OECD Principles of Corporate Governance

The G20/OECD Principles of Corporate Governance provide the international benchmark for corporate governance, guiding policymakers, regulators, and market participants in evaluating and improving the legal, regulatory, and institutional framework for corporate governance.

First published in 1999 and most recently revised in 2023, the Principles are used by governments, regulators, stock exchanges, and companies worldwide as a reference point for good corporate governance practice. They have been adopted as one of the Financial Stability Board's Key Standards for Sound Financial Systems and are used by the World Bank in its country assessments.

The Six Principles

I. Ensuring the Basis for an Effective Corporate Governance Framework states that the corporate governance framework should promote transparent and fair markets, the efficient allocation of resources, and be consistent with the rule of law. It should support effective supervision and enforcement.

II. The Rights and Equitable Treatment of Shareholders and Key Ownership Functions covers shareholders' basic rights including secure registration of ownership, the ability to transfer shares, timely access to material information, participation and voting in general meetings, election and removal of board members, and sharing in profits. The principle emphasises equitable treatment of all shareholders, including minority and foreign shareholders.

III. Institutional Investors, Stock Markets, and Other Intermediaries addresses the role of institutional investors in promoting good governance through informed ownership practices, the functioning of stock markets in supporting good governance, and the responsibilities of proxy advisors, analysts, and other intermediaries.

IV. The Role of Stakeholders in Corporate Governance recognises that the corporate governance framework should acknowledge the rights of stakeholders established by law or through mutual agreements, encourage active cooperation between corporations and stakeholders, and provide access to relevant information and effective redress for violation of rights.

V. Disclosure and Transparency requires timely and accurate disclosure on all material matters including financial situation, performance, ownership, and governance. Disclosure should include material information on the company's ESG risks and opportunities, related party transactions, and board member qualifications and remuneration.

VI. The Responsibilities of the Board covers the board's strategic guidance role, effective monitoring of management, and accountability to the company and shareholders. Boards should exercise objective independent judgement, apply high ethical standards, and consider the interests of stakeholders. The 2023 revision strengthened expectations around sustainability oversight, risk management, and board diversity.

2023 Revision: Key Changes

The 2023 revision introduced significant updates reflecting the evolving governance landscape. New provisions address sustainability and climate-related risks, the role of corporate governance in supporting sustainability objectives, digital transformation and cybersecurity oversight, and enhanced expectations for board diversity and stakeholder engagement.

Further Reading

• OECD Corporate Governance — Official OECD page
• G20/OECD Principles Full Text — 2023 revised text

Related Topics

• Corporate Governance Codes
• Board Diversity & Composition
• Audit Committee Responsibilities