Corporate Governance

Policy and Regulatory Work
Support to EBRD Investee Companies
Corporate Governance Assessments
DFI Corporate Governance Development Framework
Corporate Governance Resources
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Overview

Good corporate governance is essential for companies wishing to access external capital and for economies aiming to stimulate private sector investments. If companies are well run, they will prosper. Poor corporate governance weakens the company’s potential and paves the way for financial difficulties and even fraud.

It is important that enterprises and financial institutions that receive EBRD financing are properly organised under domestic legislation and that their treatment of shareholders, customers, suppliers and other stakeholders is transparent and complies with legislation.

The LTP's role

Since the EBRD’s equity investments are limited to a minority position, we are particularly concerned with how companies treat their shareholders and whether minority shareholders are able to have their legal rights effectively enforced. These concerns have led the EBRD to take an early, proactive approach to the development and enforcement of sound principles of corporate governance in all the economies we invest in.

We take a two-pronged approach to promoting corporate governance. First, through integrity checks and the terms and conditions of investment operations, the Bank assesses and influences the internal structure and operation of those enterprises to which it intends to lend or invest. Second, the EBRD also works closely with legislators and regulators to assist with the creation and functioning of effective legal and regulatory frameworks which support sound corporate governance practices. To support this work, the EBRD undertakes a periodic Corporate Governance Sector Assessment to gauge the quality of corporate governance-related laws and regulations in the economies where we invest. This helps us to better understand legal developments in the region and serve as a reference for economies formulating reform.

Corporate Governance projects

Albania: Review and Enhancement of the Corporate Governance Practices of "KESH"

In 2016, EBRD provided a €218 million loan to support the restructuring and modernisation of Korporata Elektroenergjitike Shqiptare (“KESH”), a state-owned electricity generation company that provides 70% of total electricity generation in Albania. Under a comprehensive reform package agreed with KESH, improvements to its corporate governance practices were also envisaged.

In 2016, the EBRD Legal Transition Team (“LTT”) benchmarked the company’s corporate governance practices and the applicable regulatory regime with international standards and best practices (in particular, the OECD Principles of Corporate Governance and the OECD Guidelines on Corporate Governance for State-Owned Enterprises). The review resulted in concrete recommendations for improvements presented in a Corporate Governance Action Plan (“CGAP”), in the areas of the state’s role as a shareholder, board independence and effectiveness, management oversight, risk management and internal audit.

In mid-2017, KESH and the Government of Albania committed to implementing the actions proposed in the CGAP. The EBRD is now assisting KESH and the Government of Albania in the implementation of the CGAP. Three teams of consultants have been engaged dealing respectively with (a) drafting the necessary corporate documentation; (b) corporate governance improvements; and (c) strategy development. The assistance is financed by the Central European Initiative.

Albania: Assistance to the Central Bank on Corporate Governance of Banks

Since the global financial crisis, it has become clear that weaknesses in corporate governance, including inadequate board oversight over risk management and internal control functions, have contributed to excessive and imprudent risk-taking in the banking sector, which has led in turn to systemic problems. This is particularly critical for Albania, as the Albanian financial system is currently centred on banks and the equity market is remarkably underdeveloped.

The EBRD Legal Transition Team is currently assisting the Bank of Albania in strengthening its supervisory procedures on selected internal governance and risk management issues and in aligning them to those of the EU, taking into account the recent international and European developments. The project is financed by the Government of the Grand Duchy of Luxembourg.

Azerbaijan: Improving Corporate Governance Regulation of State-Owned Enterprises

Since May 2018, the EBRD Legal Transition Team is assisting the State Property Issues Committee of Azerbaijan (“SCPI”) in implementing the “Action Plan for Increasing Transparency and Efficiency in Financial Activities of Large State-Owned Companies”, pursuant to Order of the Cabinet of Ministers No. 636 dated 1 December 2016. The Action Plan targets 20 State Owned Enterprises (“SOEs”) in Azerbaijan and aims at improving their transparency and efficiency of operations, so as to make them more attractive for privatisation.

As part of this project, the following documents have been prepared by the EBRD team and approved by the Cabinet of Ministers: (i) model SOE charter (for JSCs and LLCs); (ii) model bylaws for the supervisory board; (iii) model bylaws for the audit committee; (iv) model bylaws for the corporate secretary; (v) model corporate governance code; and (vi) model code of ethics. These model documentation served as a key reference point to the new Corporate Governance Standards for SOEs, approved by the Cabinet of Ministers in June 2019. Further assistance is planned to support SCPI with training and capacity building activities for the board members and management of SOEs on corporate governance standards and best practices. The project is financed by the EBRD Shareholder Special Fund.

Charter JSC

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Corporate Governance

Overview

Corporate Governance projects

Albania: Review and Enhancement of the Corporate Governance Practices of "KESH"

Albania: Assistance to the Central Bank on Corporate Governance of Banks

Azerbaijan: Improving Corporate Governance Regulation of State-Owned Enterprises

Azerbaijan: Internal Audit Review of International Bank of Azerbaijan (IBAR)

Croatia: Assistance with the Review and Implementation of the Corporate Governance Code

Croatia: Enhancing competences of supervisory board and audit committees in state-owned enterprises

Greece: Board Evaluation of the Largest Banks

Jordan: Assistance to the Central Bank of Jordan on Selected Corporate Governance Issues

Jordan: Support for the Implementation of the Corporate Governance Action Plan (CGAP) applicable to the “National Electric Power Company (NEPCO)”

Kosovo: Support with Strengthening the Corporate Governance Legal Framework and Practices for State-Owned Enterprises

Kosovo: Assistance to the Central Bank of Kosovo on Select Corporate Governance Issues for Financial Institutions

Moldova: Corporate Governance Action Plan’s implementation for Energocom

North Macedonia: Assistance to the National Bank of the Republic of North Macedonia for the Assessment of Business Models and Strategies of Banks

North Macedonia: Review and Implementation of the Corporate Governance Code

Russia: Review and implementation of the new Corporate Governance Code

Serbia: Review and Enhancement of Corporate Governance Practices and Regulatory and Legislative Frameworks Applicable to Javno Preduzece “ELEKTROPRIVREDA SRBIJE” Beograd”

Serbia: Assistance to the Ministry of Economy for Developing a State Ownership Policy for State-Owned Enterprises

Slovenia: Assistance to the Bank of Slovenia on Selected Corporate Governance Issues

Slovenia: Assisting the Bank of Slovenia with Guidelines for Risk Appetite Frameworks in Banks

Slovenia – Strengthening the Performance and Governance of State-Owned Enterprises

Tajikistan: Assistance to the National Bank of Tajikistan in Strengthening Financial Institutions’ Corporate Governance Structures and Practices

Türkiye: Implementation of the Turkish Corporate Governance Principles

Türkiye: Development of a Roadmap for the Promotion of Gender Diversity on Corporate Boards in Türkiye

Ukraine: Review and Enhancement of Corporate Governance Practices of Naftogaz

Ukraine: Executive Search for the Independent Directors of Supervisory Board of TSO (Main Gas Pipelines of Ukraine)

Ukraine: Executive Search for the Independent Directors of Supervisory Board of Ukrenergo

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