The Growth and Emerging Markets (GEM) Committee of the International Organization of Securities Commissions (IOSCO) on Monday published a report that seeks to strengthen corporate governance and align regulatory frameworks in the emerging markets with international standards in this area.
The Report on Corporate Governance in Emerging Markets — which is based on a survey of assorted players including regulators, exchanges, issuers and investors — focuses on board composition, remuneration and incentive structures, and risk management and internal controls.
According to the report, there is “broad agreement on the direction emerging market regulators should take to improve the quality and accountability of boards, ensure that remuneration and incentive structures are designed to create long term value, and improve the risk management frameworks and internal controls of corporations,” IOSCO says in a news release.
Additionally, the report proposes approaches for implementing best practices, including encouraging greater board diversity, and improving the reporting on sustainability, social responsibility and cyber risks.
“Securities regulators face, on a daily basis, problems that could be avoided or mitigated by the practical implementation of corporate governance principles and standards,” says Leonardo Pereira, chairman of the task force that prepared the report. “In this sense, I expect the report to be a concrete opportunity for securities regulators to consider possible ways for improvements in their regulatory frameworks, favoring sounder conduct standards and more effective governance structures.”
“The report is an important and timely assessment of the progress of emerging markets in aligning their regulatory frameworks and practices with global standards,” adds Ranjit Ajit Singh, vice chairman of the IOSCO board and chair of the GEM. “It makes useful recommendations to address issues associated with corporate governance in emerging markets. It also demonstrates the commitment by emerging market regulators to enhance corporate governance standards and reinforce resilience in their markets.”