models of-corporate-governance-zecharia

Models of Corporate Governance

(Zechariah's Comparative Study)

1. Key Players

Anglo-US Model

1. Management

2. Directors

3. Shareholders

Japanese Model

1. Main Bank

2.Affiliated Comp. (Keiretsu)

3. Management

4. Government

German Model

Banks

2. Share Ownership PatternAnglo-US

ModelInstitutional

Investor (61%-UK)

Individuals-21%38% on 1981

Institutional-53.3%-US

Japanese ModelFinancial

Institution-43%

Corporation-25%

Foreign Owners-3%

German Model

Institutional owners-29%

Corp.’s Equity Market-41%

Institutional Agent-3%

Individual Owners-4%

2. Share Ownership PatternAnglo-US

ModelInstitutional

Investor (61%-UK)

Individuals-21%38% on 1981

Institutional-53.3%-US

Japanese ModelFinancial

Institution-43%

Corporation-25%

Foreign Owners-3%

German Model

Institutional owners-29%

Corp.’s Equity Market-41%

Institutional Agent-3%

Individual Owners-4%

Anglo-US Model

1. Insiders (executives, managers, employees

etc)2. Outsiders

(no direct relationship to

the corp.)

Japanese Model

1. Insiders (exec.

Managers, heads of decision makers)

German Model

1. Management

Board (Vorstand)

2.Supervisory Board

(Aufsichtsrat)

3. Composition of BODs

Anglo-US Model

1. Pension fund

regulation Laws

Japanese Model

1. Industrial Development

Policies

German Model

1.Industrial democracy

act

2.Employee Co-

determination Law

4. Regulatory Framework

5. Disclosure Requirements• Anglo-US Model

• 1. Corporate Financial data• 2.Capital structure breakdown• 3.Substantial background info. On nominee to

BOD.4.Aggregate compensation paid to all exec. Officer5. All shareholders holding 5% or more total share capital6. Info. On proposed mergers and restructuring, amendments and names of indi.

5. Disclosure Requirements• Japanese Model1.Financial data on the corp. (semi-annual)2. Corp’s capital structure data3. Background info. On each nominee to the BOD4. Aggregate date on compensation5. Info. on proposed mergers and restructuring6. Proposed amendments to the article of

associations7.Names of individuals and or companies

proposed as auditors.

5. Disclosure Requirements• German Model1. 1.Financial data on the corp. (semi-annual)2. Corp’s capital structure data3. Limited info. On each supervisory board

nominee4. Aggregate date on compensation5. Any substantial shareholders holding 5% or

more on corp’s total share capital.6. 6. Proposed amendments to the article of

associations7.Names of individuals and or companies proposed

as auditors.

6. Corporate Actions Requiring Shareholder Approval

Anglo-US • Routine- (1) Election of Directors (2) Appointment of

Auditors• Non-routine-(1)Stock option plan amendments (2)Mergers

and takeovers (3) Restructurings (4) Articles of Incorporation Amendments

Japanese• Routine-(1) Dividend Payments and Reserves Allocations (2)

Election of Directors and appointment of auditors• Others- (3) Capital Authorizations (4) Amendments to

articles (5)Payment of Retirement Bonuses (6)Aggregate Compensation Increase

German •Routine- (1) net income allocation (2) Managerial Act ratification (3) Supervisory board election (4) Auditor Appointment•Others- capital authorization, affiliation agreements, change in articles of association, aggregate compensation ceiling increase

7. Interaction Among Players

Anglo-US Model

-Voting rights are valid even

with or without the presence of shareholder (voting by

proxy or by mail).

Japanese Model

-Held by majority of

shareholders and others are excluded; They

can vote through proxy

or mail; Shareholder’s

dissent is discouraged.

German Model

-designed to include the interests of labor, corp., banks and

shareholders. For the benefit

of the key players.

•Fin~

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