Corporate Governance Requirements Research Articles

Bridge Bank as a bank failure management tool: Ukraine’s case

The article aims to present an overview of Ukraine’s framework and experience on application of the bridge bank as a bank failure management tool. Ukraine’s regime, which is a single-track regime, allows using a bridge bank to deal with failures of any bank, including small and medium sized banks. System analysis of first and second level acts, as well as available scientific publications served as a methodological basis for the research. It may be concluded that Ukraine’s framework includes two variations of the bridge bank. As a general rule, a bridge bank shall be created for three months and the investor must be found in advance. Such bridge bank has simplified corporate governance and is not subject to mandatory economic standards, currency position limits, the procedure for forming and maintaining required reserves, forming provisions for losses on bank asset transactions and determining the amount of credit risk on all bank asset transactions. For systemically important banks and complex cases as defined in the law, a bridge bank can be created for a period not exceeding one year with a possible extension for up to one year. Such bridge bank may be established in advanced, which shall be considered a banking secrecy. It shall comply with almost corporate governance requirements envisaged for banks and in three months after its establishment must ensure compliance with the requirements capital and liquidity ratios. The law provides for simplified procedure for establishment and licensing of a bridge bank, and the DGF shall be exempt from payment of taxes and other fees in connection with creation of a bridge bank. The authorized capital of the bridge bank shall be formed at the expense of the DGF. Ukraine has two cases of applying a bridge bank tool, and both proved to be efficient.

Development of management accounting functions in the corporate governance system

Problematic issues of the development of theory of management accounting in context of improving corporate governance and increasing requirements from various stakeholders to its information support are increasingly becoming the object of research by domestic and foreign scientists. The purpose of this study is to identify the trends in the development of management accounting in the conditions of digitalization of the economy, and the transformation of business processes under the influence of changes in business environment as well as justification and substantiation of the new functions of management accounting in connection with the changing requirements of corporate governance and the need to improve its information support. To achieve this goal, the methods of synthesis and analysis, abstraction, deduction and induction, comparison and systematization were used, as well as a critical analysis of existing views on the essence of management accounting, its functions and possible development scenarios, taking into account transformations in accounting science and practice observed in the third decade of the XXI century. In the process of work the results of own researches conducted and received within the framework of the scientific school of the Financial University “Accounting-analytical and control processes of economic subjects of information society” and in the course of practical activity of the authors were used. Based on the analysis of literary sources, the requirements of national and international standards in the field of both accounting and financial reporting and in sustainable development, current accounting practices and corporate governance practices, new management accounting functions have been identified and justified, the implementation of which is aimed at the formation and presentation of better quality data and information as part of corporate reporting with predictive value. The results obtained can be used by economic entities in optimizing accounting and control processes and developing internal regulations on management accounting, as well as by accounting regulatory entities and professional organizations in developing recommendations in the field of management accounting for various economic entities.

Goods Procurement Audit System Information At PT. Global Satria Aji

As an effort to realize ideal information for companies, the implementation of reliable information technology governance is needed by companies. This study aims to audit the application of information technology governance of the goods procurement system at PT. Global Satria Aji, because the company PT. Satria Aji Global wants to check profit or loss and also wants to minimize losses related to the goods procurement system. The problem that is often experienced by companies is a system that is deemed unable to accommodate all the data needed when incoming data increases. This study uses the COBIT 5 framework using the EDM01, APO01, APO02, APO07, DSS01 and MEA01 process domains. The calculation of the average maturity level of the six domains used is 1.58 in decimal numbers or 158% in percent. In the study it was found that the biggest discrepancy occurred in the APO01 domain where the difference between the expected conditions and the conditions that occurred reached 2.04. The recommended improvement is to provide a consistent management approach so as to enable corporate governance requirements to be met.

