Presentation by Wendy W.Y. Yung, Member of Professional Accountants in Business Committee, at the CAPA 2015 Conference, in Seoul, Korea, October 27-29, 2015.

1. Corporate Governance in Asia
– is it fit for purpose?
Wendy W.Y. Yung (Panellist)
Member, Professional Accountants in Business Committee
Panel Discussions

2. Observations from an IFAC Member Organization Research
Research project jointly conducted by ACCA (IFAC member
organisation) and KPMG:
“Balancing Rules and Flexibility – a study of corporate governance
requirements across 25 markets” (Nov 2014)
(http://www.accaglobal.com/content/dam/acca/global/PDF-technical/corporate-governance/balancing-
rules-and-flexibility-main.pdf)
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3. 2014 ACCA-KPMG Corporate Governance (“CG”) Study: Approach
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4. Our focus – not on ranking of jurisdictions surveyed
Our focus is not on the ranking of the jurisdictions surveyed
Noted limitations / exclusions as stated in the study:
 Completeness and accuracy of information
 Based on publicly available information; not considered
CG requirements at state / provincial level (e.g. US, Canada)
 Subjectivity and interpretation
 Levels of compliance
- the study focused on only understanding the corporate
governance requirements
- did not test the level of compliance or adoption of the
requirements by listed companies within each market
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5. A large portion of developments arise from learnings and outcomes
from significant external events. Examples:
- significant corporate collapses
- financial crises
- introduction of significant legislation with global reach and relevance
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Some Interesting Observations

6. Well-defined corporate governance requirements are a critical factor in
building confidence in capital markets
 The maturity of the economy and capital markets influences, to
some extent, the need for well-defined corporate governance
requirements
- six out of the top ten highest scoring markets were developed
 Equally, as developing markets seek to build confidence in capital
markets, establishing well-defined corporate governance
requirements, is a lever for doing so
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Some Interesting Observations

7. Different approaches adopted in various jurisdictions
 Voluntary
 “Comply or explain”
- i.e. companies are required to state whether they adopt
the recommended approach and if they do not comply,
why they choose not to
- for example, CG Codes
 Mandatory
- companies must comply with the requirement, or face
fines / penalties
- for example, legislation, Listing Rules, Companies Act
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Some Interesting Observations

8. Approach adapted in various jurisdictions vary
 56% of the 1,800 requirements reviewed were principle-based
- 34%: “comply or explain”
- 22%: voluntary
 44% of requirements: mandatory
Examples:
 the US and India (although only recently introduced) adopt
a predominantly mandatory corporate governance landscape
 Russia and Brazil adopt a predominantly voluntary corporate
governance landscape
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Some Interesting Observations

9. “Structural” CG requirements are better defined than “behavioural”
(emerging) aspects
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Some Interesting Observations
Strongest themes (most well-defined)
1. Remuneration Committee
2. Audit Committee and financial integrity
3. Director independence
4. Role of the Board
5. Nominating Committee

10. “Weakness” areas are
 Less “tangible” and more “behavioural” in nature
 “Emerging”: being critical areas to enhance CG adequacy and
effectiveness
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Some Interesting Observations
Weakness themes (least well-defined)
1. Director’s time and resources
2. Performance evaluation
3. Risk governance
4. Stakeholder engagement and communication