Corporate Governance establishes the framework of best practice for the internal relationships, organization and structure of firms, as well as their relationships with shareholders and other stakeholders. Corporate governance principles have been integral to the achievement of efficiencies by both companies and the markets of larger, advanced economies, notably those of the Organization for Economic Co-operation and Development (OECD).
The OECD Principles of Corporate Governance 2004 documents a number of benefits to be derived from the adoption of good corporate governance practices. These include, in summary, that they:
Generate internal efficiencies and increase the competitiveness of companies;
Through their adoption by private institutional investors and asset management firms such as those involved in the administration of pension funds, underpin the value of the investments by these firms, and thus become more relevant to larger segments of the population;
Promote the development of a culture of values for professional and ethical behavior on which well functioning markets depend. Trust and integrity play an essential role in economic life, so that it is important that these be institutionalized;
Make criminal activity more difficult as rules and regulations are adopted in accordance with the principles;
Although focused primarily at publicly traded financial and non-financial companies, may also generate increased productivity and other benefits in guiding the practices of private firms and state-owned institutions;
By their adoption within individual companies and throughout the wider economy, help provide a degree of confidence that is necessary for the proper functioning of a market economy, and result in lower capital costs, while firms are encouraged to use resources more efficiently, thereby underpinning productivity growth;
Contribute to financial market stability, investment and economic growth;
At the macroeconomic level, have become a key element in improving economic efficiency and growth, as well as enhancing investor confidence;
The Private Sector Commission recognizes the benefits to be derived from the adoption of good corporate governance practices by publicly traded corporations, privately owned firms, state-owned enterprises, and the wider economy. The private and public sector in Guyana developed the first version of the Guyana Code on Corporate Governance; it was accepted by the Council of the Private Sector Commission on April 7, 2011. The Code does not describe mandatory or enforceable principles but provides a list of the main principles of what are commonly agreed to be good corporate governance practice.
The Code focuses on three main sections:
§ Section 1: The Board of Directors
§ Section 2: Disclosure and Accountability
§ Section 3: The Relationship with Shareholders