Board characteristics, ownership structures and bank profitability: Evidence from Sri Lanka

Despite theoretical literature stating that corporate governance mechanisms enhance the banking sector performance, empirical studies over the past decades have inconclusive evidence over the effectiveness of such mechanisms. Several studies argued that some mechanisms led to diminishing banking profitability. Hence, the scope of this study is to investigate the effectiveness of corporate governance mechanisms in driving the banking profitability. The evidence is based on 13 licensed commercial and specialized banks in Sri Lanka during the period from 2011 to 2020. It examines the relationship between profitability indicators such as return on assets (ROA) and return on equity (ROE) against seven variables related to board characteristics and ownership structures through a panel data regression model. Each regression model is initially estimated with pooled OLS method and then tested with fixed and random effects methods based on the Hausman test results. The findings suggest that board size, frequency of board meetings, representation of non-executive directors in boards, gender diversity, directors’ share ownership and economic growth are significant determinants of ROA. In contrast, board size, frequency of board meetings, bank size and economic growth are associated with ROE, summarizing that the shareholders concentrate less on ownership structures in the Sri Lankan banking sector. This broadly supports the stakeholder theory where the corporate governance mechanisms ensure enhanced returns to all stakeholders rather than the shareholders’ returns. The results also suggest that the existing corporate governance requirements for the Sri Lankan banks require careful revisits to further promote their effectiveness.

Corporate governance in Kuwait: joining the dots between regulatory reform, organisational change in boards and audit committees and firm market and accounting performance

PurposeThis study aims to examine the link between boards and audit committees and firm performance in Kuwaiti listed firms in the context of recent and extensive corporate governance regulatory reform.Design/methodology/approachPanel data regression analysis with fixed effects and clustered standard errors of firm performance for 61–97 listed industrial and services firms in Kuwait over a seven-year period. The dependent variables are the returns on assets and equity, the debt-to-equity ratio and leverage and Tobin’s Q and the independent variables comprise board of directors and audit committee characteristics, including size, the number of meetings and the numbers of independent and outside board and expert committee members. Firm size, subsidiary status and cash flow serve as control variables.FindingsMixed results with respect to the characteristics of the board of directors. Board size and independent and outsider board members positively relate only to Tobin’s Q and insiders only to debt to equity. For audit committee characteristics, committee size, independence and expertise positively relate to the return on equity and committee size and expertise only to Tobin’s Q. Of the five performance measures considered, board and audit committee characteristics together best determine Tobin’s Q.Research limitations/implicationsData from a single country limits generalisability and control variables necessarily limited in a developing market context. Need for qualitative insights into corporate governance reform as a complement to conventional quantitative analysis. In combining accounting and market information, Tobin’s Q appears best able to recognise the performance benefits of good corporate governance in terms of internal organisational change.Practical implicationsThe recent corporate governance code and guidelines reforms exert a mixed impact on firm performance, with audit committees, not boards, of most influence. But recent reforms implied most change to boards of directors. One suggestion is that non-market reform may have been unneeded given existing market pressure on listed firms and firms anticipating regulatory change.Social implicationsKuwait’s corporate governance reforms codified corporate governance practices already in place among many of its firms in pursuit of organisational legitimacy, and while invoking substantial change to audit committees, involved minor change to firm performance, at least in the short term. Some firms may also have delisted in expectation of stronger corporate governance requirements. Regardless, these direct and indirect processes both improved the overall quality of listed firm corporate governance and performance in Kuwait.Originality/valueSeminal analysis of corporate governance reforms in Kuwait, which have rapidly progressed from no corporate governance code and guidelines to an initially voluntary and then compulsory regime. Only known analysis to incorporate both board of directors and audit committee characteristics. Reveals studies of the corporate governance–firm performance relationship may face difficulty in model specification, and empirical significance, given the complexity of corporate governance codes and guidelines, leads in changing firm behaviour and self-selection of firms into and out of regulated markets.

Satellite Imaging of Methane Super-Emitters To Provide Data To Clean Up Supply Chains

