Mark Hynes - thoughts on corporate disclosure

Opinions on changing rules, changing best practices, and their effect on investor relations officers.

Thursday, September 30, 2010

Improved US governance and share ID

The New York Stock Exchange Commission on Corporate Governance has delivered its views on the way forward on corporate governance. After a year-long investigation it has published ten key principles for what it calls “solid governance”. It signals a move away from a prescriptive rules-based governance regime that has been the hallmark of previous efforts, to a market-based, principles approach. This is very refreshing.

The principles are very broad, and allow issuers and their IR teams the freedom to develop a governance communication strategy which suits them and their investors.

It is also interesting that when you consider that agreement has been reached on core corporate governance principles between such a wide variety of stakeholders, ranging from issuers, to investment banks, to investors, corporate governance agencies and regulators.

The second point of interest is that this is yet another nod in the direction of improved shareholder disclosures. Hard on the heels of the SEC’s review of the OBO/NOBO regime, the NYSE code calls for improved shareholder ownership transparency - with this principle: “A critical component of good governance is transparency, as well governed companies should ensure that they have appropriate disclosure policies and practices, and investors should also be held to appropriate levels of transparency, including disclosure of derivative or other security ownership on a timely basis.”

As the European Commission continues deliberating refinements to the Transparency Directive in the area of major shareholdings notifications, its great to see the US (finally?) paying attention to the imbalance of corporate and investor disclosures.


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