corporate governance - current and past projects [EBRD

June 2008

Present projects

Russian Federation: Assistance to the Russian Ministry of Economic Development and Trade on Corporate Governance

The Russian Ministry of Economic Development and Trade (MEDT) has developed a concept paper on the “Improvement of Corporate Governance Legislation”. The paper includes a number of proposed reforms on corporate governance that MEDT aims to implement in the Russian Federation shortly. Within the concept paper, the Vice-Minister of Economic Development and Trade, Anna Popova requested the EBRD to provide technical assistance with the development of the new legislation on holdings, liability of company registrars, protection of rights of shareholders and disclosure of shareholding structure. The EBRD will provide the MEDT with a comparative analysis of the international standards and best practices in place in some Western jurisdictions along, with a set of recommendations, tailored for the development of Russian legislation. This project is financed by Italy and is ongoing.

Armenia: Development and Implementation of a Corporate Governance Code

The EBRD is assisting the Ministry of Trade and Economic Development of the Republic of Armenia' strategy in developing a Corporate Governance Code applicable to state-owned companies, listed companies, and banks.

The Code will concentrate in particular on minority shareholders protection, disclosure and transparency practices, board members duties and responsibilities, accountability and independence rules. The Code offers flexibility: on one hand, authorities can easily monitor companies' compliance with the rules. On the other hand, companies that deem it preferable to set aside specific provisions can do so by explicitly stating their reasons - the "comply-or-explain" mechanism. Such a tool is proven to be an incentive for companies to move towards better governance practices at their own pace, without having to revolutionise their internal structures and procedures. Moreover, the concept of a corporate governance code applicable to banks is currently under development in the ETC in conjunction with the OECD. The project is thus directly building on this initiative.

The project has been approved by TC Com. The project will be sponsored by the ETC Multi-donor Fund (Contributors to the multi-donor fund are Canada, Finland, Ireland, Japan, Luxembourg, Netherlands, Norway, Spain, Sweden, Switzerland, Taipei China and the UK).

Regional: Corporate Governance in the Banking Sector in Eurasia – Task Force

Corporate governance in the banking sector is an issue which has only recently come to the fore, but which is attracting more and more interest. Only recently the Basel Committee published a series of recommendations on this matter but there are no standards focused on transition countries. In Eurasia the banking sector is much more developed than the securities market and it is essential that high corporate governance standards here are developed and implemented.

The EBRD and the OECD have set up a Task Force mandated to analyse the situation in relation to the corporate governance of banks in Eurasia and to develop a set of recommendations on the most important issues in this area. The Task Force has developed a Policy Brief (English (0.1Mb) and Russian (1.9Mb)) identifying key corporate governance challenges affecting banks in that region and making recommendations to address them. Its purpose is to support policy makers, banking supervisors, capital market regulators, banks and banking associations in their work of strengthening corporate governance practices.

The EBRD’s co-financing of the initiative is sponsored by the ETC Multi-donor Fund (Contributors to the multi-donor fund are Canada, Finland, Ireland, Japan, Luxembourg, Netherlands, Norway, Spain, Sweden, Switzerland, Taipei China and the UK).
Read more on this initiative on the EBRD website.

Regional: Corporate Governance Sector Assessment Update 2007

The EBRD has undertaken an analytical assessment of corporate governance legislation in its countries of operations in 2003-2004. The assessment benchmarked the legal development in each country against the OECD's Principles of Corporate Governance, providing a clear analysis of gaps in the existing legislative framework and identifying future legal reform needs. The results of this project are available on the Bank’s website. The assessment now needs to be updated, taking into consideration the EBRD Core Principles for Corporate Governance, the 2004 OECD’s Principles and the new OECD methodology for assessing the implementation of the Principles. This project is internally funded and is ongoing.

Past projects

Azerbaijan: Amendments to the Foreign Investment Protection Law

The EBRD assisted a working group to prepare a new draft law based on internationally recognised guidelines for foreign investment laws. The draft provided solutions to key omissions and shortcomings in the existing legal framework and proposed additional measures to be taken to ensure the effectiveness of the law. This project was funded by the German government and was completed in January 1999.

Mongolia: Assessment of the Current Legal Framework of Mongolia Regarding Corporate Governance and Secured Transactions

The EBRD completed a project to assess the legal reform needs of the Mongolian Government, in particular in improving Mongolia’s corporate governance framework and the implementation of its secured transaction framework. The findings of this project were used as the basis for developing follow-up legal technical assistance projects in the corporate governance and secured transactions areas in the country. The project was funded by the EBRD-Mongolia Co-operation Fund (established by several donor countries) and was completed in May 2002.

