The new Code of Principles of Good Corporate Governance and its implications for Maltese listed companies

Abstract

Corporate governance refers to the process and structure by which a company is directed and controlled. In October 2001, the Malta Stock Exchange approved the Code of Principles of Good Corporate Governance for adoption by listed companies. The Code is designed to provide all those involved in Corporate Governance with a concise guide on the obligations of directors and how they may be performed. The objective of this dissertation is to study the Code, discover and examine the views of listed companies in implementing it, the mechanisms put in place to adhere to it, the effect it had or is expected to have on the organisation's affairs and any reasons for non-compliance to all or parts of the Code. The study discovered that listed companies already follow some procedures and principles mentioned in the Code. However, actual Code implementation, introduced certain good practices which were not being followed and enhanced and formalised practices which were already there. Listed companies pertaining to the different industries were affected differently by the Code. Companies that are already strictly regulated, namely banks and insurance companies, suffered least implications in adhering to the Code whilst other companies implemented substantial changes. The study also proposes recommendations that should help tackle better the issue of corporate governance in Maltese listed companies. The concluding chapter explains how the code could be better implemented if adjusted to be more applicable to the Maltese scenario.