The process of full convergence with international standards and practices for accounting and audit must be accelerated.Priority 8: The implementation and monitoring of audit and accounting standards should be overseen by independent bodies.
4- Reform Priorities: Board PerformancePriority 9: Board performance should be improved by appropriate training and periodical board evaluations.Priority 10: Board nomination process should be transparent and include full disclosure about prospective board members, including their qualifications, with emphasis on the selection of qualified candidates both at the private companies and at SOEs.Priority 11: Directors must improve their skills and participation in strategic planning processes, monitoring internal control and risk oversight.Priority 12: Boards should ensure independent reviews of transactions involving executive management, directors, controlling shareholders and other insiders.
5- Reform Priorities: Shareholders rightsPriority 13: The legal and regulatory framework should ensure that minority shareholders are adequately protected from expropriation by insiders and controlling shareholders.Priority 14: External auditors, rating agencies, advisors, and intermediaries should be able to inform and advise shareholders free of conflicts of interest.
6- Reform Priorities: Shareholder ActivismPriority 15: Shareholder activism should be encouraged and facilitated, in particular by institutional investors
Conclusion1. Building the business case for the importance of good corporate governance practices2. Ensuring that the legal and regulatory framework that adequately protects minority shareholders from expropriation.3. Ensuring improved capacity of the regulatory institutions for an active, visible and effective enforcement of corporate governance4. Enhancing the quality of disclosure in a timely and transparent manner, including all material information about ownership & control5. Raising board performance by continued director training, monitoring and evaluation, and ensuring a transparent board nomination process6. Facilitating and encouraging shareholder activism.