GLOBAL - G20 leaders have been called upon to strengthen shareholder rights in the aftermath of the global financial crisis.

The International Corporate Governance Network (ICGN) sent a letter to Canadian Prime Minister Stephen Harper and Chung Un-Chan, prime minister of South Korea, encouraging the G20 leaders to recognise the integral role of institutional investors in financial market reform.

In the letters, Christianna Wood, ICGN chairman, wrote: "We recognise the efforts of Basel III, however we do not believe there is enough emphasis on the importance of good corporate governance to be effective in solving the fundamental problems facing the banking industry."

"The oversight of a robust banking industry is not, and should not be, restricted to regulators and legislators - investors in financial institutions also have a significant role to play and can be very influential in holding management to account."[…]

"For the accountability chain to work shareholders must both have rights and exercise them responsibly," the letter continues. "In jurisdictions where rights are weak, they should be strengthened. In all jurisdictions, shareholders must be encouraged to exercise their rights responsibly. […] We now believe it is right for world leaders to focus on equipping shareholders with adequate rights and invite them to participate in strengthening the global governance framework."

The ICGN strongly encouraged its $9.5trn (€7.7trn) assets strong membership of global investors to step up their ownership responsibilities in the aftermath of the banking crisis. Among the initiatives undertaken were the revision of the ICGN Global Corporate Governance Principles with a new section on the responsibilities of shareholders, publication of a new set of guidelines concentrating on non-executive director remuneration and the development of guidelines on the role of shareholders in assessing the effectiveness of boards in fulfilling their risk oversight responsibilities, which are set to be launched later this year.

The G20 summit was held in Toronto, Canada, over the weekend. South Korea chairs the G20 in 2010.