_ The use of satellite imaging to verify self-reporting of methane emissions using empirical data gathered in near-real time by artificial intelligence, could cost the fossil fuel industry dearly in fines under the new methane provisions of the US Inflation Reduction Act (IRA). Signed into law in August, the IRA requires the US Environmental Protection Agency (EPA) to adopt within 2 years methods to monitor and collect empirical data on methane emissions. The act introduces the federal government’s first-ever tax on greenhouse gas emissions, but does not specify preferred technologies. Satellite monitoring is assumed to be at the top of the list, according to geo-analytics company Kayrros. Private industry can, and likely will, play the same game, as it has access to the very technologies the government uses and can invest to acquire empirical data to identify problems companies might not even know they have. Once emissions are quantified at their source, industry can clean up supply chains and thus blunt the financial impact of penalties set to debut in 2024. Third-Party Audits: Good for ESG Optics but Missing the Bigger Issue In May, ExxonMobil announced it had become the first oil and gas company to earn an “A” grade certification under the independent MiQ standard for managing methane emissions from associated gas at its Poker Lake, New Mexico, facilities which the company said in 2021 accounted for more than 10% of its Permian Basin gas production. Responsible Energy Solutions, a Texas-based independent auditor in the field of Responsibly Sourced Gas (RSG), conducted the study. One month later, Chevron announced it had earned top marks from Denver-based Project Canary, an SaaS-based (software-as-a-service) data analytics company organized as a public benefit corporation which markets itself as the gold standard for independent RSG audits. It uses its own monitoring devices and does not run data through the client’s SCADA system. Gas producers are turning to third-party audits to differentiate their production streams as RSG to comply with the investment community’s ESG (environment, social, and corporate governance) requirements. In a study issued a year ago, the global research and business consultancy Wood Mackenzie referred to RSG certification as a “nascent” industry (audit companies tend to be innovation-driven data analytic startups) and noted that “certification processes exist (currently) only for upstream assets and there is no universal or industry standard.” “Certification is based on standards such as air emissions, water stewardship, land use, and community impacts,” Wood Mackenzie reported. “RSG differs from normally produced natural gas in that producers take extra steps to reduce their carbon footprint, mitigate emissions, and minimize environmental and social impacts.” RSG certification monitoring might collect empirical data—which is a start—but it is largely at pad level, ignoring the bigger and more ominous picture that can be assessed only from space. That bigger picture is what the EPA will turn to when it begins to levy its methane tax in 2024 and it is why the industry is starting to look “up” as well. Drone surveys are widening the view. A paper presented at the 2021 SPE Annual Technical Conference and Exhibition (ATCE) detailed how BP conducted the first methane emissions survey of an offshore facility with a miniature methane spectrometer onboard a fixed-wing unmanned aerial vehicle (SPE 206181).

Agency Meets Stability: The Effect of Corporate Governance and Capital Requirements on Bank Lending

Agency Meets Stability: The Effect of Corporate Governance and Capital Requirements on Bank Lending

Influence of operational levels of corporate governance on earnings management in companies listed on B3

Purpose: To analyze the influence of operational levels of corporate governance on earnings management in companies listed on B3.
 Methodology: Descriptive research with a documentary procedure and a quantitative approach was adopted. The sample consisted of 207 companies listed on B3, which are classified in the operational levels of corporate governance. Data were collected through Economática® from 2013 to 2018 and, subsequently, the model developed by Kang and Sivaramakrishnan (1995) was used. To estimate the result management, the software SPSS, LhStat and Excel were used.
 Results: The results show that in the result management aspect there is not a trend or an evolutionary line, that the segments which require higher corporate governance standards, companies have accounting choices to manage less results, or, that in the segments with lower corporate governance requirements, companies have accounting choices to manage more results. After all, the operational levels that have the best corporate governance concepts, do not negatively influence the practice of earnings management, as well as, the operational levels that do not have the best concepts, do not positively influence the earnings management practice.
 Contributions of the Study: The study brought contributions to the corporate sphere, addressing the promotion of governance as a mechanism for transparency in companies accountability in the aspect of earnings management. This allows users to infer the quality of accounting information disclosed by B3. Likewise, contributions in the academic sphere when analyzing accounting choices directly from companies' accounting statements, bringing the theory discussed in the academy closer to the associations reality.

