“The corporate governance of private equity backed-firms in OECD and non-OECD countries”
On the 22nd of June 2007, the Corporate Affairs Division organised in Paris an Experts Meeting on Private Equity, Corporate Governance and Non-Listed Companies with the support of the Government of Japan. The meeting gathered senior practitioners from family firms, private equity funds, private equity associations and law firms to discuss the challenges and opportunities for corporate governance in private equity-backed companies both in OECD and non-OECD countries, particularly what specific implications they have on public policy.
Main issues discussed include:
How the private equity industry is filling a financing gap for non-listed companies seeking to raise capital, especially in emerging countries where capital markets are less active and where access to debt markets is limited;
How the private equity industry benefits the capital markets, especially in emerging markets such as Brazil, through the good governance they bring to the non-listed companies;
How the private equity operations affect the corporate governance structures of non-listed companies and what are the major corporate governance changes experienced;
What are the corporate governance devices used by private equity investors that allow them to provide “smart” capital through active ownership such as board seats, reporting practices, information systems, management incentive;
How can improvements in the legal and regulatory framework, including voluntary standards, support sound private equity practices and private equity-backed companies? Where can private contracting substitute for market regulation?
The Experts Meeting was convened as a follow-up to the kick-off International Experts Meeting held in Istanbul in April2005 and to the focus group meeting held in Paris in 2005 to further advance discussion on the specific role of private equity firms in the corporate governance of non-listed companies. The meeting also followed the statement by the OECD Steering Group on Corporate Governance on the benefits and possible weaknesses of private equity firms and activist hedge funds as corporate owners.