Corporate Governance of Listed Companies

Aysel Muradlı, Business Administration

Company whose shares are traded on an official stock exchange.

What is a listed company?

The principal difference between listed and privately held companies is that listed companies have shares that are publicly traded on a stock market.

Listed companies have to make transparent and timely disclosure of information to shareholders.

Listed vs Private Company

Both are incorporated under Companies Act.

Not all public companies are listed on a stock exchange, but all listed companies must be public companies.

Listed vs Public Company

Many shareholders (minimum limit)

Stock markets and their listing requirements are important to the corporate governance of listed companies.

Prospectus- a legal document that reviews the company, its history, business, and financial situation

Features of Listed Companies

Mission◦To provide an organized, fair and efficient market

for trading securities

Requirements◦Listing Agreement Compliances◦Stock Exchange Internal Norms◦Compliance of Securities Laws◦Compliance of Companies Act

Stock Exchange’s Role

The most important regulatory body in the US

The SEC oversee the proper functioning of primary and secondary financial markets.

◦ the protection of security holder rights◦ the prevention of corporate fraud

Securities and Exchange Commission (SEC)

Corporate governance standards of listed companies according to the NYSE.

◦The listed company’s board is required to have a majority of INED.

◦Nonexecutive directors must meet independently from executive directors on a scheduled basis.

◦The compensation committee of the board must consist entirely of INED.

New York Stock Exchange(NYSE)

Corporate governance standards of listed companies according to the NYSE.

◦The audit committee must have a minimum of 3 members, all of whom are “financially literate” and at least 1 of them is a “financial expert”.

◦The company must have an internal audit function.

◦CEO must certify annually that the company is in compliance with NYSE requirements.

New York Stock Exchange(NYSE)

Important provisions of the SOX:

◦The requirement that the CEO and CFO certify financial results

◦An attestation by executives and auditors to the sufficiency of internal controls

◦ Independence of the audit committee of the board of directors

◦A limitation of the types of non-audit work an auditor can perform for a company

◦A ban on most personal loans to executives or directors

Sarbanes–Oxley Act of 2002

Thanks for your attention!