UNDERSTANDING…..
CORPORATE
GOVERNANCE
PETER METCALFE
THE FOUNDATION FOR THE DEVELOPMENT OF AFRICA
is a private, 'not-for-profit', non-membership, organisation actively serving Africa by
promoting processes conducive to sustainable development
......throughout Africa - with the emphasis on sustainability!
This organisation is currently rated as one of the most proactive Sustainable Business
Development Organisations in Africa!
Serving Africa since 1999.
NOTHING IS AS POWERFUL AS THE HUMAN NETWORK!
PAPERLESS
Sustainable Development is the action and/or act of bringing people
and/or processes into position for the effective use in the support
and/or delivery of efforts, conducts and the cause!
PETER METCALFE
May 2002
DEVELOPMENT
INVESTMENT
CORPORATE
GOVERNANCE
Corporate governance is a term, broadly used,
that refers to the rules, processes, or laws by
which an entity is operated, regulated and
controlled.
Should rules be disregarded or not enforced the
situation is referred to as ‘bad’ governance.
Adhering to the law and obeying the rules is
therefore ‘good’ governance.
There is no middle road here.
It is either right or wrong!
WHY
CORPORATE
GOVERNANCE?
CORPORATE
[Latin corportus, past participle of corporre, to
make into a body, from corpus, corpor-, body;
see: kwrep- in Indo-European roots.]
CORPORATE
YOU and ….I
CORPORATE GOVERNANE
The term, corporate governance, can also refer
to internal factors defined by the officers or
stockholders, thus the constitution of an entity,
as well as to external forces such as consumer
groups, clients, voters as well as government
regulations.
CORPORATE GOVERNANE
A well-defined and enforced corporate
governance provides a structure that, at least in
theory, works for the benefit of everyone
concerned, by ensuring that the entity adheres to
accepted ethical standards and best practices as
well as to formal laws.
CORPORATE GOVERNANE
Everything we do is subjected to regulation or
standards. The ultimate law, rule or standard, in
any country, should be it’s Constitution and
based upon this foundation, laws and by-laws
are devised and standards are established.
CORPORATE GOVERNANE
In recent years, corporate governance has
received increased attention because of highprofile scandals involving abuse of corporate
power and, in some cases, alleged criminal
activity by corporate officers.
CORPORATE GOVERNANE
The Enron scandal, revealed in October 2001,
eventually led to the bankruptcy of the Enron
Corporation, an American energy company
based in Houston, Texas, and the dissolution of
Arthur Andersen, which was one of the five
largest audit and accountancy partnerships in the
world. In addition to being the largest
bankruptcy reorganization in American history
at that time, Enron was attributed as the biggest
audit failure.
CORPORATE GOVERNANE
Shareholders lost nearly US$11 billion - Enron's
$63.4 billion in assets made it the largest
corporate bankruptcy in US history.
CORPORATE GOVERNANE
An integral part of an effective corporate
governance regime should include provisions for
civil or criminal prosecution of individuals who
conduct unethical or illegal acts in the name of
the entity.
SO….. WHO IS
“ACCOUNTABLE ?”
WORLDOMETERS
http://www.worldometers.info
http://www.worldometers.info
DID YOU KNOW?
http://www.youtube.com/watch?v=
cL9Wu2kWwSY
SO….. HOW
“SIGNIFICANT”
ARE WE?
ENFORCING
CORPORTE
GOVERNANCE
………HOW SAD
CORPORATE GOVERNANCE
STRUCTURES / GUIDELINES
USED FOR
ACCEPTED ETHICAL STANDARDS
or
BEST PRACTICES
or
FORMAL LAWS
………APPLY OR ELS
The Cadbury Report - UK
“Financial Aspects of Corporate Governance”
(December 1992)
Greenbury Report - UK
“Addressed a growing concern about the level of
director remuneration”
(July 1995)
Hampel Report - UK
“Corporate Governance”
(June 1998)
Turnbull Report - UK
“Internal Control:
Guidance for Directors on the Combined Code”
(September 1999)
Higgs Report - UK
“Review of the role and effectiveness of
non-executive directors”
(January 2003)
European Corporate Governance
Institute
International Corporate
Governance Network (ICGN)
Global Corporate Governance
Forum
SOX or SOA - USA
The Sarbanes–Oxley Act of 2002, also known as
the 'Public Company Accounting Reform and
Investor Protection Act‘ and 'Corporate and
Auditing Accountability and Responsibility Act‘
SOX or SOA - USA
SOX, is a United States federal law enacted on
July 30, 2002, which set new or enhanced
standards for all U.S. public company boards,
management and public accounting firms.
It is named after sponsors U.S. Senator Paul
Sarbanes (D-MD) and U.S. Representative
Michael G. Oxley (R-OH).
KING III - SA
KING III - SA
The revised King Code and Report on
Governance for South Africa (King III) was
launched on 1 September 2009.
It came into effect and replaced the King II
(introduced in 2002) on 01 March 2010.
King I was introduced in 1999.
KING III - SA
King III was prompted by changes in
international governance trends and the reform
of South Africa's company laws with the
promulgation of the new Companies Act 71 of
2008 that came into effect on 1 July 2010.
The review also came at a time when entities
and corporate governance were increasingly
under the spotlight in light of corporate failures
and the then global economic slowdown.
KING III - SA
King III principles and recommendations must
be seen against the legislative requirements
contained in the 2008 Act and the Public
Finance Management Act of 1999.
This is reflected in the terminology used in King
III with "must" indicating a legal requirement
and "should" indicating where the application of
King III would result in good governance.
CONSUMER PROTECTION
ACT 68 of 2008
CONSUMER PROTECTION
ACT 68 of 2008
Consumer protection laws designed to ensure
fair trade competition and the free flow of
truthful information in the marketplace. The
laws are designed to prevent businesses that
engage in fraud or specified unfair practices
from gaining an advantage over competitors and
may provide additional protection for the weak
and those unable to take care of themselves.
CONSUMER PROTECTION
ACT 68 of 2008
Consumer Protection laws are a form of
government regulation which aim to protect the
rights of consumers. For example, a government
may require businesses to disclose detailed
information about products - particularly in
areas where safety or public health is an issue,
such as food.
SO….. WHO IS
“ACCOUNTABLE ?”
KING III
Chapter One – Principle One - Phrase One
KING III
“Good corporate governance is essentially
about effective, responsible leadership.
Responsible leadership is characterised by
the ethical values of responsibility,
accountability, fairness and transparency.”
How can we secure
Good Corporate Governance
throughout Africa?
Ensuring effective LEADERSHIP
Ensuring effective RISK MANAGEMENT
Ensuring effective SUSTAINABILITY
Ensuring effective CONFLICT RESOLUTION
Ensuring effective COMMUNICATION
Ensuring effective INTEGRATION
Ensuring effective PARTICIPATION
Ensuring effective REPORTING
Ensuring effective STRATEGY
Ensuring ‘TRIPLE BOTTOM LINE’ effectiveness
Ensuring effective IMPLEMENTATION
THINKING
“OUT OF THE BOX”
THANK YOU
Peter METCALFE
The Foundation for the Development of Africa
www.foundation-development-africa.org
www.isupportafrica.com
www.peter-metcalfe.com
peter@isupportafrica.com