Corporate governance and business performance. Efficient corporate governance Costs of the firm to implement corporate governance
Introduction
1 Corporate governance: ideal model and Russian reality
3 Russian boards of directors
4 Managers and shareholders
Conclusion
Bibliography
Regulations
Literature
Introduction
The formation of market relations in the Russian economy is characterized by a radical transformation of the means and forms of its organization and functioning. A wide range of modern market institutions is represented in the economic space of Russia: corporate entities, credit and banking institutions, investment companies and funds, financial and insurance companies, stock exchanges, etc. A special place among large corporate-type structures is occupied by financial-industrial and large industrial groups that have shown a high dynamism of economic development, which gives certain grounds for hope that they will help solve the problems of developing key areas of the domestic economy.
Currently in Russian Federation 87 financial and industrial groups have been registered, which include more than 1,500 legal entities, with a total number of employees over 3 million people. Large financial-industrial and industrial corporate structures demonstrate high resistance to the impact of adverse external factors in a deep economic crisis ensure the creation of a favorable investment climate.
The formation of dynamic corporate formations aroused considerable interest not only among practitioners, but also among legal scholars, and put on the agenda many issues related to the prospects and features of their development in modern Russian law.
The successful development of modern forms of management in Russia is hampered not only by the lack of an adequate legal framework, but also by the lack of development of this problem in the theory of law, which hinders the creation of a methodology for their study and a methodology for designing effective models.
It seems fruitful to attempt to comprehend the integration processes and show the features of the development of modern financial and industrial corporate structures, to generalize foreign and Russian experience their formation by the following authors: A. Dvoretskaya, V. Dementiev, V. Ivanter, A. Kalin, A. Kulikov, V. Kulikov, E. Lensky, S. Lenskaya, T. Kashanina, A. Nekipelov, Yu. Nikolsky, Yu Petrov, E. Saburova, A. Savina, A. Seleznev, B. Smitienko, N. Timofeeva, V. Tsvetkova, A. Tsygichko, Yu. Yakutin and others.
The objects of this course research are financial, industrial and industrial corporate structures, relations that form the internal organization of Russian corporations, the legal environment for their functioning.
aim term paper is the study of modern forms of corporate entities in Russian law and the development on this basis of the concept of formation of a mechanism for the formation and development of corporate structures, which makes it possible to identify their classification features, determine the principles of the internal organization of a corporation, and propose measures to improve corporate governance.
1 Corporate Governance: Ideal Model and Russian Reality
The problem of corporate governance associated with establishing a balance of interests of different groups of stakeholders (shareholders, including large, minority, owners of preferred shares, managers of the company and its employees, government agencies) are relevant for most countries of the world.
The issue of developing corporate governance standards has also become the focus of attention of international organizations. Thus, in May 1999, the OECD Council approved the Principles of Corporate Governance, which are advisory in nature and are a kind of guideline for creating a legal framework for corporate governance in state level, as well as to evaluate and develop the company's own practices. The document sets out principles relating to five areas: (1) shareholder rights; (2) equality of shareholders; (3) the role of stakeholders in corporate governance; (4) disclosure and transparency; (5) duties of the board of directors.
One hundred percent level of implementation of these principles has not been achieved anywhere. But most of all, the most developed countries approached it, primarily those belonging to the Anglo-American legal family (USA, Hong Kong, Canada). The countries of continental law are somewhat behind, among which are especially countries whose law is based on the Napoleonic Code.
For Russia, the most significant comparison is with the so-called emerging markets. But here we see that the myth about the uniqueness of the “horrors” of corporate governance in Russia, surprisingly, is nothing more than a myth. Investors face the same problems in Indonesia, Korea, Brazil, Mexico, Argentina, Turkey, Czech Republic, India.
The second myth that needs to be dispelled is the opinion held by some investors that there are no laws in Russia regulating the sphere of corporate governance.
In connection with the foregoing, it is advisable to dwell in more detail on the legal basis of Russian corporate governance and compare it with the situation in other countries.
For this comparison, the G7 countries (Canada, USA, UK, Italy, France, Germany, Japan) and the 15 largest emerging markets were taken:
4 countries from Latin America: Argentina. Brazil, Mexico, Chile;
2 countries from Europe: Greece, Portugal;
8 countries from Asia: South Korea, Philippines, Indonesia, Malaysia, Taiwan, Thailand, India, Turkey;
1 country from Africa: South Africa.
Table 1. Overview of the main corporate governance risks in Russia.
Source: Brunswick Warburg
The existing legislation in Russia has already adapted a number of important measures to protect the rights of shareholders (the introduction of mandatory dividends and the right of a minority of shareholders to cancel management decisions are practically not enough).
Basically, in Russia, corporate governance is regulated by a number of laws - the Civil Code of the Russian Federation, the Federal Laws “On Joint Stock Companies”, “On the Market valuable papers”, “On the protection of the rights and legitimate interests of investors in the securities market”, as well as regulations of the Federal Commission for the Securities Market and some other departments.
