Corporate Governance Principles

HFSF Corporate Governance Principles (CG Objectives & Standards)

The Fund’s long-term strategy is to divest its holdings in the banks. In order to be able to do so, the HFSF needs to be confident that the sustainability of the individual banks and the stability of the banking system more generally will not be adversely affected by its departure. The Fund also needs to be confident that each bank, upon their divestment, will be seen as an attractive investment proposition by other investors with a long-term perspective. For both reasons, the Fund needs to ensure that each of the banks exhibits high standards of corporate governance and respects shareholder rights.

This is achieved by ensuring the banks comply with the HFSF law and the RFA, but additional criteria for assessing whether the banks are meeting these tests have been developed and are set out in detail.

The corporate governance standards – specific practices that can help to protect the interests of the Fund and other shareholders – are grouped under ten governance objectives, as shown below. The intention is that the Fund’s decision on whether a bank’s governance arrangements were sufficiently robust for it to divest safely would be based on whether these objectives had been met, not only on whether the specific practices were being followed:

  1. Board and committee composition
  2. Board performance and appointment
  3. Corporate culture
  4. Risk management
  5. Accounting, audit and compliance
  6. Director remuneration
  7. Related party transactions
  8. Shareholder rights
  9. Corporate structure
  10. Environmental and social issues