corporate governance core principles

Core Principles for Corporate Governance

As a major lender and investor in enterprises domiciled in the countries of central and eastern Europe and the CIS, the EBRD has always sought to improve corporate governance standards. Improving the corporate governance system of its investee companies is consistent with the EBRD’s commitment to apply sound banking principles in all its financial operations. The Bank is determined to ensure that all its operations have “transition impact”, i.e., they contribute to the transformation of its countries of operations from centrally planned economies to market economies, and by insisting on good corporate governance, the EBRD assists the transition process. The EBRD is also active beyond its purely financial operations. Good corporate governance depends on the broader legal and regulatory environment prevailing in the country of domicile of a given company. Through various law reform initiatives in its countries of operations, the EBRD seeks to address these broader aspects of corporate governance.

The EBRD regularly conducts assessments and surveys to measure the extensiveness and effectiveness of legislation in its countries of operations. The extensiveness of corporate governance was last assessed by the EBRD in 2004 (see Corporate Governance Assessment Project) while effectiveness was the object of the Legal Indicator Survey 2005. In these two initiatives, national laws and practices are measured against international standards and best practices - such as the Principles of Corporate Governance published by the Organisation for Economic Co-operation and Development (OECD) - and assessed to see how they work in practice.

The nature and content of the corporate governance framework varies from jurisdiction to jurisdiction depending on the different legal traditions across the EBRD's countries of operation. Nevertheless, these laws need to comply with international standards and best practices as they give a perception of soundness of the legal framework and the degree of investors’ protection in a given country.

This need has led the EBRD to define a set of 10 core principles  (0.1Mb) for a corporate governance framework (CGF). By virtue of being “core” principles, these cannot be exhaustive but are intended to form the foundation of a CGF.  These principles are based on international standards and best practices, and therefore can assist in assessing a country’s CGF in identifying the need for reform. These principles are meant as guidelines only and identify the results to be achieved rather than the process by which to achieve them. Invariably, exceptions to these principles may have to be made in the context of a given country's legal system

Read more about the Bank's role in The role of the EBRD in promoting sound corporate governance in Law in transition - Autumn 1999: Corporate governance and in Law in transition - Spring 2006: Strengthening corporate practices.

If you have any comments or questions regarding this statement of core principles, please contact the EBRD’s corporate governance and capital markets specialist, Mr. Gian Piero Cigna, on +44 0207 338 7087 or at cignag@ebrd.com.