In particular, the Law “On Joint Stock Companies” (hereinafter referred to as the Law) contains the basic norms of corporate law that define the rights of shareholders, the role, powers and responsibilities of those who are entrusted with managing the activities of a joint stock company, as well as ensuring the protection of the rights and interests of shareholders. The law has been in force since 1996 and has not changed since then. The practice of its application has shown that although this Law, which is very progressive from the point of view of international experience, has largely regulated corporate relations, there are still gaps in it that urgently need to be filled.
The imperfection of the Law and the ambiguous interpretation of its norms have led to the fact that some violations have a completely legal form. The specificity of the situation lies in the fact that the provisions of the Law, which, it would seem, guarantee the protection of shareholder interests, in Russian conditions in practice, due to their “skillful” application, they play the opposite role.
However, the main reason for Russia's problems is poor enforcement of the law. In this parameter, Russia lags far behind most other countries in transition, including a number of CIS countries.
The most typical violations of shareholders' rights include: violation of the shareholder's right to participate in a general meeting, dilution (dilution) of capital, violation of shareholders' rights during reorganizations and consolidation of companies (especially during the transition to a single share), violations of information disclosure requirements, withdrawal of assets into “friendly” companies, transfer pricing, making “interested” transactions in violation of the established procedure, fictitious bankruptcies followed by the purchase of assets being sold.
Let's dwell on some of them.
2 Features of violation of shareholder rights in Russia
A. In Russia, one of the main principles of corporate governance is legally fixed - “one share - one vote”. The shareholder exercises the right to participate in the management of the company by participating in the general meeting of shareholders - the supreme governing body of the joint-stock company. But as it turned out, it is not always easy for a shareholder to exercise his right.
According to the Law, the right to participate in the general meeting may be exercised by a shareholder either in person or through a representative. This provision expands the opportunities for shareholders to take part in the meeting. But the mention in the Law that the power of attorney must contain the passport data of the representative, in the context of the struggle for control, acquires the force of a formidable weapon. The party wishing to prevent the “opponent” from participating in the meeting understands any entry in the passport as passport data. The power of attorney of the representative of the shareholder, on a formal basis, is rejected, and the representative is not allowed to participate in the meeting.
The deadlines for preparing for the holding are violated general meeting and, as a result, the shareholder does not have time to participate in the meeting, because the notice of the meeting or the ballot was received too late, or, which also happens, not received at all, as they were simply “forgotten” to send.
Of course, if the decision of the general meeting is made in violation of the requirements of the law, or the charter of the company, it can be appealed by the shareholder in court. But even this barrel of honey was not spared by a fly in the ointment. The shareholder must take into account that the court may uphold the appealed decision if the voting of this shareholder could not affect the voting results, the violations committed are not significant and the decision did not cause losses to this shareholder. Thus, a minority shareholder, whose vote usually does not affect the voting results, often requires not only a good lawyer, but also a lot of luck in order to defend his rights in court in the event that, for example, the terms of the meeting notice were violated.
B. Most often the rights of shareholders are violated during the placement of securities. As a result, the new issue is already becoming synonymous with the violation of shareholders' rights.
An example is the well-known conflicts of recent years in oil companies Yukos (transfer of funds from subsidiaries, dilution of minority shareholders), Sidanco (attempt to issue and place convertible bonds at a price lower than the market price for placement by affiliates), Sibneft (transfer of assets to a holding and discrimination against small shareholders of subsidiaries when switching to a single share). It should be noted that in a significant part of the cases, “blurring” failed. In 2008 alone, the Federal Securities Commission of Russia denied state registration of share issues in 2,600 cases, including attacks on “oligarchs”.
Especially often, the Boards of Directors, using the opportunity provided by the Law to make decisions on increasing the authorized capital, placed shares by closed subscription to affiliates at a clearly non-market price, often without even informing the shareholders about this.
The terms of the placement were determined on the basis of the "bottleneck" principle - in such a way as to exclude or significantly hinder the possibility for shareholders to acquire shares. For example, the placement of shares of a large issuer was carried out only for one day, and at the same time, the personal presence of the shareholder was required to conclude the transaction.
C. Violations of shareholders' rights related to the reorganization of joint-stock companies have also become widespread. The purpose of the reorganizations was to transfer the profitable business of the “controlling” shareholder to new companies. Financial difficulties of the “old” company were inherited by the shareholders who remained in it. Or vice versa, individual shareholders were forced out into new companies with an unfavorable financial condition.
To prevent such violations, the FCSM of Russia introduced a number of provisions into its regulations aimed at protecting the rights of shareholders in the process of issuing securities. These include the requirement that the decision to place shares by closed subscription can be taken only by the general meeting of shareholders of this joint-stock company. Later, this provision was enshrined in the Federal Law “On the Protection of the Rights and Legitimate Interests of Investors in the Securities Market”.
