USAID Deputy Mission Director Speech “Transparency and Disclosure: Foundation for Good Governance and Investments”

I would like to express a warm welcome to the participants of this international conference on "Transparency and Disclosure: Foundation for Good Governance and Investments." You are a diverse group, representing a wide spectrum of experiences from government, business, and civil society.  The interest you have expressed with your presence here suggests that momentum is building for policy improvements in the areas of financial accountability and transparency. Better accountability and transparency, and the integrity of capital markets all derive from improved corporate governance.  Good governance creates more value for shareholders and stakeholders, reduces the cost of capital, and increases a company's competitiveness.  Good corporate governance and disclosure play a crucial role in business development and economic growth, and especially in attracting necessary capital investments. Several of Ukraine’s neighbors -- Poland, Hungary, and the Czech Republic – have shown how improved corporate governance practices lead to increased investments and economic growth.  The same advances will occur in Ukraine if the principles on corporate governance of the Organization for Economic Cooperation and Development OECD) are implemented. You may recall that OECD Corporate Governance Principles were first developed in 1998 after extensive consultations with representatives of business, government, and civil society from a wide range of countries. The resulting Principles established a model of best practices, which countries can refer to in seeking to address concerns on corporate governance, investment, tax policy, and competition policy. These Principles have become the basis for a new Ukrainian draft Law on Joint Stock Companies.  It is vital that the Joint Stock Company Law is approved by the Parliament of Ukraine, for it is essential for improving the legal framework for corporate governance and financial disclosure.  Significant support from the government is needed to ensure prompt passage of this critical piece of legislation. Once approved, this legislation will greatly strengthen Ukraine’s financial market infrastructure, which many of you have successfully helped to build from the ground up.  Today that infrastructure includes: the Securities Commission, the Financial Services Regulator, the PFTS stock exchange, the MFS - a respected depository owned by market participants -- and an energized broker/dealer community. In addition, Ukraine has a new Securities Law, which moves the country significantly forward in the area of information disclosure. Both the public and private sectors have made great strides in a relatively brief time, but challenges remain if we are to build a vibrant, efficient capital market that can compete in the global economy. In addition to the Joint Stock Company Law, it is critical that Ukraine adopt additional legislation that embodies international best practices of corporate governance, to give legal protection to minority share holders, including Ukraine’s pension funds and other institutional investors. Just as important, Ukraine needs to move off-shore securities trading in Ukrainian companies into the organized market in order to improve market transparency and liquidity.  Market regulators need to tighten requirements for the disclosure of financial information, advance internationally accepted accounting and reporting standards, and protect shareholder rights through an independent, privately owned and operated central depository. All of these issues will be discussed today and tomorrow at the different conference panels.  We encourage your active participation. I would like to extend my sincere gratitude to our host, the Securities and Stock Market Commission of Ukraine, which has done a superb job in helping to organize this event. USAID remains committed to the financial sector reforms that are the heart of this Conference.  I look forward to following your discussion over the coming days.  Thank you and good luck.