CORPORATE GOVERNANCE PRINCIPLES

1. CORPORATE OBJECTIVE
The overriding objective of the corporation should be to optimise
over time the returns to its shareholders. Where other
considerations affect this objective, they should be clearly stated
and disclosed. To achieve this objective, the corporation should
endeavour to ensure the long-term viability of its business, and to
manage effectively its relationships with stakeholders.
2. COMMUNICATIONS AND REPORTING
Corporations should disclose accurate, adequate and timely
information, in particular meeting market guidelines where they
exist, so as to allow investors to make informed decisions about
the acquisition, ownership obligations and rights, and sale of
shares.
3. VOTING RIGHTS
Corporations’ ordinary shares should feature one vote for each
share. Corporations should act to ensure the owners’ rights to
vote. Fiduciary investors have a responsibility to vote1. Regulators
and law should facilitate voting rights and timely disclosure of the
levels of voting.
4. CORPORATE BOARDS
The board of directors, or supervisory board, as an entity, and
each of its members, as an individual, is a fiduciary for all
shareholders, and should be accountable to the shareholder body
as a whole. Each member should stand for election on a regular
basis.
Corporations should disclose upon appointment to the board and
thereafter in each annual report or proxy statement information on
the identities, core competencies, professional or other
backgrounds, factors affecting independence, and overall
qualifications of board members and nominees so as to enable
investors to weigh the value they add to the company. Information
on the appointment procedure should also be disclosed annually
Boards should include a sufficient number of independent nonexecutive
members with appropriate competencies2.
Responsibilities should include monitoring and contributing
effectively to the strategy and performance of management, staff
key committees of the board, and influence the conduct of the
board as a whole. Accordingly, independent non-executives
should comprise no fewer than three members and as much as a
substantial majority. Audit, remuneration and nomination board
committees should be composed wholly or predominantly of
independent non-executives.
5. CORPORATE REMUNERATION POLICIES
Remuneration of corporate directors or supervisory board
members and key executives should be aligned with the interests
of shareholders3. Corporations should disclose in each annual
report or proxy statement the board’s policies on remuneration—
and, preferably, the remuneration break up of individual board
members and top executives—so that investors can judge
whether corporate pay policies and practices meet that standard.
Broad-based employee share ownership plans or other profitsharing
programs are effective market mechanisms that promote
employee participation.
6. STRATEGIC FOCUS
Major strategic modifications to the core business(es) of a
corporation should not be made without prior shareholder approval
of the proposed modification. Equally, major
corporate changes which in substance or effect materially dilute
the equity or erode the economic interests or share ownership
rights of existing shareholders should not be made without prior
shareholder approval of the proposed change. Shareholders
should be given sufficient information about any such proposal,
sufficiently early, to allow them to make an informed judgement
and exercise their voting rights.
7. OPERATING PERFORMANCE
Corporate governance practices should focus board attention on
optimising over time the company’s operating performance. In
particular, the company should strive to excel in specific sector
peer group comparisons.
8. SHAREHOLDER RETURNS
Corporate governance practices should also focus board attention
on optimising over time the returns to shareholders. In particular,
the company should strive to excel in comparison with the specific
equity sector peer group benchmark.
9. CORPORATE CITIZENSHIP
Corporations should adhere to all applicable laws of the
jurisdictions in which they operate.
Boards that strive for active co-operation between corporations
and stakeholders will be most likely to create wealth, employment
and sustainable economies. They should disclose their policies on
issues involving stakeholders, for example workplace and
environmental matters.
10. CORPORATE GOVERNANCE IMPLEMENTATION
Where codes of best corporate governance practice exist, they
should be applied pragmatically. Where they do not yet exist,
investors and others should endeavour to develop them.
Corporate governance issues between shareholders, the board
and management should be pursued by dialogue and, where
appropriate, with government and regulatory representatives as
well as other concerned bodies, so as to resolve disputes, if
possible, through negotiation, mediation or arbitration. Where
those means fail, more forceful actions should be possible. For
instance, investors should have the right to sponsor resolutions or
convene extraordinary meetings.