In accordance with the requirements of the Federal Securities Commission of Russia, the period during which shareholders may conclude agreements on the acquisition of these securities (except for the case of placement of shares and securities convertible into shares among shareholders exercising the pre-emptive right to purchase) cannot be less than one month.
A requirement has been established for the obligatory involvement of an independent appraiser to determine the placement price of securities, in the event that they are placed by an open joint stock company with 1,000 or more shareholders, as well as an open joint stock company, the state registration of securities issues of which is carried out by the Federal Securities Commission of Russia, by closed subscription to persons, who are not shareholders of this joint-stock company, or not to all shareholders of this joint-stock company, as well as to all shareholders, but not in proportion to the number of shares they own. Although the quality of the work of the so-called independent appraisers, as you know, causes a lot of criticism.
Defined clear order preliminary (including prior to the submission of documents for the state registration of the issue of securities (at least 30 days in advance)) disclosure of information on the issue, which allows shareholders to learn about the relevant decisions during the issue in a timely manner and appeal them before their rights are violated . In addition, the Standards establish the preference for shareholders to purchase shares when placing additional shares, clarify the rules for making decisions on large and interested transactions related to the placement of shares, as well as the rules for paying for shares in non-monetary funds.
An important role in the corporate governance system is assigned to the boards of directors, while it is assumed that the board of directors should ensure the management of the company, taking into account the interests of all shareholders, by searching for a possible balance. However, in domestic practice of corporate governance, in most cases, the board of directors defends the interests of only a large (controlling stake) shareholder, as well as its own, sometimes contrary to the interests of the company's shareholders. As mentioned earlier, by the decision of the board of directors to issue shares, the shares of unwanted shareholders were “diluted” in favor of large shareholders, new shareholders appeared affiliated with the members of the board of directors, and the block of shares acquired by them as a result of a closed issue often turned out to be “controlling”.
In recent years, with the help of boards of directors, some companies have redistributed assets without taking into account the interests of small shareholders (the property of a joint-stock company from the assets of this joint-stock company was transferred to organizations friendly to the company's management, or to the parent company). Establishment of unreasonably high salaries and remunerations for members of the board of directors and executive management bodies, in conditions when dividends and wages were not paid. Through transfer pricing and tolling schemes, shareholder income often flows into the pockets of managers and the “controlling” shareholder. However, it must be emphasized that the solution of these issues is, first of all, in the plane of criminal law, and to a lesser extent this applies to corporate law.
Opposition is being made to an independent audit of the financial activities of a joint-stock company, which is insisted on by unaffiliated shareholders.
At the same time, it should be remembered that the existence of a conflict of interests between shareholders and the board of directors is an objective phenomenon, and the world experience has already developed some measures to resolve it.
For example, by including so-called independent directors in the board - persons not related to the company business relations, no matter what this affects the objectivity and independence of their decisions, but had a certain impact on the decisions of the council. Within the council, it is expedient to organize additional various committees - for audit, for remuneration of management, for relations with shareholders.
4 Managers and shareholders
The day-to-day management of the activities of a joint-stock company is carried out by the executive body of the company, which has the right to resolve any issues of the company's activities that are not referred to the exclusive competence of the general meeting and the board of directors. Thus, the decisions of the company's executive body directly and daily affect the company's activities.
Of fundamental importance is the question of which governing body is competent to form the executive body, since this determines to whom the executive body is accountable. The formation of the executive bodies of the company and the early termination of their powers in Russia are carried out by decision of the general meeting of shareholders, if the company's charter does not refer these issues to the competence of the board of directors of the company.
Unfortunately, the CEOs have made a huge contribution to creating a negative image of Russian corporate governance. With the direct participation of the directors, (and sometimes on their initiative), the withdrawal of assets from joint-stock companies takes place. During the privatization of enterprises, the management staff, as a rule, did not change, but as a result of the change of ownership, new shareholders appeared who had no relation to this joint-stock company before, and as a result, the “old” managers in every way opposed the participation of new owners in the company's activities.
The mentioned conflicts were partially overcome over time, but before the old battlefields had cooled down, new ones appeared: non-market transactions with the company's property, refusal to provide the necessary information to shareholders, opposition to the arrival of new managers.
The fight for disclosure continues.
For example, information about the remuneration of members of the governing bodies of Russian joint-stock companies is a separate page in the history of domestic corporate governance. It goes without saying that shareholders have the right to know how much it costs to run a company, where and how their money is used. To this end, based on world practice, the Federal Securities Commission of Russia has established a requirement to disclose the above information in the prospectuses for the issue of securities and quarterly reports of issuers. Interestingly, this requirement turned out to be one of the most criticized by the majority of issuers and some so-called professional participants in the securities market.
