OECD: Beneficial Ownership and Control : a comparative study Disclosure, information and enforcement


Investor confidence in financial markets depends in large part on the existence of an accurate disclosure regime that provides transparency in the beneficial ownership and control structures of publicly listed companies. This is particularly true for corporate governance systems that are characterized by concentrated ownership. On the one hand,
large investors with significant voting and cash-flow rights may encourage long-term growth and firm performance.
On the other hand, however, controlling beneficial owners with large voting blocks may have incentives to divert corporate assets and opportunities for personal gain at the expense of minority investors.

This paper does not only concern the protection of minority investors. It also takes the interests of other stakeholders and society as a whole into account. The paper focuses particularly on the misuse of corporate vehicles, which arguably poses a major challenge to good corporate governance. Stakeholder rights (e.g. employees and creditors) cannot be properly exercised if ultimate decision makers in a company’s affairs cannot be identified. The accountability of the board may also be seriously endangered if stakeholders and the general public are unaware of decision-making and ultimate control structures. Finally, regulators and supervisory agencies have a strong interest to know beneficial owners – in order to determine the origin of investment flows, to prevent money laundering and tax evasion and to settle issues of corporate accountability.

A good corporate governance infrastructure should combine transparency, accountability and integrity and this
requires knowledge of beneficial ownership. The protection of minority investors and other stakeholder protection
will be challenging without access to reliable information about the ownership, including the identity of the
controlling owners, and control structures of listed companies. In this respect, this paper makes three major claims
about the nature and scope of the disclosure and reporting regime.

Detailed report link: here

Source of the report at OECD website: here