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Corporate governance is important for the efficient functioning of markets and companies, in accordance with the overall goals of communities and societies. The financial crisis has highlighted the need for a more effective and sustainable corporate governance infrastructure that helps promote investor confidence and assists companies in meeting investors’ expectations.
Investor confidence in financial markets depends in large part on the existence of an accurate disclosure regime that provides transparency in the beneficial ownership and control structures of publicly listed companies. This is particulary true for corporate governance systems characterised by concentrated ownership, where protecting minority shareholder interests is paramount. Neither shareholder nor stakeholder rights can be proprerly exercised if the ultimate decision makers in a company cannot be identified. The accountability of the board may also be seriously endangered if the public is unaware of control structures. Finally, regulators and supervisory agencies have a strong interest to know beneficial owners.
This report was requested by Bapepam-LK, the Capital Market and Financial Institution Supervisory Agency in Indonesia, in the context of the OECD-Indonesia Policy Dialogue on Corporate Governance. It assess the costs, benefits and practicality of different policy approaches as well as suggests policy options to better identify ultimate beneficial owners in Indonesia.