And yet, there is clear progress in the area of information disclosure. First, the FCSM of Russia, in development of the requirements of the Law “On the Securities Market”, adopted a number of regulations specifying the composition of the information included in the quarterly reports of issuers and information on significant facts in their financial and economic activities, as well as establishing the procedure for its disclosure. In addition, the requirements for the disclosure of information carried out by issuers in the course of the issue of securities are determined.
In fairness, it should be noted that the Russian legislation on disclosure of information, which was formed in difficult conditions, is still far from ideal, but, nevertheless, it already today allows the investor to receive basic information related to the management of the company.
Secondly, with the release of the Law “On the Protection of the Rights and Legitimate Interests of Investors in the Securities Market”, the FCSM of Russia received the authority to impose penalties for violations in the field of information disclosure. The same law establishes a ban on public circulation of securities of issuers who do not disclose information to the extent and in the manner prescribed by law.
Conclusion
Summing up the above, we will highlight the main violations (problems of corporate governance) that have a significant impact on the position of investors, and analyze the existing mechanisms for protecting the rights of shareholders and possible ways to improve them.
The main causes of problems with corporate governance,
and as a consequence, the losses of investors are reduced to the following.
1. The ongoing struggle for “control” in many enterprises.
2. Unsatisfactory law enforcement system in Russia (including the inefficient work of many courts).
3. Passivity of the Government of Russia.
4. Disunited and passive position of minority shareholders.
5. Gaps in the legislation, for example, the absence of a mandatory pre-emptive right of shareholders or the institution of class (collective) claims.
6. Insufficiently deep due diligence before making investment decisions, in particular, in Russia it is necessary to check in advance:
Transparency and legitimacy of financial schemes used by managers; the existence of a “bad history” in relation to shareholders, the presence of ties with oligarchs and crime,
The existence of legal "mines", as, for example, in the case of OJSC MGTS, when, in accordance with the privatization legislation, the company had an unconditional obligation to increase the authorized capital and transfer a controlling stake to the winner of the investment competition.
Managers' relationship with local authorities.
The situation with corporate governance that has developed in Russia requires a whole series of steps, some of which must be taken by the State Duma, the Government of Russia, and some by the investors themselves.
It is possible to ensure the protection of shareholders' rights from unfair actions of managers both by tightening liability at the legislative level for actions that violate the rights of shareholders, by improving the current legislation, and by improving the practical use of existing laws (which requires political will!).
In this regard, it is necessary to adopt a number of normative acts that eliminate the existing gaps in the legislation. Some of these bills are already in the State Duma.
At the same time, the main priorities for improving corporate governance legislation in Russia are:
acceptance legal regulations that ensure the unhindered dismissal (dismissal) of chief executives, or even confiscation of assets owned by chief executives, in case they violate corporate governance rules.
Prohibit insider trading.
Qualifications of transactions with affiliates.
Expansion of information disclosure requirements and responsibility for the content of disclosed information.
Regulation of the “erosion” of capital (including through the introduction of a mandatory pre-emptive right of shareholders).
Restriction on "cross-ownership" of shares.
Introduction of direct liability of officials, directors and controlling shareholders for causing damage to the joint-stock company itself, or to shareholders (up to criminal prosecution).
Everything that was said above is very important and will not lose its relevance for a long time. But it is equally important to change the attitude towards the problem of corporate governance among the joint-stock companies themselves, which will inevitably change, since the “positive” or “negative” corporate governance practice in the company, respectively, affects its investment attractiveness, and therefore, in the long term, its survival. Thus, there is no alternative to improving corporate governance in Russia.
Bibliography
Regulations.
