This report assesses the corporategovernance policy framework, and enforcement and compliancepractices in Peru. Corporate governance reform is at anearly stage, and some legislation has recently been upgradedto protect shareholder rights. The major issues are drivenby the growing importance of private pension funds, whichhave become the most important institutional investors. Atpresent, the governance structure of the pension fundadministrators is weak, and there are not enough checks andbalances to deal with conflicts of interest. Improving theinternal governance structure is crucial in order to ensurethe preservation of private savings for retirement. Votingand board representation policies are being developed by theregulator, so that pension funds can assume an active roleas shareholders of their portfolio companies. The reportrecommends that: (1) the procedures governing the generalmeetings should be amended to encourage shareholderparticipation; (2) the related party transactions'approval process should be more transparent and allowshareholders to opt to challenge transactions that areunfair to them; (3) the thresholds to challenge corporatedecisions should be lowered and harmonized for all listedcompanies, and (4) there should be a requirement for aminimum number or percentage of independent directors on theboards of listed companies and for the creation of auditcommittees, and (5) directors should have access to adequatetraining so as to understand their duties andresponsibilities. The report also proposes increasedindependence and a strengthening of enforcement mechanismsfor the securities regulator.
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