Research on the Relationship between Audit Risk Assessment and Risk Governance: Evidence from Tunisia

ABSTRACT The study examines the relationship between corporate governance mechanisms and audit risk in firms listed on the Tunisian Stock Exchange (TSE). The study covers the period 2006–2013. Panel regression analysis was used to estimate the relationship between corporate governance variables and audit risk. The results show that board size, board independence and institutional ownership were negatively related to audit risk. It is also discovered that audit risk index level increases as poor corporate governance. These findings may have important implications for analysts, investors, regulators and academics. First, the identifying factors that may influence the audit risk can help guide the reforms to improve the functioning of the financial market. Second, the study provides ample evidence of risk governance problems in the Tunisian market, highlighting the necessity of new corporate governance requirements. This study is unique in providing Tunisian evidence on the effect of corporate governance on audit risk. This paper is also relevant as it develops an index of audit risk and risk corporate governance.

Corporate Governance: Joining the Dots between Institutional Reform, Organisational Change and Firm Performance

Purpose — Examine the link between boards and audit committees and firm performance in Kuwaiti listed firms in the context of recent and extensive corporate governance regulatory reform. Design/methodology/approach — Panel data regression analysis with fixed effects and clustered standard errors of firm performance for 62–95 listed industrial and services firms in Kuwait over the period 2010–2017. The dependent variables are the returns on assets and equity, the debt to equity ratio and leverage and Tobin’s Q and the independent variables comprise board of directors and audit committee characteristics, including size, the number of meetings, and the numbers of independent and outside board and expert committee members. Firm size, subsidiary status, and cash flow serve as control variables. Findings — Mixed results with respect to the characteristics of the board of directors. Board size and independent and outsider board members positively relate only to Tobin’s Q and insiders only to debt to equity. For audit committee characteristics, committee size, independence and expertise positively relate to the return on equity and committee size and expertise only to Tobin’s Q. Of the five performance measures considered, board and audit committee characteristics together best determine Tobin’s Q. Research limitations/implications — Data from a single country limits generalisability and control variables necessarily limited in a developing market context. Need for qualitative insights into corporate governance reform as a complement to conventional quantitative analysis. In combining accounting and market information, Tobin’s Q appears best able to recognise the performance benefits of good corporate governance in terms of internal organisational change. Practical implications — The recent corporate governance code and guidelines reforms exert a mixed impact on firm performance, with audit committees not boards apparently of most influence. But recent reforms implied most change to boards of directors. One suggestion is that nonmarket reform may have been unneeded given existing market pressure on listed firms and firms anticipating regulatory change. Social implications — Kuwait’s corporate governance reforms likely codified corporate governance practices already in place among many of its firms in pursuit of organisational legitimacy, and while invoking substantial change to audit committees, ultimately involved little change to firm performance, at least in the short term. Some firms may also have delisted in expectation of stronger corporate governance requirements. Regardless, these direct and indirect processes both improved the overall quality of listed firm corporate governance and performance in Kuwait. Originality/value — Seminal analysis of corporate governance reforms in Kuwait, which have rapidly progressed from no corporate governance code and guidelines to an initially voluntary and then compulsory regime. Only known analysis to incorporate both board of directors and audit committee characteristics. Reveals that studies of the corporate governance–firm performance relationship may face difficulty in model specification, and ultimately empirical significance, given the complexity of corporate governance codes and guidelines, leads in changing firm behaviour, and self-selection of firms into and out of regulated markets.

Internal Audit Function Quality and Audit Committees’ Practices: Survey Evidence from Jordan

The current study examines the extent to which audit committees comply with the requirements of corporate governance in Jordan and describes the current status of internal audit function. In addition, the study examines empirically the relationship between the internal audit quality and the compliance of audit committees with the governance requirements. The results from 49 respondents indicate that audit committees comply with the requirement of corporate governance and no significant difference is found in such compliance due to sector. In addition, the internal audit quality attributes are met among Jordanian companies to a considerable extent. Further, the independence and objectivity dimension of internal audit quality has a positive and significant relationship with the compliance of audit committees with governance requirements. Internal audit competence and due professional care have no significant relationship with audit committees compliance. One important implication of the current study is the development of a scale to measure the compliance level of audit committees with the governance requirements that can be used by both academics and decision-makers in firms.