1. Criminal Code of the Russian Federation (Articles 165, 201, 204).
2. Federal Law No. 208-FZ of December 26, 1995 “On Joint Stock Companies”
3. Federal Law No. 39-FZ of April 22, 1996 “On the Securities Market”
4. Decree of the FCSM of Russia dated May 14, 1996 N 10 "On the procedure for publishing information on the acquisition by a joint-stock company of more than 20 percent of the voting shares of another joint-stock company"
5. Decree of the FCSM of Russia of September 17, 1996 No. 19 “On approval of the Standards for the issue of shares when establishing joint-stock companies, additional shares, bonds and their issue prospectuses” (as amended by the Decree of the FCSM of Russia of November 11, 1998 No. 47)
6. Decree of the Federal Securities Commission of Russia of February 12, 1997 N 8 “On Approval of the Standards for the Issue of Shares and Bonds and their Prospectuses during the Reorganization commercial organizations” (.as amended by the Decree of the Federal Securities Commission of Russia dated November 11, 1998 No. 48)
7. Decree of the Federal Securities Commission of Russia dated December 31, 1997 N 45 “On Approval of the Regulations on the Procedure for Suspending the Issue and Recognizing the Issue of Securities as Failed or Invalid”
8. Decree of the FCSM of Russia dated April 20, 1998 N 8 "On approval of the Regulations on the procedure for holding a general meeting of shareholders by absentee voting"
9. Decree of the Federal Securities Commission of Russia dated April 20, 1998 N 9 “On Approval of the Regulations on the Procedure and Scope of Disclosure of Information by Open Joint Stock Companies when Placing Shares and Securities Convertible into Shares by Subscription”
10. Decree of the Federal Securities Commission of Russia of August 11, 1998 N 31 "On approval of the Regulations on the quarterly report of the issuer of emissive securities"
11. Decree of the Federal Securities Commission of Russia dated August 12, 1998 N 32 "On Approval of the Regulations on the Procedure for Disclosing Information on Material Facts (Events and Actions) Affecting the Financial and Economic Activities of an Issuer of Equity Securities"
12. Decree of the Federal Securities Commission of Russia dated September 8, 1998 N 36 “On approval of the Regulations on the procedure for returning securities to owners Money(other property) received by the issuer as payment for securities, the issue of which is recognized as failed or invalid”
13. Federal Law No. 46-FZ of March 5, 1999 “On the Protection of the Rights and Legitimate Interests of Investors in the Securities Market”
14. Decree of the FCSM of Russia dated June 7, 1999 No. 3 “On approval of the Regulations on the procedure for considering cases and imposing fines for violation of the legislation of the Russian Federation on the protection of the rights and legitimate interests of investors in the securities market”
15. Decree of the Federal Securities Commission of Russia dated September 30, 1999 N 7 “On the procedure for keeping records of affiliated persons and providing information on affiliated persons of joint-stock companies”.
Literature.
1. Bakumenko M.V. Mergers in the Russian economy. // Collection of scientific papers: Actual problems of reforming the Russian economy. - Volgograd: RPK "Polytechnic". 2008.
2. Bandurin A. V., Zinatulin L. F. Economic and legal regulation of corporations in Russia. – M.: BUKVITSA, 2007.
3. Vorobyov A.S. Development of corporate relations in the modern Russian economy. - M.: Republic. 2008.
4. Kashanina T.V. Corporate right. Textbook for high schools. Moscow: Publishing group NORMA-INFRA M, 2007.
5. Oleinik S.V. Prohibitions and procedural requirements in the corporate legislation of some countries. M., Postscript, 2008.
6. Experience in the creation and activities of the first financial and industrial groups in Russia // Financial and industrial groups: Foreign experience and realities of Russia / Financial Academy under the Government of the Russian Federation; Ed. Smitienko B.M., Movsesyan A.G. - M.: FA. 2008.
7. Patrushev P.M. Capital of financial and industrial corporate structures: theory and practice. - M.: FA. 2007.
8. Sevastyanov S.N. Corporate Governance: Problems of Legislation in Russia (report on a grant from the State Committee for Higher Education of the Russian Federation). - M.: FA. 2008.
9. Chernyshov V.N. The main trends in the formation of corporate legislation in the Russian Federation., M., Fakt-M., 2008.
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Improvements in corporate governance are often superficial in practice and used to promote goals rather than as a way to put in place structures and procedures that enable a corporation to gain shareholder confidence, reduce the risk of financial crises, and improve access to capital. The creation of internal structures and procedures based on the principles of fairness, transparency, accountability and responsibility is the first task that management must solve in the process of corporate governance reform.
The organizational structure of corporate governance may consist of four blocks, as, for example, in OAO Tatneft. The first is the corporate governance department, whose main functions are the creation, maintenance and improvement of corporate governance; development, organization and implementation of the company's corporate policy; preparation of proposals for the development and introduction of amendments to the internal documents of the Company (Code corporate behavior, Regulations on Committees under the Board of Directors), participation in their development; organization of work to unify business processes and procedures in the Company. The second block is the Central Securities Department, whose main functions are to establish and develop effective relations with investors, shareholders and news agencies, monitor the domestic and international securities markets, manage the liquidity of shares and other securities, develop the company's share market, list and maintain listing on Russian and foreign trading floors and organization of work with the registrar. The third block is the department of legal support, which is primarily responsible for the legal purity of the documentation of Uralsvyazinform and our subsidiaries; this includes statutes and all sorts of provisions. And, finally, the fourth block is the department of public relations and interaction with public authorities. Its main function is to coordinate the information policy of the society in relation to regional and Russian media and public authorities.
Without pretending to complete and detailed disclosure of such a complex topic as improving the efficiency of the corporate governance system of a corporation, let's consider the internal mechanism of corporate governance in a joint-stock company (Fig. 7.2).
Improvement of corporate governance is the most important measure necessary to increase the inflow of investments into all spheres of the economy, both from domestic and foreign investors. This requires a mechanism to improve the management system of relations with shareholders. The main task regarding the implementation of this direction is the protection of shareholders' rights as one of the priorities of the country's socio-economic development.
