Promoting Corporate Governance in Peru

(Lima, October 5, 2010).- CAF, Latin America’s development bank, and the Lima Stock Exchange (BVL) today launched the “BLV Corporate Governance Program” (PGCBVL) aimed at the BVL’s issuers and the companies enrolled in the “Avanza BVL” program (a joint BVL-IDB program for supporting financing for medium-size companies on the stock market).

The objective of the “BVL Corporate Governance Program” (PGCBVL) is to promote a corporate governance culture and the development of the Peruvian stock market by raising companies’ awareness of the benefits of corporate governance and providing them with the necessary training.

The program also seeks to support companies in the design and implementation of corporate governance practices that lead to better administration and control and to an improvement in their value, solidity, and efficiency, providing them with greater competitiveness by contributing to their transparency, so enabling them to inspire greater investor confidence.

Michael Penfold, CAF’s Public Policies and Competitiveness Director, highlighted that “good corporate governance consists of different regulatory and organizational aspects that permit companies to attract large financial capital, function efficiently, and create economic value, benefiting the companies, their shareholders, and the country.”

“Good corporate governance refers to the philosophies and processes of companies, whether public or private, that make it possible to measure objectives, challenges or opportunities, as well as to find balance and direction. These practices are tools for greater transparency in companies’ internal finances and serve to mitigate problems of asymmetric information in financial markets,” emphasized Penfold, indicating that this project is particularly important for CAF, as it has been the leader in promoting good governance practices in the region.

In referring to CAF’s mission of promoting sustainable development and regional integration, Penfold commented that CAF fosters a corporate government culture as it promotes the economic development of countries by restoring confidence in the companies that finance their activities via the public stock market, the aim being to handle their operations and administer partnerships so as to protect the rights of investors and other interest groups, thereby promoting the transparency, productivity, competitiveness, and integrity of the institutions.

“This project was first carried out very successfully in Colombia and, besides achieving the transfer of know-how and methodology, it occurred as part of the BVL and the Stock Exchange of Colombia’s integration process currently under way,” stressed Penfold.

The president of the Lima Stock Exchange, Roberto Hoyle, highlighted the importance of the BVL Corporate Governance Program, explaining that this is a joint BVL-CAF initiative whose purpose is to support public and private companies and institutions interested in implementing good corporate governance practices.

“As you know, good corporate governance is becoming increasingly important, both locally and internationally, owing to its being recognized as a valuable means for achieving more reliable and efficient markets. Also, it is remarkable the direct and significant impact that implementation of these practices has on the value, solidity, and efficiency of companies and, therefore, on the economic development and general well-being of countries.”

“Peru is no stranger to the advances in and debates regarding the good corporate governance of companies. Over the years, Peru’s regulatory framework has been adapting itself to these trends, focusing efforts on getting Peruvian companies to achieve international standards so as to be able to inspire greater confidence among domestic and foreign investors, and in particular among minority investors,” he added.

“Different efforts are currently under way in our country to give visibility to companies that adopt good governance practices and to create the conditions so that more companies adopt these practices,” explained the president of the BVL. “However, this is not sufficient to achieve the standards attained by international markets,” he added.

“That is how the “BVL Corporate Governance Program” came into being, as a continuation of the efforts that the BVL has been making since 2008 to contribute to the implementation of good governance practices by issuers apparent in initiatives such as the Corporate Good Government Index, which is an indicator that reflects the behavior of the securities of issuers that comply adequately with the principles of corporate governance; the Annual Good Corporate Practices Acknowledgement Ceremony, at which awards are given for the implementation of good practices by the BVL’s issuers; and the “Avanza BVL” Program that has been developed together with the Inter-American Development Bank (IDB), a program that supports medium-size enterprises interested in obtaining financing through the stock market and has been training and evaluating companies in corporate governance,” explained Hoyle .

The Lima Stock Exchange is a private company that facilitates the trading of listed securities by offering issuers and investors adequate services, systems, and mechanisms. The Lima Stock Exchange is a market that facilitates investment via the buying and selling of securities and company financing. The stock markets are organized, regulated, and transparent so that operations can be conducted with total confidence. For more information visit: www.bvl.com.pe

CAF es una institución financiera latinoamericana constituida en 1970 con el objetivo de impulsar el desarrollo sostenible y la integración regional. Promueve el crecimiento sostenido, sostenible y de calidad en la región, mediante el financiamiento de proyectos de los sectores público y privado, y la provisión de cooperación técnica y otros servicios especializados. CAF, conformada por 18 países de América Latina, El Caribe, Europa y 14 bancos privados, es una de las principales fuentes de financiamiento multilateral y un importante generador de conocimiento para la región. Para mayor información visite www.caf.com