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models of corporate governance

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Zendy Rose Flores

on 7 May 2013

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Transcript of models of corporate governance

Anglo- US Model
Japanese Model
German Model Models of Corporate Governance Anglo-US Model A. Key players:
Management
Directors
Shareholders
B. Share ownership
shift of stock ownership from individual to institutional shareholders
C. Board of Directors Composition
insiders
outsiders
D. Regulatory Framework
Private Pension Funds Regulation (agency of the Department of Labor) - "fiduciary responsibility" Japanese Model A. Key players:
Government
Management
Keiretsu or Affiliated Company (insider)
Main bank
B. Share ownership
ownership of equity markets by financial institutions and corporations
C. Board of Directors Composition
composed almost completely of insiders (executive managers)
directors may be removed by the main bank and keiretsu
50 jApanese board members (average) German Model # 3 unique elements:
Board composition, Shareholder's rights, & Voting Right restriction

A. Key players:
German banks
Corporate shareholders
B. Share ownership
German banks and corporations are the dominant shareholders
C. Board Composition
Management board
Supervisory board
D. Regulatory Framework
Industrial Democracy Act
Law on Employee Co-determination Elements:
Key players
Share ownership
Board of Directors Composition
Regulatory Framework
Disclosure requirements for publicly-listed stock corporations
Corporate actions requiring shareholder approval
Interaction among key players
E. Disclosure requirements for publicly-listed stock corporations:
1. Corporate financial data
2. Corporation's capital structure breakdown
3. Substantial background information on each nominee of BODs
4. Aggregate compensation paid to executives
5. All shareholders holding more than 5% of the corporation's total share capital
6. Information on proposed mergers and restructuring
7. Proposed amendments to the articles of association
8. Names of individuals and/or companies proposed as auditors F. Corporate actions requiring shareholder approval
Routine corporate actions
appointment of auditors
elections of directors
Non-routine corporate actions
establishment or amendment of stock option plans
mergers and takeovers
restructurings
amendments of the articles of incorporation G. Interaction among key players
-the model establishes a COMPLEX, WELL-REGULATED system for communication and interaction between shareholders and corporations

shareholders:
-exercise their voting rights
-receive agenda for the meeting including proxy statements, annual report, voting card
-may vote by proxy D. Regulatory Framework
-Government ministries have developed INDUSTRIAL POLICIES and REGULATORY CONTROL
-decline:
fragmentation
increasing internationalization
partial liberation and opening to global standards E. Disclosure requirements 1. corporation's financial data (semi-annual basis)
2. corporation's capital structure
3. background information on each nominee to the BODs
4. Aggregate data on compensation (maximum amount of compensation payable to all executives and BODs
5. information on proposed mergers and restructuring
6 Proposed amendments to the articles of association
7 Names of individuals and/or companies proposed as auditors F. Corporate Actions requiring shareholder's approval
Routine corporate actions
payment of dividends and allocation of reserves
election of directors and appointment of auditors
others
capital authorizations
amendments to the articles of association and/or charter
payment of retirement bonuses to directors and auditors
increase of the aggregate compensation ceiling for directors and auditors
Non-routine corporate actions
approval of mergers,takeovers, and restructuring G. Interaction among Players
-generally links and strengthens relationships
-prefers that majority of its shareholders be long-term affiliated parties
-shareholders:
may attend the annual general meeting
vote by proxy or by mail Management Board:
-daily management of the company
-"insiders" or executives Supervisory Board:
-appoints and dismisses the management board
-approves major management decisions
-advices the management board
-composed of labor/employee representatives and shareholders representatives E. Disclosure Requirements 1. corporation's financial data (semi-annual basis)
2. corporation's capital structure
3. limited information on each supervisory board nominee
4. Aggregate data for compensation (both of the management and supervisory board)
5. any substantial shareholder holding more than 5% of the corporation's total share capital
6. information on proposed mergers and restructuring
7. Proposed amendments to the articles of association
8. Names of individuals and/or companies proposed as auditors F. Corporate Actions Requiring Shareholder Approval
Routine Corporate Actions
1.allocation of net income
2.ratification of the acts of the management board
3.ratification of the acts of the supervisory board
4.election of supervisory board
5.appointment of auditors
others:
capital authorizations
affiliation agreements with subsidiaries
amendments to the articles of associations and/or charter G. Interaction Among Players
-the system is geared towards the interests of the key players

-obstacles to shareholder participation:
in terms of bank's power as depositories and voting agents
pro-bank and anti-shareholder tendency of the system
restriction in voting right BODs shareholders management by: Zendy Rose Flores SUMMARY: highlights
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