Designing loss event database using evolutionary prototyping model to perform bank operational risk management identification process

Many banks in Indonesia have failed in the process of transformation towards their vision, due to a lack of awareness in managing risk and not growing a risk-based culture. The external and internal environment of the banking system is experiencing rapid development which will be followed by increasingly complex risks for banking business activities. Loss Event Database is a solution to perform the function of identifying and measuring Operational Risk Self-Assessment. The research method used to design and build a Loss Event Database refers to the Evolutionary Prototyping model where at each stage, the involvement of developers and users is intensely carried out. The implementation of Operational Risk Self-Assessment through the development of a Loss Event Database using the Evolutionary Prototyping model is able to reduce the operational risk rating from the Moderate to Low to Moderate level, meeting the requirements of good corporate governance in accordance with applicable regulations and best practices in the banking world.

Salary Arrangement of Dual Status Executives in Dual Class Share Companies: Incentive or Self-interest?

The dual class share structure can help internal shareholders or founding shareholders obtain majority voting rights（control rights）with a small number of capital investment（cash flow rights）, and become the controlling shareholders; it can help founders realize equity financing without losing control. The introduction of dual class share structure is an important measure in Chinese capital market reform, but the institutional arrangement of the same share with different rights has caused great controversy in many countries that have implemented it. Because of the demand for practical experience of dual class share companies and the shortage of existing empirical samples, this paper takes American listed companies from 2008 to 2017 as samples to investigate the problems of dual class share companies exposed in the relatively perfect market environment and relatively loose regulatory environment in the United States. These problems will become the focus of dual class share system reform in China’s transitional capital market. The core research issues of this paper are the special salary arrangement, incentive effect, effective or invalid reasons and corresponding security mechanism when high-voting shareholders are also executives in dual class share companies. It is found that compared with the one-share-one-vote company, the executive compensation of dual class share company has the unique phenomenon of high monetary compensation and low stock option. Further research finds that: The high monetary compensation of dual class share companies does not effectively improve corporate performance, but exposes the self-interest of executives; while stock option weakens the agency problem, compensates for the low claim of high-voting shareholders, and promotes corporate performance by stimulating heterogeneous capital investment of high-voting shareholders. The reason is that under different ownership structure and power structure, the role and path of monetary and equity executive compensation on enterprise performance are different. This study explores the new meaning of executive compensation as an alternative mechanism of claim under the dual class share structure and the meaning of the high-voting shareholders having two sides. Therefore, it is suggested that the external shareholders with one-share-one-vote should pay attention to the executive compensation structure of dual class share companies, especially the compensation design of high-voting shareholders; the regulators should require the dual class share companies to strengthen the information disclosure of executive compensation, improve the requirements of corporate governance, and limit the multiple rights of one share.

Relational Enforcement of Stock Exchange Rules

Stock exchanges, as regulating entities supervised by the Securities and Exchange Commission (SEC), have wielded their rulemaking power on various corporate governance issues, ranging from the independent board committee requirement adopted in 2003 to the board diversity requirement approved in 2021. Simultaneously, as for-profit corporate entities, major stock exchanges have been competing against each other to attract and retain more companies. This dual status of stock exchanges—as regulators and as profit-driven entities—brings into question the stock exchanges’ incentive to enforce their own rules against listed companies. What happens if a listed company violates stock exchange rules? As the first study that offers an analysis of original hand-collected data on 838 enforcement actions by stock exchanges in 2019, this Article finds that (1) stock exchanges’ detection of noncompliance is mostly on the failure to meet mechanical criteria, such as the $1.00 minimum stock price requirement; (2) listed companies tend to self-report violations of corporate governance requirements before the stock exchanges detect them; and (3) even after noncompliance is detected, stock exchanges tend to extend cure periods and rarely impose the only substantive sanction for stock exchange rule violations: delisting. Focusing on stock exchanges’ corporate governance requirements for listed companies, our analysis of S&P 1500 companies’ board composition data shows that despite this low likelihood of detection and enforcement, most companies diligently comply with the stock exchanges’ requirements. This Article argues that this curious coexistence of lax enforcement and diligent compliance can be explained as an extension of the relational contract theory to the relationship between a regulator and a regulated. Competition among stock exchanges makes a long-term, interactive relationship between stock exchanges and their listed companies valuable to both sides. The fact that the stock exchanges’ enforcement mechanism relies on a single, drastic measure of terminating the relationship (i.e., delisting) and that listed companies’ noncompliance hardly triggers delisting incentivize cooperative compliance between the regulator and the regulated. Such “relational enforcement” of stock exchange rules indicates that where there is an extended regulatory relationship that offers a substantial benefit to the regulated entity, diligent compliance can be expected even in the absence of rigorous, formal policing.

