A contemplation on the third chapter of “the Corporate Governance Directive for the Listed Companies of the Tehran Stock Exchange and Iran Fara Bourse”

Abstract

Securities and Exchange Organization in November 2018 communicated a directive called “the Corporate Governance Directive for the Listed Companies of the Tehran Stock Exchange and Iran Fara Bourse,” which eventually all of its provisions became effective in September 2019. A critical examination of the provisions of the third chapter of this directive about the board of directors and chief executive officer is the subject of this essay. We criticize requirements like that all companies must separate the office of the chairman of the board of directors and chief executive officer, and believe it should have contained provisions with the purpose of more serious protection of minority shareholders. This paper also questions the efficiency of mandating the one-size-fits-all approach of the directive to all companies, large or small. Furthermore, we have noticed that there is no provision in the directive about the issue of diversity on the board. Our comparative study came to this conclusion that most of the good or bad corporate governance practices have not been proven to have definitive effects, and investors should keep this point in mind that corporate governance practices are just one of the many pieces of information about the firm’s quality.

Keywords

• ِdirective
• corporate governance
• exchange
• independent directors
• committee