Of course, protecting the rights of shareholders is the task of both state bodies and the companies themselves. In 2002, the Organization for Economic Co-operation and Development (OECD) decided to revise the Corporate Governance Principles published in 1999. The basis for the new version of the OECD Principles , published in April 2004 , comprehensive studies of the experience of various countries in the field of corporate governance were formed, and many interested parties were involved in the process of revising the document.
Rice. 7.2. - Internal mechanism of corporate governance in a joint-stock company
The OECD principles specify the minimum rights required by an investor. This list includes rights to:
1) secure registration of ownership of shares;
2) transfer or transfer of shares;
3) timely and regular receipt of necessary and essential information about the corporation;
4) participation in general meetings of shareholders and voting at these meetings;
5) election and removal of members of the board of directors;
6) receiving a share of the corporation's profits.
In the countries of the European Union, strengthening the protection of shareholder rights is identified as a key direction in the development of company law: “ Ensuring effective and proportionate protection of the rights of shareholders and third parties should be at the center of any company law. A strong system for protecting the rights of shareholders and third parties, which allows to achieve a high degree of trust in business relationships,is anthe main condition for ensuring the efficiency and competitiveness of the business... Improving the protection of shareholders' rights should be based primarily on: a) providing full information about what rights exist and how they can be exercised,b) improving the means necessary for the effective realization of existing rights” .
Of course, the "written law" alone is not enough for this. Effective enforcement mechanisms are needed. The confidence of minority shareholders is enhanced if the legal system allows them to initiate legal or administrative proceedings against managers or members of the board of directors in order to restore or compensate for violated rights, and if the implementation of these procedures does not involve excessive costs and obstacles. As stated in the OECD Principles, ensuring the functioning of such a mechanism is a key responsibility of the legislature and the executive.
An important factor affecting the level of protection of shareholders' rights is the behavior of the companies themselves. In 2002, the World Bank published a study of the relationship between corporate governance, investor protection, and the performance of 495 companies in 25 emerging markets. The main conclusions of the experts are as follows:
In countries with weak legal systems, the level of corporate governance is lower;
The level of corporate governance in national companies depends on how significant information asymmetries and distortions of the market environment are faced by a particular corporation;
Companies listed on the US stock exchanges have a high level of corporate governance, and this dependence is especially typical for companies from countries with weak legal systems;
Good corporate governance has a positive impact on the market value of companies and their performance, and this relationship is stronger in countries with weak legal systems.
Thus, the weaker the legal system in a country, the more important the state of corporate governance is to improve the functioning of companies. Conversely, the activities of companies with proper corporate governance are less dependent on the degree of development of the legal system, since their need for external mechanisms for resolving conflicts between participants in corporate relations is not too acute.
Management of relations with shareholders (investors, stakeholders) became a separate area of activity of corporate leaders long before a full-fledged theory of corporate governance began to develop. It is believed that the term "investor relations" (investor relations) introduced in 1953 by Ralph Coldinner, then chairman of the board American company General Electric. In 1969, a professional association (National Institute) of managers and consultants in investor relations (National Investor Relations Institute, NIRI) was established in the USA. Later, such organizations appeared in many countries of Brazil, Great Britain, Germany, Canada, Finland, France, Japan, etc., and in 1990 they merged into the International Investor Relations Federation (IIRF).
Currently, this area is experiencing a real boom: many large firms have introduced special managerial positions (investor relations officer, IRO) and organized relevant divisions that work closely with the offices of corporate secretaries, finance and public relations departments. Web sites that have become a mandatory attribute of modern companies are now unthinkable without special IR sections (relevant recommendations regarding the content of corporate sites are given to companies and regulators of the EU countries in the Winter report).
Information technologies play a very important role in this development of events, and above all the Internet, which has made it possible to bring the processes of information disclosure and communication of companies and their leaders with the outside world to a qualitatively new level. It is necessary to dwell on six main aspects of the use of IT systems in order to improve the interaction of corporations with current and future shareholders, creditors and other counterparties.
Firstly, holding interactive Internet forums in addition to traditional "road shows" (roadshow), organized in anticipation of the placement of new issues of securities. Such virtual meetings are much cheaper, save the physical strength of managers and allow the company to convince a wider circle of potential buyers of stocks and bonds of the prospects of its business - not only institutional investors in large financial centers, but also individual investors in the provinces. Of course, to ensure the continuity and high level of such a forum is a task of a completely different plan compared to the preparation of a traditional presentation.
Secondly, online broadcasts of telephone and video conferences of senior officials and their speeches at major corporate, industry and other events. The use of such funds plays a special role in companies with dispersed structures of equity capital and credit resources mobilized in the form of bonds (in other words, in corporations whose securities are owned by many smallholders). This is important not only from the point of view of a sharp increase in the audience covered, but also in order to reduce the number of personal appeals of investors to the authorities, suppress unfavorable rumors and the appearance of unreliable information in virtual clubs and lounges. Thus, in the first half of 2003, 83 out of 100 leading European companies organized Internet broadcasting of various corporate events, including 27 used this method during the annual general meeting of shareholders. Cisco's annual financial analyst conference in 2003 attracted 500 physical participants in the United States and several thousand virtual participants in 60 countries.
