Table of Contents

  • This report presents the results of the third thematic peer review based on the OECD Principles of Corporate Governance. The report is focused on the corporate governance framework that manages related party transactions with the aim to protect minority investors. It covers over 30 jurisdictions, including in-depth reviews of Belgium, France, India, Israel,The statistical data for Israel were supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law. Italy and India.

  • Around the world, the potential to abuse related party transactions (RPTs) covering both equity and non-equity transactions is viewed as an important policy issue even though they are seldom banned. Rather, jurisdictions have sought to put in place management and approval processes to minimise the negative potential. There is a wide variability across jurisdictions so that this report focuses on the experience of five jurisdictions (Belgium, India, Israel, Italy and France) with supplemental information from 31 others.

  • Around the world, the potential to abuse related party transactions (RPTs) covering both equity and non-equity RPTs is viewed as an important policy issue because of some high profile cases that have damaged market integrity through inequitable treatment of shareholders. Jurisdictions have responded in many different ways and efforts to manage such transactions are ongoing. The problems raised center around an acute policy-induced trade-off. On the one hand, the policy process or consensus accepts that related party transactions can be economically beneficial, especially in company groups where there are often developmental arguments that they substitute for under-developed markets and institutions. Therefore, with some exceptions such as loans to directors, RPTs are not banned. Once such an approach is in place it is difficult to change so that there is strong path dependence with reforms often marginal. On the other hand, there is a clear concern that such transactions can be abused by insiders such as executives and controlling shareholders. Indeed, concern to control corporate self-dealing has been a key aspect of the development of corporate law in many countries over the past century. Searching for a balance is ongoing as institutions and economies change. However, as this report demonstrates, the third corporate governance peer review of the OECD Corporate Governance Committee, effective overall solutions have still not been found in many jurisdictions. There is thus a great need to exchange experiences.