Views on improving the integrity of global capital markets
02 July 2012

Corporate Governance Roundup: Egypt and Philippines Get New Tools, Japan Gets New Fund, U.K. May Get New Law

New resources for directors and shareowners in Egypt and the Philippines, new fund focuses on improving corporate governance in Japan, and mandatory “say-on-pay” law in the U.K. moves closer to reality.


The International Corporate Governance Network (ICGN) held its 2012 annual meeting in Rio de Janeiro in the final week of June. A number of the panels focused on concentrated ownership, family-owned or state owned companies, and the investor protections and governance challenges that go along with these ownership structures — the predominant form of ownership of public companies in Latin America.

You can check out the agenda to see what you missed (next year’s meeting is in New York) on the ICGN website, or hop on Twitter and search the following Twitter stream: #ICGN12.


Egyptians citizens can be forgiven for having more weighty matters than corporate governance on their minds recently (presidential elections for those out of the loop), but they may have missed the launch of the Egyptian Directors and Governance Association (EDGA). The association, formed to offer training and advice to boards, states on its website:

We are a diversified group of professionals, experts and board members sharing the same belief in the importance of professional directorship and corporate governance and the vision towards responsible, ethical and effective governance practices for the welfare of the Egyptian business community.


The recent corporate governance scandal at Olympus has concentrated minds in Japan on the need for improvements in corporate governance. As the saying goes, in every crisis there is opportunity — and Taiji Okusu, former head of investment banking at Credit Suisse and UBS, has formed an activist fund focused on Japan to invest in companies with higher governance standards. The fund, Japan Governance Partners, plans to buy controlling stakes of small to midsize Japanese firms and force corporate governance improvements.

Funds have focused on improving governance in Japan before, but often this has been done by investors and funds based outside the country that may not have the cultural and business understanding that Japan Governance Partners seems to have. According to the fund, Japan is the “most undervalued market in the world” because of a “big discount due to poor corporate governance practices.”

We will be eagerly following the performance of this fund to see if this model bears fruit.

The Philippines

The Shareholders’ Association of the Philippines (SharePhil) was established by an investor group for the purpose of empowering investors by guiding and educating them, especially minority shareholders, on their rights and responsibilities as a stakeholder.

In the words of SharePhil chairman Evelyn Singson: “What we are providing is an avenue where we will try to empower the investor by educating the stockholders on his rights and responsibilities because if he is aware of what [his] rights are, he can participate more actively or demand more attention in terms of company management.”

SharePhil president Rosario “Cherry” Bernaldo noted that forming the organization came on the back of a World Bank study on the country’s adherence to basic principles of corporate governance four years ago.

“One of the recommendations is the lack of shareholders’ activism. We benchmark the Philippines with other countries like Australia, Singapore, Hong Kong, and they have a very strong, united group of shareholders that has a lot of activities and they are heard. When this was presented to the Securities and Exchange Commission and the Philippine Stock Exchange, they supported this organization. However, unlike in one or two other countries where it was initiated by the public sector, the government won’t do the same so it has to be the private sector … which led to the growth of this association,” she said.

United Kingdom

Following many failed “say-on-pay” votes at U.K. companies, and much hand-wringing among investors, issuers, and regulators about what “mandatory” say on pay would entail, Britain’s Business Secretary Vice Cable announced what exactly a “mandatory” say-on-pay law will mean. The law, which is expected to pass Parliament, would include a mandatory vote on pay that would take effect in October 2013, and would require all listed companies to publish a single figure for each director’s compensation, as well as a chart comparing the company’s performance and the chief executive officer’s pay.

A study by the High Pay Commission (A British lobby group) appears to support the law, finding that over the preceding decade, directors’ salaries at major British companies rose 64 percent and average annual bonuses 187 percent — even though share prices fell an average of 71 percent during the period.

United States

Proxy season in the United States is winding down, as the vast majority of U.S. annual meetings are held in the months of April, May, and June. Expect a review of the U.S. proxy season in this space soon.

In June, the biggest governance news in the U.S. turned out to be two instances in which shareowners voted for access to the corporate proxy at Nabors Industries and Chesapeake Energy. You can find more details on the issue in our earlier blog post.

As we noted earlier in the month, this burgeoning private ordering of proxy access will likely give shareowners more leverage in dealing with boards at U.S. companies, even if that power is only to negotiate for corporate governance improvements or for shareowner representation on the board.

About the Author(s)
Matt Orsagh, CFA, CIPM

Matt Orsagh, CFA, CIPM, is a director of capital markets policy at CFA Institute, where he focuses on corporate governance issues. He was named one of the 2008 “Rising Stars of Corporate Governance” by the Millstein Center for Corporate Governance and Performance at the Yale School of Management.

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