Strengthening corporate governance with enhanced accountability and transparency
Corporate transparency has become a major focus for regulators around the world, highlighting the importance of accountability, ownership disclosure and ethical conduct in today’s business environment. As the regulatory landscape becomes more complex, it is more important than ever to understand the nuances of corporate transparency.
In our global guide for regulations in the first half of 2024, we explore the changing landscape of corporate transparency, including recent regulatory developments and their implications for businesses. Here, we summarize some of the key points in the guide:
- Reasons behind the spike in regulations globally
- The challenges of compliance
- The potential benefits of embracing transparency as a core business principle
Download the full guide to get our latest insights on corporate transparency and other regulations shaping the global business landscape.
A catalyst for accountability and trust in modern business
Corporate transparency has become a hot topic in the business world in recent years. A series of high-profile corporate scandals, data breaches and growing public scrutiny have led to the introduction of new laws and regulations that require companies to be more open, self-reflective and diligent in their operations, regardless of whether they are public or private.
The objective of these regulations is to counter financial crimes, bolster market integrity and reinstate confidence in the corporate realm. By illuminating ownership hierarchies, beneficial ownership details and the responsibilities of top management, corporate transparency standards enable stakeholders to wield informed decision-making and to hold companies to account.
Key regulatory developments
As the trend toward legislating for corporate transparency grows, we've been keeping an eye on current and emerging regulations across the blog. One such regulation is the U.K.'s Economic Crime and Corporate Transparency Act (ECCTA), which became law in August 2022. The ECCTA requires the establishment of a public register of beneficial ownership information for U.K.-registered companies, offering a clearer view of the individuals who are in ultimate control and derive profit from these entities.
The United States has similarly enacted the Corporate Transparency Act (CTA), compelling certain entities to disclose their beneficial ownership to the Financial Crimes Enforcement Network (FinCEN). This legislation is designed to enhance the fight against money laundering, terrorist financing, and other illegal activities by promoting transparency and streamlining the identification of beneficial owners.
In the Asia-Pacific region, Australia has made strides to bolster corporate transparency. The Australian Government has recently amended the Privacy Act, broadening its scope to include extraterritorial entities and imposing hefty penalties for recurrent breaches. Furthermore, the Australian Prudential Regulatory Authority (APRA) has introduced CPS230, a new standard that heightens operational risk management requirements and underscores the responsibility of boards.
These regulatory advancements underscore a global commitment to fostering corporate transparency and responsibility. By mandating increased disclosure of ownership configurations, beneficial ownership particulars, and executive responsibility, these steps empower stakeholders to make well-informed decisions and to hold companies to account for their conduct.
Addressing the challenges of corporate transparency
Despite the benefits of corporate transparency, organizations face significant challenges in maintaining compliance. Ensuring that beneficial ownership information is accurate and up-to-date, implementing robust data protection measures, and adhering to complex reporting requirements can be daunting tasks.
Yet, the adoption of transparency as a foundational business value yields a multitude of advantages. It burnishes an organization's standing, fosters trust with stakeholders and mitigates the risk of legal and regulatory entanglements. Furthermore, transparent entities are often more appealing to investors and collaborators, who view them as dependable and forthright.
Eager to learn more about corporate transparency and other regulatory trends shaping the global landscape?
Download our guide Mastering regulatory compliance at midyear: Essential 2024 guidance for directors and executives.