Full Coverage of Internal Audit Based on Value Chain Analysis

In order to adapt to the requirements of corporate governance, internal audit must enhance its value and innovate itself to meet new challenges. The value of internal audit mainly lies in the improvement of internal value rather than the improvement of quantitative value. The improvement of internal audit value must be aimed at risk management and internal control. The core of internal audit innovation is the innovation of audit concept and audit thinking mode, and the basic foothold should be on the innovation of audit content, which is the full coverage of internal audit. Full coverage of internal audit refers not only to the full coverage of the audited entity, but also to the full coverage of the audit content. Internal audit should not only be limited to the flow of funds, but should jump out of the small circle of financial audit and march into the decision-making audit and strategic audit. The scope of internal audit must be extended to all aspects of enterprise economic activities. Full coverage of internal audit requires that internal audit must be value-added internal audit aimed at increasing enterprise value, which is value chain audit. Based on the value chain analysis as the breakthrough point, putting the internal audit activity into the organization's value chain, the author put forward that the tentacles of the internal audit should be thoroughly all the value chain analysis, and according to the type of cost drivers respectively constructed three kinds of value-added internal auditing mode, the structured audit mode, process-based audit model and nodal audit model.

Post-recession share repurchase behaviour by JSE-listed companies: transparent or not?

PurposeShare repurchases are increasingly employed in South Africa. Disclosure on share repurchases in annual reports is poor, and a high percentage of share repurchases are not announced in real time on the Johannesburg Stock Exchange (JSE). A comprehensive database of share repurchases by JSE-listed companies has been created up to 2009, but post-recession repurchase behaviour is not known. This study aims to examine South African share repurchase behaviour (activity, repurchase entity, repurchase type and transparency) in the post-recession period and compare this to the 2000–2009 period.Design/methodology/approachComprehensive share repurchase data for all JSE-listed companies (excluding those in the basic materials and financial industries) were obtained by scrutinising annual reports and JSE announcements.FindingsThe repurchasing of shares reached a peak during the financial recession of 2008/2009, with share repurchases stabilising at a lower level post-recession. Repurchases executed by subsidiaries have decreased post-recession, probably owing to the introduction of dividends tax. However, 45% of the share repurchase value was not announced via the JSE (compared to 22% in 2000–2009).Practical implicationsReal-time JSE announcements of all share repurchases are required to improve transparency.Originality/valueOwing to low announcement rates, a lack of transparency relating to share repurchases was observed in South Africa post-recession. Enhanced corporate governance requirements could improve transparency.

Problems of Formation of Compliance in Russia

The integration of Russian companies in the global economy requires compliance with the requirements of good corporate governance. There are included but not limited the compliance with established anti-corruption laws, norms and rules. Such mechanisms are developing quite intensively in Russia: the legal foundations are studied, the components of the compliance system are identified. The compliance is most widely developed in the banking sector and medicine. There are required procedures implemented poorly in domestic corporations due to the lack of mandatory legislative requirements. Domestic companies operating in international markets are guided by the laws of the respective countries, mainly the USA, Great Britain and France. Unified requirements for systems and mechanisms for verifying compliance with current standards are not developed in domestic practice, which contributes to a different interpretation of the existing provisions of the Central Bank and international rules. The study goal is to identify priority areas for the compliance development in Russia, bringing the domestic regulatory framework closer to world practice. The paper shows that Russian corporations use a large number of internal regulatory documents in their practice, many of which differ mainly by their names. Direct adherence to international standards is not possible due to differences in the requirements of domestic and foreign legislation. To accelerate the adaptation of domestic companies to the world practice of good corporate governance, it is necessary to develop national formats, the structure of a compliance system and a list of basic internal paperworks. There are shown the importance and development directions of the Russian national regulatory framework. These research materials may be useful to corporate governance specialists, reactionaries, and corporate executives.

