Permanent Secretary for Financial Services & the Treasury Tony Miller says the Government, regulators, directors, shareholders and professional advisers all have an important role to play in promoting healthy market development.

Speaking at City University today, Mr Miller said corporate misgovernance can cause great damage to an economy.

"With the SARS crisis fresh in our memories, it seems a good opportunity to remind ourselves about another disease, 'Enronitis'. There are many parallels: both have an immediate effect on individuals as well as a wider psychological community effect, and they excite a global reaction. Also, the lessons are too easily forgotten."

Citing the Enron case, Mr Miller said the damage was not confined to the corporation that failed, as its impact had spilled over to other corporations and the market as a whole.

"It rippled through the whole market place because this spate of high-profile corporate failures undermined investor confidence domestically and overseas. The result of such scandals is an increase in the cost of raising capital for other firms, as investors begin to charge a higher risk premium," he said.

Mr Miller stressed that the Government and regulators, directors, professional advisers, the media as well as shareholders all have a role to play in promoting an ethic of good corporate governance.

"As an international financial centre, we have to keep a watchful eye on overseas developments and make sure our regulatory regime is on par with international standards. The Government cannot simply let things drift. It has a clear responsibility for driving reforms," he said.

Directors have to understand the nature of the trust shareholders place in them and not for one moment absolve themselves of the fiduciary duties which flow from it.

Independent non-executive directors played a pivotal role in overseeing the internal control and financial reporting systems of issuers, and providing checks and balances over the board's decision-making on significant transactions.

For professional advisers, they have to demonstrate their ability to monitor their members' adherence to professional and ethical standards. Any self-regulatory regime has to be effective, transparent and accountable, Mr Miller said.

The media also has a particular responsibility for the fairness and accuracy of the information and the assessments it publishes.

Mr Miller said shareholders, as owners of companies, should have a legitimate interest in how their company behaves, and legitimate rights in expressing their views. Empowering them and facilitating their exercise of their rights are indispensable elements of ensuring good corporate governance.

"Corporate governance, by definition, should not and cannot solely be a matter for the Government and regulators. Directors, shareholders and professional advisers all have an important role to play in the corporate governance regime," he said.