Since the global financial crisis, there has been a surge in the issuance of corporate bonds, particularly in emerging markets. This has represented an opportunity to support companies’ access to finance, but it may give rise to new risks if regulatory frameworks are not fit for purpose. Regulations and practices that promote the transparency and accountability of the company, board members and executives, to both shareholders and bondholders, help to build trust in markets, thereby improving market efficiency and supporting corporations’ long-term projects. A well‑functioning public bond market enhances the resilience of corporations, notably by providing an alternative to bank lending during periods of financial instability.
The G20/OECD Principles of Corporate Governance (hereafter, the “Principles”) focus on publicly traded companies. These Guidelines for Corporate Bond Issuers (hereafter, the “Guidelines”) provide recommendations for publicly traded companies on issues related to bond issuance and bondholder rights that are only briefly addressed or not covered at all in the Principles, such as bondholder meetings. Additionally, the Guidelines provide recommendations on how the content of the Principles could be applied to companies that list their bonds but whose shares are not publicly traded, particularly regarding disclosure and board responsibility.
These Guidelines include guidance for corporate bond issuers that list their bonds on a stock exchange or another trading venue but not necessarily their equity. The Guidelines do not provide guidance in relation to unlisted bonds – for which no reporting obligation would typically exist – and do not address creditor rights or insolvency frameworks more broadly. The Guidelines are non-binding and do not aim to provide detailed prescriptions for national legislation. They are not a substitute for, nor should they be considered to override domestic law and regulation. Rather, they seek to identify objectives and suggest various possible means for achieving them. A jurisdiction’s implementation of the Guidelines, and the markets in which regulation is more closely aligned with them, will depend on its national legal and regulatory context. The Guidelines are addressed to policymakers, but stock exchanges and private sector initiatives may also play an important role in implementing the recommendations.
The Guidelines are intended to help policymakers evaluate and improve the legal, regulatory and institutional framework for corporate bond issuers and the role of bondholders in corporate governance, with a view to supporting economic efficiency, access to capital, sustainable growth and financial stability. This is primarily achieved by providing corporate bond issuers, bondholders and company board members and executives with the right information and incentives to perform their roles effectively.
Throughout these Guidelines, “listed companies” refer to companies with their equity listed on a stock exchange. “Publicly traded companies” is a synonym of “listed companies”. A “listed bond” is authorised to be traded in a stock exchange or another regulated trading venue. An “unlisted bond” is traded directly between parties, often called “over the counter” (OTC). “Issuers of listed bonds” include companies that do not list their equity but list their bonds.