Mongolia: Improving Corporate Governance Legal Framework and Practice in Mongolia

The EBRD completed a project to assist the Mongolian Government to improve the country’s corporate governance legal framework and practice. More specifically, the Project assessed the adequacy of the framework created by the existing legislation governing corporate governance issues, with the aim to foster sound corporate governance practice in Mongolian companies and to bring corporate governance legal framework and practice in Mongolia in line with international sound practice. The assessment led to the development of an action plan by the Mongolian Government to improve corporate governance practice in the country. The project was funded by the EBRD-Mongolia Co-operation Fund (established by several donor countries) and was completed in May 2004.

Regional: Corporate Governance Sector Assessment

The EBRD has undertaken an analytical assessment of corporate governance legislation in its countries of operations. The assessment benchmarks the legal development in each country against the OECD's Principles of Corporate Governance, providing a clear analysis of gaps in the existing legislative framework and identifying areas in need of legal reform in the future. The assessment results of this project are available on the Bank’s website. This project was funded by the UK government and was completed in January 2004. A detailed report on corporate governance legislation in the ETC is also available on the EBRD website.

Regional: CIS Model Investors Protection Law

This project’s objective was to develop a CIS Model Investor Protection Law aiming to bring stability to the investment environment by providing model clauses protecting investors and empowering national securities commissions to impose meaningful incentives and penalties on professional market participants and issuers. The EBRD sponsored the project by way of designing it and providing commentaries on draft documentation, developed in the course of the project’s implementation and participated in the drafting group’s sessions. The CIS Model law on Investor Protection was approved by the CIS Inter-Parliamentary Assembly in April 2005. This project was funded by the Dutch government.

Regional: Corporate Governance Guidelines

The EBRD developed principles of good corporate governance for companies operating in its countries of operations. The EBRD also prepared a general document containing a catalogue of structural features which will serve as benchmarks of good corporate governance for companies domiciled in the Bank's countries of operations. This project was funded by the Austrian government and was completed in September 1998.

Regional: Legal Indicator Survey 2005 – Corporate Governance

In 2005 the EBRD completed a survey in order to evaluate the effectiveness (i.e. how the law works in practice) of legislation on corporate governance in all countries of operations. The initiative, which was financed by the Italian Government, aims to discover how corporate governance legislation is implemented and how effective are the mechanisms for a minority shareholder to obtain disclosure of corporate information and to obtain redress in case of breach of its rights. The results have been published in the Transition Report 2005 and in the Spring 2006 edition of Law in transition. The results of other EBRD Legal Indicator Surveys (dealing with insolvency, enforcement of charge and concessions (0.1Mb)) are available on the EBRD website. Read more on the Legal Indicator Survey 2005.

Russian Federation: EBRD/EU Corporate Governance and Capital Markets Roundtables

The EBRD held a series of roundtables for Duma deputies on proposed changes in Russia’s Company and Securities Laws. The first such roundtable, on protection of investor rights and corporate governance, was hosted by the EBRD’s Moscow Office. Three other roundtables, including discussion of the concept of a draft electronic documents law and the draft Law on Investment Funds, were also held. This project was funded by EU Phare and was completed in August 2000.

Russian Federation: Corporate Governance Code

The EBRD assisted the Russian Federal Commission on the Securities Market (FCSM) in developing a Corporate Governance Code, accompanied by an explanatory commentary that will be used as a central reference for issuers of securities. The Code is broadly based on the OECD Principles of Corporate Governance, and provides guidance for improved corporate bylaws and operating procedures. Through Stock Exchanges, the FSCM requires Russian companies to disclose the degree of compliance with the Code’s provisions, and to justify any lack of compliance. The Code should serve as an important tool for assessment by investors of Russian companies’ compliance with international best practices of governance. The Code was endorsed by the Russian Government in March 2002. The English and the Russian versions of the Code are available on the “Federal Financial Markets Service” website. The project was funded by the Japanese government and was completed in July 2002. For further information, please see the EBRD Press Release on the operation.

Russian Federation: Corporate Governance Ratings

The EBRD helped to develop a methodology for a corporate governance rating system for Russian companies, in co-operation with the Institute of Corporate Law and Governance (ICLG). The rating system provides investors with a guide as to which Russian companies pursue the best international practices of governance. The rating system is expected to create incentives for companies to apply good governance standards in their practices in order to increase their attractiveness to potential investors. The report with the assessment results for over 30 Russian companies was launched in March 2001. The project was funded by the Japanese government and was completed in March 2002.