Proper functioning of corporate governance is a key issue in international financial markets. With the development of economic entities and giant firms entering the investment markets in recent years, the necessity of executing corporate strategic principles is now markedly taken into account.
Speaking to Securities & Exchange News Agency, the deputy head of the board of directors of SEO elaborated on the newly-announced corporate governance principles and its key features.
Hassan Amiri-Hanzaki said the most important advantages of implementing corporate governance include preventing self-regulation, boosting the role of auditors, and increasing transparency, Financial Tribune reported.
Referring to the history of corporate governance instructions for companies in Tehran Stock Exchange and Iran Fara Bourse, he said the first edition of rules were introduced in fiscal 2013-14 in collaboration with the Tehran Stock Exchange Co.
The SEO evaluated the instructions and published it to get public feedback. However the directions did not stayed in the drafting phase.
It wasn't until July that the SEO finalized the instructions drafted five years earlier after taking into consideration the revisions and proposals by market stakeholders, he said.
Amiri-Hanzaki continued that some of the contents of the rules require companies to revise their charters. The sample charter of the listed companies on SEO and TSE according to the final instructions will be announced soon. The companies are obliged to revise their statute based on the sample statute and articles and ratify them in their general assembly meetings.
According to the instructions, the number of independent board of director members should not be less than 20% of the total board of directors’ members.
Corporate governance is the system of rules, practices and processes by which a firm is directed and controlled. Corporate governance essentially involves balancing the interests of a company's many stakeholders, such as shareholders, management, customers, suppliers, financiers, government and the community.
Since corporate governance also provides the framework for attaining a company's objectives, it encompasses practically every sphere of management, from action plans and internal controls to performance measurement and corporate disclosure.