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 – 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 the relevant legislation.

The role of the EBRD's Legal Transition Programme

As 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 where we invest.

The EBRD and its Legal Transition Programme 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 that 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, the 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 per cent of Albania's electricity generation. A comprehensive reform package was also agreed with KESH that outlined improvements to its corporate governance practices.

In 2016, the EBRD Legal Transition Team benchmarked KESH'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 of State-Owned Enterprises). The review resulted in concrete recommendations for improvements presented in a Corporate Governance Action Plan (CGAP) covering 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 and the EBRD is now assisting KESH and the government in this process. Three teams of consultants have been engaged, dealing 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 of 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 relatively 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 European Union, taking into account 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 has been 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 to improve their transparency and efficiency of operations in order 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 joint-stock companies and limited liability companies); (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. This model documentation served as a key reference point for the new Corporate Governance Standards for SOEs, which was 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

Croatia: assistance with the review and implementation of the Corporate Governance Code

Croatia: enhancing competencies of supervisory boards 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 a Corporate Governance Action Plan applicable to the National Electric Power Company

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: helping Energocom implement a Corporate Governance Action Plan

North Macedonia: assisting the National Bank of the Republic of North Macedonia with an assessment of bank business models and strategies

North Macedonia: review and implementation of the Corporate Governance Code

Serbia: review and enhancement of corporate governance practices and regulatory and legislative frameworks applicable to Javno Preduzece Elektroprivreda Srbije

Serbia: assistance to the Ministry of Economy in developing a state-ownership policy for state-owned enterprises

Slovenia: assisting 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 independent directors of the supervisory board of TSO (Main Gas Pipelines of Ukraine)

Ukraine: executive search for the independent directors of the supervisory board of Ukrenergo

Corporate governance of banks

DFI Corporate Governance Development Framework

Basic concepts of corporate governance – videos

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What characteristics make an effective board?

What are board committees and what do they do?

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