How can governments and regulators ensure effective corporate governance?
To ensure an effective corporate governance framework it is necessary that clearly defined rules and regulations, including voluntary codes, are established. Without being prescriptive, the Principles recognise that the ideal mix between these regulatory components has to be the result of a country’s specific circumstances, institutions and history. In developing or improving the corporate governance framework the Principles call on policy makers to give the various authorities that operate in the country the powers and resources for effective implementation and enforcement. The Principles also seek to minimise the risks of over-regulation and the costs from unintended consequences of policy actions. As part of this, the Principles recommend policy makers to check from time to time the ability of the different elements of corporate governance to promote good and transparent practices.
