Germany's body in charge of the Corporate Governance Code, the Regierungskommission Deutscher Corporate Governance Kodex, has proposed amendments to update the code after a six-week consultation process.
Regierungskommission said the updated version of the code will be effective once the Federal Ministry of Justice and Consumer Protection publishes it in the electronic German Federal Gazette.
The amended code now expresses in its preamble that good governance is guided by ethical and self-responsible behaviour principles. As such the preamble refers to a so-called guiding principle of the behaviour of the “Ehrbarer Kaufmann” or “honourable businessperson”.
The code also recommends the chairperson of an audit committee remain independent. The input from the consultation showed that it continues to be considered as best practice that the chairperson has not served as a member of the company’s management board during the previous two years.
The Regierungskommission added: “As before, the Chairman of the Supervisory Board shall not additionally chair the Audit Committee. Within the scope of the German Audit Reform Act and the Reform of the EU Statutory Audit Market, legislators had waived the requirement of having any independent Supervisory Board members on the Audit Committee at all.”
Meanwhile, Rolf Nonnenmacher has been appointed chair of the Regierungskommission, effective March, 1, replacing Manfred Gentz who served at the commission for eleven years, four of which as chairman.
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By GlobalDataNonnenmacher is a supervisory board member and audit committee chairman at German companies such as Continental, Covestro, and ProSiebenSat1 Media.
He was chairman of chairman of KPMG Europe Middle East Africa until 2013.
The Regierungskommission stated: “Gentz was always opposed to trends whereby the Code would be 'juridified', and against regulation becoming too detailed, discouraging people to reflect on their own actions, and only abiding by rules.”
Well Investments Research (WIR) has published a report entitled, Puncturing the Myth, a Follow-Up, an update of a previous one launched in December 2016, which put into question the financial position and governance standards of Japanese listed pneumatics manufacturer SMC Corporation.
WIR is self-described as a firm whose purpose is to "identify situations where Japan’s capital markets have overlooked opaque, suspect or confusing issues around listed Japanese firms and provide an insight into them based on clear, actionable analysis".
SMC Corporation contested the findings of the report.
According to WIR, after two months since the publication of the report, SMC’s management "continues to keep silent" without addressing the issues raised by the report, which went beyond corporate governance practices.
Among the issues WIR raised are: alleged potentially false disclosures under Japanese rules and alleged existence of unaudited subsidiaries.
Regarding the auditing of the company, WIR also singled out as issues "that of a scandal-ridden small auditor who supposedly oversees the group’s numbers, the constant rotation of auditors at overseas subsidiaries, an incomprehensibly fast completion of audits for a global business of this scale".
In addition, the research firm underscored "a dubious inventory valuation and cash balance that don’t add up."
Japan introduced its first Corporate Governance Code in June 2015, a work produced by a Council of Experts, as a response to corporate scandals like that of Olympus.
A Corporate Governance Council has been set up in Singapore to review the national code, according to the Monetary Authority of Singapore (MAS).
The code, has not been updated since 2012 when new rules on board independence and remuneration were introduced.
According to MAS, the Council will focus this time on improving the disclosure of governance practices, particularly when companies report on the reasons to not follow the comply-or-explain code's provisions, as well to propose mechanisms to monitor the progress on corporate governance practices.
The Council will be chaired by Chew Choon Seng, former chairman of the Singapore Exchange.
Representatives from the Accounting and Corporate Regulatory Authority (ACRA) will also have a seat at the Council.
Other council members include: Mak Yuen Teen, associate professor of accounting at the National University of Singapore; Tham Sai Choy, chairman of KPMG Asia Pacific; and Leong Wai Leng, CFO of Temasek Holdings (Private) Limited, a sovereign wealth fund of the Government of Singapore.
Chew Choon Seng said: “We need to ensure that our CG Code remains relevant and progressive, and supports sustained business growth and innovation. The review of the CG Code will therefore take into account changes in our corporate landscape as well as international developments.”
The OECD has published Mexico's National Auditing System: Strengthening Accountable Governance, a comprehensive report reviewing the country's systems to oversee its public finances. The report offers recommendations to implement recent legislative reforms aimed at reinforcing public governance and promotion of accountability, integrity and transparency in government. The 2015 legal reform created the so-called National Anti-Corruption System and the National Transparency System, and introduced the National Auditing System (Sistema Nacional de Fiscalización, or SNF). Implementing efforts of the reforms will be led by Mexico’s supreme audit institution (SAI) and the Superior Audit Office (Auditoria Superior de la Federación, or ASF), an oversight body whose mandate has been enhanced.
Angel Gurría, OECD secretary-general, wrote in the foreword of the report: "ASF will now report to the Mexican Congress twice more throughout the fiscal year on the state of public expenditures, and it will take on a new investigative role to curb administrative irregularities. However, greater authority and responsibilities comes with challenges and risks. ASF and other audit institutions operate at the intersection of accountability, integrity and good governance." The OECD has previously published Chile's Supreme Audit Institution: Enhancing Strategic Agility and Public Trust in 2014 and Brazil's Supreme Audit Institution: The Audit of the Consolidated Year-end Government Report in 2013. Gurría also noted: "Supreme audit institutions (SAIs) represent one critical driver in a system of governance actors, and their role is evolving. Many SAIs are going beyond their traditional oversight role, to being purveyors of evidence and analysis in support of a richer policy dialogue."