Does Corporate Governance Affect the Quality of Integrated Reporting?

This study examines how governance mechanisms affect the quality of integrated reporting (IR), which is fast emerging both as a tool to help firms understand their value creation process and to communicate effectively with external stakeholders. This study first developed an index to assess the quality of integrated reports. Subsequently, 132 integrated reports of Sri Lankan public listed companies selected over a three-year period were content analysed. The hypotheses formulated on the relationship between corporate governance and the quality of IR based on the agency theory were analysed using multivariate linear regression and panel regression. The results show that there is limited support from the corporate governance system for providing quality information to stakeholders on the value creation process through IR, except for board size and the availability of a separate risk management committee. This is the result of the heavy emphasis of corporate governance requirements and the resulting mechanisms of Sri Lankan companies on mandatory corporate reporting requirements compared to a voluntary reporting model such as IR. Since many corporate governance aspects are meant to fulfill mandatory reporting requirements, the results imply that the directors have given limited attention to providing quality information through voluntary disclosure practices such as IR, although they use resources to prepare integrated reports.

Corporate governance in India and some selected Gulf countries

The present study highlights corporate governance practices in India and GCC countries. More importantly, this study discusses corporate governance codes in India and GCC countries in a comparative manner to compare these countries based on their corporate governance codes. The current study has potential implications for stock markets, policymakers and academicians in the GCC and India. The study focuses on the regulatory mechanisms of corporate governance that have to be implemented by listed firms in India and GCC countries. Some companies still have some deviations from the requirements of corporate governance regulations. Accordingly, regulators and policymakers could give more consideration for compliance and disclosure with these codes. This study brings reflective insights related to corporate governance mechanisms particularly, from developing countries context, i.e., GCC member states, and India. The present study adds to the existing stock of knowledge by highlighting the regulatory requirements of corporate governance codes in India and some GCC countries after the amendments of corporate governance codes in these countries.

The Impact of the New CSSF Circular on Luxembourg ManCos providing MiFID II Portfolio Management Services

On 23 August 2018, the CSSF issued its circular 18/698 on the substance requirements (the “CSSF Circular”) applying to Luxembourg management companies. The management companies to which the CSSF Circular applies, include alternative investment fund managers (“AIFM”), as well as management companies subject to chapters 15 (“UCITS ManCo”), 16 and 17 of the Law of 17 December 2010 (“UCITS Law”) relating to undertakings for collective investment. According to this new CSSF Circular, the CSSF is further tightening its substance and corporate governance requirements and placing greater demands on Luxembourg ManCo (as defined below) operators. Currently, both the AIFM and the UCITS Law allow AIFMs and UCITS ManCos (hereinafter collectively referred to as “ManCos”) to perform certain additional “MiFID II portfolio management services” in addition to the management and marketing of AIFs and UCITS (as applicable). For that purpose, the AIFM and the UCITS Law, till now, required AIFMs and UCITS Mancos to solely comply with certain MiFID I requirements as implemented in the amended Law of 5 April 1993 on the financial sector (“LFS Law”). The implementation of Directive 2014/65/EU (“MiFID II”), as implemented in the LFS Law in Luxembourg, strengthened investor protection rules. Contrary to the pre-MiFID II era, the AIFM nor the UCITS Law clarify whether and to what extent the new MiFID II rules apply to ManCos that perform additional MiFID II portfolio management services. By absence of any MiFID II updates of the AIFM and UCITS Law in this regard, the CSSF Circular clarified what MiFID II rules are applicable to ManCos additionally performing MiFID II portfolio management services. This contribution discusses the new CSSF Circular rules applicable to ManCos performing “MiFID II portfolio management services”, in addition to, those set out in the AIFM Law and the UCITS Law. For that purpose, first this contribution provides an overview of the MiFID II portfolio management services allowed to be performed and the requirements applicable to Man-Cos under the AIFM Law and UCITS Law.This article then clarifies what MiFID II and Luxembourg-specific requirements are under the CSSF Circular applicable to ManCos for the performance of these services. It continues by discussing the impact of the CSSF Circular clarifications regarding Luxembourg ManCos and then concludes.