ADDRESS BY THE HON. JOHN DALLI, MINISTER OF FINANCE, AT THE CORPORATE GOVERNANCE WORKSHOP ORGANISED BY THE INSTITUTE OF DIRECTORS IN ASSOCIATION WITH MFSC

Good Corporate Governance

The largely acclaimed and widely debated new administrative philosophy that is being projected at all levels and in all walks of life envisions "good corporate governance".

This embodies the following factors as criteria:

Honesty
Transparency
Fairness
Responsibility
Check and balance
Social involvement.

The degree of success achieved by following the above criteria will propagate corporate integrity and help gain credibility in all aspects of society. Ownership based governance is likely to transform corporations into more democratic institutions and institutional investors can unleash the wealth-generating capacity of "human capital" which is based in the skills and knowledge of corporate employees.

We should not shy away from the issues. Even corporate governance leaders who have been responsible for substantial progress in the field can become unresponsive and hypocritical if they isolate themselves from mechanisms of accountability. There is great value in shifting from oligarchic corporate structures towards those, which establish systems of accountability and encourage long-term participation by shareholders and employees in corporate decision-making.

This will help develop faith and trust-worthiness in shareholders, consumers, staff and the business sector, both domestically and internationally. Thus, it will reinforce and stabilise business at the grass root's level and move ahead with enduring prosperity through the business itself and its network of related business affiliations.

The movement to more democratic forms of corporate governance by empowering owners is important not only for creating wealth; it cuts directly to our ability to maintain a free society. Major trends in lifestyles are already encompassing the following factors: economising, self-learning and health prioritising. Such behaviour encourages better rationalisation, well-rounded learning and discernment. In addition, consumers will prioritise life quality with major emphasis on thoughtful balance and good sense.

In the recent past, companies learned they could create better products more efficiently with the full mental participation of their employees. Today, investors are learning that participation by shareholders also adds value. As a result, a corporation with good corporate governance will become even more highly esteemed and will reach out effectively to more end-consumers than ever. Corporate image is more likely to be attained through the whole of the corporate process, both internally and externally, rather than merely through cosmetically hyped-up promotion via media publicity and public relations deployment.

The keys to creating wealth and maintaining a free society therefore lie primarily in the same direction. Both require that broad based systems of accountability be built into the governance structures of corporations themselves.

This is the objective of today's meeting. It is important that our companies not only get first hand knowledge on corporate governance but also have the willingness and ability to apply corporate governance for the common good. The corporations that embrace such a dialogue should be better equipped to create wealth and compete in global markets.

The phenomenon of corporate governance is international. We have the OECD's principles initiatives by the World Bank and International Monetary Fund as well as those in dozens of individual countries around the world.

We at the MFSC are not staying behind. Within the Registry we have already set up a company compliance unit to monitor good governance by both licensed and unlicensed companies. I hope that once this Unit is firmly established we should be able to produce a code of conduct on corporate governance.

I welcome the initiative taken by the Institute of Directors in association with the Malta Financial Services Centre as these initiatives strengthen our reputation not only as properly regulated country but also as a country for good business.