Flexibility and Proportionality in Corporate Governance
The quality of corporate governance regulations matters. If they are well designed,
they can help governments achieve important policy objectives, such as higher levels
of investment, increased productivity and better business sector dynamics. But for
this to happen, the rules and regulations must be allowed to evolve over time. They
must also be able to meet the many different needs of those entrepreneurs, investors
and stakeholders who are supposed to implement them.
This is why the G20/OECD Principles of Corporate Governance state that policy makers
have a responsibility to shape a regulatory framework that can meet the needs of corporations
that operate under widely different circumstances.
Importantly, this concept of flexibility and proportionality is not about less demanding
rules or the acceptance of sub-standard practices. On the contrary, it represents
a functional and outcome oriented approach to regulation that facilitates implementation
and makes enforcement more effective.
This OECD report presents the results of an OECD review on flexibility and proportionality
practices in seven different areas of corporate governance regulation. The review
covers 39 jurisdictions and six in-depth country case studies.