Thirdly, electronic voting at general meetings of shareholders. In the United States, voting by paper ballots is rapidly becoming a thing of the past; of course, such high-tech companies as Dell, IBM, and Intel have achieved the greatest success in this direction. The savings per shareholder voting over the Internet is about 40 cents, which is quite significant for corporations with millions of shareholders. Also important is the growth in the proportion of owners involved in making the most important corporate decisions. Finally, shareholders who have been given the opportunity to easily and quickly vote on agenda items on the Web site can become interested in the merits of the company's products and become their buyers. As Dell's head of investor relations points out, from good shareholders are obtained good clients.
Fourth, online acquisition of shares and reinvestment of dividends directly on corporate websites. About half of the Fortune 500 corporations use direct share purchase plans over the Internet, according to Sharebuilder Corp. This makes it possible to increase the activity of stock trading and stimulate demand from individual, including foreign, investors. It is this category of capital owners that can provide some insurance during difficult periods, when large institutional investors begin massive sales of securities in order to fix profits and avoid losses.
Fifth, automatic distribution of notifications, press releases, annual reports and other information by e-mail. The average cost of preparing and distributing materials is reduced from $5-8 to $1 per addressee (the owner of securities, an employee of a consulting or auditing firm, an investment bank, a newspaper, a magazine, etc.). This argument usually gives the desired impression to investors when companies ask for their consent: saving their money! Typically, corporations begin to develop this direction with an electronic mailing list to their employees-shareholders, and then move on to a wider use of this channel of interaction with the outside world. Thus, they get the opportunity to maintain almost constant contact with their counterparties, track and analyze changes in the composition of stock and bond owners, and as a result, identify the most promising layers of investors and establish work with the target audience.
At sixth, placement of interactive annual reports on corporate websites. These electronic documents allow users to translate financial statements into Excel spreadsheet format, as well as navigate between different sections of reports and to other pages of corporate websites using hypertext links. In turn, companies create databases about users and the configuration of their preferences when working with reports (that is, which sections of documents are of greatest interest to them). All of this helps Investor Relations Managers to better understand and meet client needs. The translation of the financial statements of American firms into an interactive form was greatly facilitated by the fact that back in 1992, the Securities and Stock Exchange Commission began to accept corporate reporting through the Edgar system (Electronic data gathering, analysis and retrieval - collection, analysis and reproduction of electronic data) . In 2001, this system was transferred to the Internet and became a platform for online interaction between investors, issuers and the Commission.
In the United States and many European countries, there are now many companies that offer a full range of IT services for the relationship maintained by corporations with the outside world. As an example, one of the most famous American firms working in this field can be mentioned - Corporate Communications Broadcast Network, which in March 2004 became part of the large information technology company Thomson Corp. business is also developing, such as providing access to interactive annual reports of corporations on Web sites of specialized firms. For example, on the site AnnualReports.com you can get acquainted with the reports of 2,700 companies (the annual fee for such a service is $600), and corporate subscribers can also convert their reports into an interactive form (this service costs $1,000).
Thus, modern corporate governance is unthinkable without the intensive and consistent implementation of the latest information technologies. The main condition for success in this process is the maximum integration of all IT systems used, which should be subordinated to the single goal of assisting the board of directors in ensuring the effective management of the company (overseeing the activities of top managers in the areas of implementing corporate strategy, exercising internal control and maintaining proper relations between corporation and its counterparties). It is important to emphasize that since this field of activity develops, as a rule, by transferring the most complex functions to specialized firms (that is, through outsourcing), it is quickly becoming a separate and very promising type of business for software manufacturers, system integrators and other technology companies.
The classical theory of company management defines corporate control as a special subsystem or function of management, management activity, the task of which is to quantitatively and qualitatively evaluate and record the results of the organization's work. At the same time, its main functional direction “classics consider the control over the implementation of corporate plans and budgets by the management by the company's employees.
However, the domestic practice of corporate governance convinces us that, in essence, from the standpoint of all elements of this formula, namely the subjects, object, technology and nature of this type of management activity in the broadest sense, this perspective greatly simplifies the essence of the problem.
Search efficient model corporate control, according to the authors, can be successful only if the co-owners of the executive bodies of the enterprise are ready to solve a peculiar problem for the optimum with different values. And to be even more precise - not so much a separate task, but a set of such tasks.
The board of directors is also the controlling body. Thus, the model Code of Corporate Conduct indicates its four main functions:
The Board of Directors determines the company's development strategy and adopts the annual financial and business plan;
The Board of Directors ensures effective control over the financial and economic activities of the company;
The Board of Directors ensures the implementation and protection of the rights of shareholders, as well as contributes to the resolution of corporate conflicts;
The Board of Directors ensures the efficient operation of the company's executive bodies, including through control over their activities.
