Corporate Governance in Slovakia
in
“Nine Minutes”
Vratko Kaššovic
Chairman of the Board
of Central European Corporate Governance Association
Corporate Governance Roundtable in Budapest
Media Center, Budapest Stock Exchange, January 25, 2006
1. Corporate Governance (CG) Institutional
Framework,
2. National CG Codex,
3. World Bank Report (Country Assesment) on CG,
4. Transposition of the EC Recommendations
in Slovakia
1. CG Institutional Framework in Slovakia
Ministry of Justice, Economy and Finance of Slovak Republic – Ministries
Responsible for:
 Compliance of National CG Legislation with EU Directives
 “National Position” to EU Plan - Modernizing Company Law and Enhancing CG in
the European Union
 Cooperation with OECD in CG development
Bratislava Stock Exchange:
 “Pioneer” in Development of Corporate Governance in Slovakia
 Implementation of CG Code through the Listing Rules
Central European Corporate Governance Association – CECGA
 Not-for-Profit organization with the objective to address Corporate Governance
issues in Slovakia and in Central Europe
CECGA – Brief History, Structure and Mission
After more than two years of activities of the Bratislava Stock Exchange in the area of
Corporate Governance, with the financial support and assistance of the FIRST
Initiative, London, and personal initiative and activity of Mrs. Jennie S. Mills from
Milford International, London, the Central European Corporate Governance Association
(CECGA) was successfully founded on 27th October 2004.
CECGA has the legal status of a civil association and is open for individuals - board
members, managers, company secretaries and academic members. At present it has
41 members. CECGA Structure: Board of Association (9 members), Advisory Board (5
members), Membership and Ethics Committee (3 members), Academic Committee (3
members) and Honorary President (State Secretary of Ministry of Justice).
CECGA Mission is to ensure Professional Development of Board
Members (including both executive boards and supervisory boards) in the
area of Corporate Governance and to help resolve professional needs
and requirements of board members directly related to their serving
in the boards of companies.
CECGA – Objectives
 Establish and ensure effective operation of a professional institution for both existing and
potential board members
 Monitor international developments in corporate governance, to update the Unified Code of
Corporate Governance currently in effect and to promote its principles as part of the
activities of board members
 Promote excellence in the Association members’ performance of their duties as board
members through quality education and professional development programs;
 Encourage academic research on corporate governance matters, to disseminate its results
through the Association and to promote the subject as part of the business study curricula
in high schools, universities and its own training courses.
 Provide relevant and up-to-date information on corporate governance issues to the
Association members and professionals;
 Represent members’ interests domestically and internationally
 Advocate policies of members in their performance of board membership
 As an organization with an independent governance structure, the Association intends to
become the opinion leader on board membership issues and trends in corporate
governance;
 Collaborate with key institutions that have a role to play in promoting the best practices of
corporate governance both in Slovakia and abroad
CECGA – Core Activities
 Attracting quality members, maintaining their loyalty and sustaining their enthusiasm
 Organizing orientation courses for new members as well as other specialized courses
focused on all key aspects of modern corporate governance practices
 Undertaking academic research on the latest international trends and preparing
educational materials for the members of company boards
 Organizing roundtables on current corporate governance issues, which will include
presentations on the subject and informal discussions allowing the solving of common
problems and networking of members
 Publishing an e-magazine, which in the initial stage can be produced in conjunction with
the BURZA magazine
 Developing and administering the website with all necessary information on the
Association and its activities. The website will also provide a gateway to a virtual library
where all fundamental documents, articles and publications on corporate governance will
be accessible, along with information on board membership and other relevant information
 Building relations and starting collaboration with similar institutions in the country as well
as abroad in order to share information and experience, and to possibly organize joint
events.
CECGA – Future Ambitions
Create „National wide Platform“ – Network of People from State,
Public, Private, Academic and other Companies and Institutions for
Open Dialog on Corporate Governance Development
Link National Platform for CG with relevant partners in CE Countries
in order to transfer/share Best Practice in Corporate Government on
all levels
2. National CG Codex in Slovakia
In September 2002 a group of entities interested in improving the
transparency of Corporate Governance and led by the Financial Market
Authority, Bratislava Stock Exchange and professional Associations
assembling financial-market institutions, created a ‘Unified Code of
Corporate Governance’, based on the OECD Principles from 1999.
Effective from April 2003, Listing Rules of the Bratislava Stock Exchange
require that the companies with shares listed on the main and parallel listed
market of the Stock Exchange include in their Annual Reports a statement on
compliance with the Code requirements, on the ‘comply or explain’ basis
For the first time, the statement has been a part of the Annual Reports of
listed companies for the year 2003.
Principles of „National CG Codex“ 2002
1.
The Company should be headed by an effective executive board and supervisory board which
should lead it and account to the shareholders
2.
The Company should protect shareholders’ rights
3.
The shareholders are obligated to inform the company of all capital structures and any
arrangements that enable certain shareholders to obtain a degree of control disproportionate to
their equity ownership. The company is obligated to ensure disclosure of all such capital
structures and arrangements. Some capital structures allow a shareholder to exercise a degree
of control over the company disproportionate to the shareholder’s equity ownership in the
company
4.
The company should ensure that all shareholders, including minorities and foreign
shareholders, are treated equitably
5.
The company should ensure that timely and accurate disclosure is made on all material matters
regarding the company, including the financial situation, performance, ownership, and
governance of the company which will enable shareholders to determine whether to invest or
not.
6.
Institutional investors/shareholders should act responsibly in their dealings with the Company
7.
Shareholders should have certain rights and exercise certain responsibilities in connection with
the company
8.
The corporate governance framework should recognize the rights of stakeholders as
established by law and encourage active co-operation between companies and stakeholders in
creating wealth, jobs, and the sustainability of financially sound companies
3. World Bank Report on CG in Slovakia
Corporate Governance Assessment was completed in September 2003 as
part of the joint World Bank-IMF program of Reports on the Observance of
Standards and Codes (ROSC) in cooperation with Ministry of Finance,
Financial Market Authority (FMA), Ministry of Justice, Bratislava Stock
Exchange, Central Depository, Association of Securities Brokers, and many
other experts from relevant institutions
Key Findings and Proposals:
 the general Weakness of the Supervisory Board, which causes some noncompliance with several OECD Principles;
 lack of Protection for Shareholders of “Free Market” Companies,
 inadequate Authority and Institutional Capacity at the Financial Market
Authority
 Institute of Directors should be created to train supervisory board members,
disseminate best practice, and promote dialogue between the public and
private sectors.
4. Transposition of EC Recommendations
2004/913/EC fostering an appropriate regime for the remuneration of
directors of listed companies
Incorporation in Slovak Company Law in March 2006, in cumulative form only
2005/162/EC on the role of non-executive or supervisory directors of
listed companies and on the committees of the supervisory board
implementation is under the discussion between Ministry of Justice and
CECGA
 Modernising Company Law and Enhancing CG in the European Union – A
Plan to Move Forward
Slovak position – November 2005
http://europa.eu.int/comm/internal_market/company/consultation/index_en.htm
Instead of “The End”
Few relevant Internet links:
Bratislava Stock Exchange
www.bsse.sk
www.bsse.sk/map.aspx?LANG=EN
CECGA
www.cecga.org
www.bsse.sk/map.aspx?LANG=EN
National CG Codex
www.bsse.sk/Content/EN/Issuers/corp_gov/Corporate%20Goverance%20Code_1.p
df?LANG=EN
World bank Report on CG in Slovakia
www.worldbank.org/ifa/rosc_cg.html