Corporate Governance Standards: A Comparative Study of US, German and Jordanian Laws
Dr. Hassan Abdulrahim Al Akour
Assistant Professor of Commercial Law – Former Dean – College of Law – University of Qatar
This paper examines the most important standards of corporate governance and the circumstances surrounding their implementation and activation in order to achieve the integrity and sound management of these companies to achieve their objectives. The importance of this topic is that it comes in light of the recent financial crises that have hit the world of public shareholding companies, which was mainly due to the weakness of the corporate governance system according to reports of many international organizations. The scope of this study includes three different legal systems, namely US, German and Jordanian laws, as part of an analytical and critical evaluation of corporate governance rules, with the aim of presenting best practices in corporate governance and making recommendations for the development of corporate governance.
Issues raised in the study were examined in two topics, the first of which dealt with the presentation and analysis of the legislative environment for corporate governance in the United States, mainly Sarbanes-Oxley act and governance instructions for both NYSE and NASDAQ, as well as in Germany, through the statement of the powers and responsibilities of the supervisory board of the public shareholding company, which represents a milestone for the law of the German public shareholding companies with the presence of a board above the board of directors and exercise control over its work. The paper also discusses the situation in Jordan through the submission of the Securities Law of 2017 as well as the Governance Instructions for 2017 issued by the Jordan Securities Commission. The second topic discussed the rules of corporate governance in the three countries, including the independence of the members of the board of directors, and the requirement of a special committee on corporate governance and nominations for board membership, the determination of the remuneration of executives in public shareholding companies, and the requirement of the Audit Committee, which may be considered the most important among the committees of the Board of Directors, where the laws of America and Jordan were more detailed and interested in them than German law.
This research concluded with many recommendations to develop the rules of corporate governance in Jordan, including that the management of public shareholding companies should consist of a supervisory board and an administrative board, and that the members of the management of the public shareholding company should have advanced experience, in addition to the presence of a majority of independent members in the board of directors. This is in addition to the requirement to limit the composition of the Audit Committee and other Main Committees of independent members, and that the disclosure of data should be done in more details and specifications, in addition to the requirement of the approval of the Executive Director and Chief Financial Officer of the accuracy of the financial statements of the company, and to be held responsible for any error in these reports, including criminal liability.
Keywords: Joint Stock Company, Audit, Integrity, Transparency, Conflict of Interest.