The Igor Belikov Study on
the Adoption and Implementation
of the the Russian CCC :
Accomplishments and Problems
Discussion notes by
Leo Goldschmidt
Chairman, Corporate Governance Committee
APCIMS-EASD
Moscow, 2 October 2003
Survey of accomplishments
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–
–
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Summer 2000
Nov 2001
April 2002
Apr 2002-Jun 2003
Work starts on CCC
Government approves CCC
CCC presented to community
FCSM + Exchanges, Ministries
conduct 10 regulatory events
– Aut 2001-Sum 2003 RID + S&P and others conduct
9 surveys, polls and analyses
Benefits
Surveys, by their existence
• Provide quantitative benchmarks enabling
evaluation of past and measurement of future
progress
• Improve discriminatory abilities of investors
• Should create investor expectations
• Should prompt improvement by companies
• Should initiate a virtuous circle
Overall
• Comprehensive, factual
• Lucid, not complacent
• Clear, striking
• CG Assessment : 2 Groups
– Major companies : interested but application uneven
Motivation : raising capital but West more than Russia
– Other large + SME : little interest, less application
Capital markets no motive (no liquidity, alternatives)
Problems
• Is CG economically reasonable for SMEs (84)
(see de-listings in the West)
• Lack of monitoring instruments and resources
(FCSM low, exchanges nil - caution needed)
• Extreme inefficiency in sanctions
• Government representatives on boards weak
in fostering compliance
• Banks no CG interest in credit due diligence
• Investor organisations : no efforts to monitor
Recommendations
• Recognise company differences and prioritise
• Focus on OJSC top 200, exchange traded,
sector leaders, IPOs- increase their disclosure
• Facilitate reorganisation of smaller OJSCs,
reduce their CG obligations
• FCSM to compel CG observance and
disclosure and tighten sanctions
• Exchanges to liaise with FCSM in enforcing
• Distinguish between shares and bonds issuers
Recommendations (2)
• Government reps to include CG in oversight
and reporting, appraisal for renewal of post
• CG observance = condition for public sector
contracts
• Banks to include CG as element of credit
due diligence
• Investors/rating agencies to proclaim CG as
important investment criterion
Recommendations (3)
• Carry out international comparisons
• New NCGC with business associations to
promote observance and give incentives e.g. awards for best CG section in report
• Regular upgrading of CCC