Hawkamah and World Bank launch task force
Dubai, December 23, 2007
Hawkamah Institute for Corporate Governance and the World Bank, supported by INSOL International and the Organisation for Economic Development (OECD), have established a Task Force on Insolvency and Creditor Rights Systems.
The task force will develop a 'Mena Policy Brief' based on an individual country analysis of the legal framework for insolvency and creditor rights, along with recommendations and policy options for consideration by Mena policy makers, said an official spokesman.
The task force will consist of experts and officials from the Mena countries, the World Bank, INSOL, OECD, PwC and will include representatives of Mena government agencies, banks, judiciary, regulators, the financial sector and insolvency professionals.
The task force aims to conduct an assessment of Country Level Insolvency and Creditor Rights systems in the Mena region and will propose recommendations on improving the systems and making them more effective.
This assessment is based on the methodology of the World Bank’s Report on Observance of Standards and Codes (ROSC) programme and the World Bank Principles on Effective Insolvency and Creditor Rights Systems.
Market efficiency, corporate governance and insolvency are closely linked. As experience from both developed and emerging markets has shown, the corporate governance framework should be complemented by an effective, efficient insolvency framework and by effective enforcement of creditor rights.
Corporate governance in insolvent enterprises poses specific challenges. Legal frameworks often impose on directors of insolvent enterprises to act in the interests of creditors, and provide the latter with a specific role in the governance of distressed debtors.
Importantly, effective insolvency systems, based on developed legal frameworks and relying on a sound judicial system play a critical role for orderly exit of insolvent corporations and for the efficient reallocation of resources.
“There is a clear underlying link between insolvency, corporate governance, foreign investment and access to capital. Indeed, companies with a good corporate governance record reduce the risks of lenders and are often able to borrow more and on more favourable terms than their competitors with a poor governance record,” said executive director of Hawkamah Dr Nasser Saidi. – TradeArabia News Service