IoD seminar: improving standards generates calls for reform

The Institute of Directors has a key role to play in helping the government, all local stakeholders and society to improve corporate governance standards, and so improve the foundations for economic growth and development.

The IoD's 'Force for Change' seminar, held earlier this month at the Corinthia Palace Hotel, Attard, brought the MFSA, FOI and all other stakeholders together to hear presentations by world expert Patricia Peter on corporate governance issues.

MFSA speakers outlined the Draft Code due for implementation soon. The seminar aimed to share with parliamentarians, the regulator and the business community the IoD's work on corporate governance; to listen to their views on the challenge of implementing the necessary reforms to improve corporate governance standards; and to seek regulatory support for building the necessary political will and momentum to push this agenda forward.

Good corporate governance underpins market confidence, integrity and efficiency, and so promotes economic growth and financial stability. It requires transparent and reliable disclosure mechanisms about corporate performance. Clearly defined responsibilities and effective powers among the shareholders, the board and management are also needed.

The assessment by the MFSA, presented by Paul Spiteri, concluded that the Draft Code should be revised to take into account new developments and concerns, while retaining those rules which recognise the need to adapt implementation to varying legal, economic and cultural circumstances.

The revised Draft Code encompasses new regulatory measures which were discussed in an open panel moderated by MFSA chairman Professor Joe Bannister. The 200-odd delegates held a spirited discussion with panel members representing local and international business.

Good corporate governance relies on effective checks and balances. To strengthen them, the revised Draft Code aims to tighten the oversight of management by the board of listed companies and public interest companies, and to improve the accountability of the board to shareholders.

New rules call for the exercise of informed ownership by shareholders through both strengthening their ability to influence the board and by lowering the costs of exercising ownership rights. 

The Draft Code is the centrepiece of the numerous activities undertaken by the MFSA to improve corporate governance. The effectiveness of the revised Draft Code now calls for their active use by Government, parliamentarians, the regulator and private parties, and IoD chairman James Satariano said that the IoD was willing to act as a co-ordinating force for further education among these stakeholder groups.