As you can see, in two of them the control load is clearly indicated. Moreover, the missions of the designer and implementer of the company's development strategy, the defender of the rights of shareholders also imply comprehensive control. First of all, behind the execution of decisions of the representative bodies of companies (the general meeting of shareholders and the board of directors itself) on determining the main directions of the company's development, approving its key business plans, as well as public procedures and corporate actions directly related to the rights and legitimate interests of shareholders.
In contrast to the set of immanent tasks of the audit commission, the preliminary approval of transactions, primarily major transactions and transactions with interest, is a targeted mission of the board of directors. Using the opportunities provided by Art. 65 of the Federal Law “On Joint Stock Companies”, an increasing number of companies lower the “bars” of major transactions in their charters. However, the most effective application of the ideology of preliminary control is the simultaneous use of three criteria for transactions that the collective business owner considers the most risky and refers in the charter to the additional competence of the board of directors: 1) price (the introduction of a monetary limit on the contract price); 2) constructive, (assigning to the competence of the board of directors transactions that fall under the signs of specific civil law structures) and 3) temporary (in this case, the principle of "accumulative total" works on a set of similar transactions, which does not allow managers to bypass this "barrier" splitting deals into parts and concluding them after short periods of time).
Parallel audit and other forms of control outsourcing (we will mention a special targeted management audit carried out in the relevant
cases by specialized consulting companies) are classified as optional corporate control modules. So, if the official auditor of the company, approved by the decision of the annual general meeting of shareholders,. prepares a conclusion for the annual meeting of shareholders and on this his mission in most companies is exhausted, then the “parallel” auditor works in the genre of periodic and unscheduled audits of activities subsidiary. In contrast to the institution of personal controlling (as a rule, this is a personal adviser to the general director), in this case, the control of decisions made by management is carried out in the genre of traditional a posteriori control. What is essential is that the presence of an auditor who is legally or actually affiliated with the parent company as a “curator” becomes an integral part of almost daily management practice of a subsidiary company.
Unlike specialized control bodies and other structures of this kind, the so-called additional control formations economic society are not directly provided for by the texts of federal laws (control bodies and control formations are integral parts of the institution of corporate control). However, their creation is not against the law. Thus, the law proceeds from the fact that companies and their owners are endowed with the freedom of creativity in this field. Moreover, some “law of advisory” documents actively advise the use of such freedom.
Thus, the Code of Corporate Conduct of OAO TATNEFT and the practice of its application in 2003-2004. were unanimous in that the set of functions of the formations of the board of directors should also include purely control goals. This allows us to consider committees and commissions of the board of directors as corporate control structures (CCS) of a special kind. We list their main control tasks:
1. Solution of the universal problem of "control of controllers". In a corporate context, it is transformed into tasks such as:
Professional and democratic (i.e., first of all, excluding arbitrariness and at the same time transparent) selection of companies applying for the vacancy of the official auditor of the company;
Preliminary consideration within the framework of the campaign for the preparation of the annual general meeting of shareholders of the draft detailed audit report of the auditor with the possibility of opposition on problematic positions;
Coordination of the activities of all bodies and formations of the joint-stock company - the audit commission, the auditor, the internal audit department of the management apparatus, etc.
2. Monitoring of practice and control over the implementation of the norms of the company's internal regulations governing the activities of its bodies for the implementation of complex and especially important corporate actions. Among them are the code of corporate governance of this company, provisions on dividend policy, on information policy, on confidentiality, on interaction with subsidiaries and affiliates (for holdings).
3. Control over the compliance of the actual personal and socio-economic circumstances of independent directors with the established charter and local regulations with the criteria of this institution.
4. Control over the provision of information and reports from the executive bodies to the board of directors of the company, as well as aperiodic self-reports of individual top managers at a meeting of the board of directors, in accordance with the procedure established by the charter, internal regulations and decisions of the board of directors.
5. Control over the compliance of the decisions taken by the management bodies of the company with the competence of these bodies, established by law and the charter of the joint-stock company.
6. Additional control over the execution of non-normative (targeted) decisions of the board of directors (in addition to control by the chairman and the board of directors and organizational assistance to such control by the corporate secretary of the company).
Unlike committees, the so-called control and audit service (CRS) of the board of directors is, according to the deep conviction of the authors, one of the most controversial recommendations of the Code of Conduct. Their attempts to find at least one joint-stock company, where KRS would be created under the board of directors, turned out to be futile. The main reasons for the "inattention" of corporate practice to the CDF are as follows
The authors of the code believe that the main form of work of the CDC is to check the operations and actions of the executive bodies and the company's management apparatus for compliance with the corporate business plan (preliminary control for operations that do not comply with it, and a posteriori control for those that do). Obviously not taking into account that in most companies there are no detailed business plans at all, and where they are approved, they most often have an operationally indefinite format (“control figures” and an indication in a general form of the key resources for achieving them).
In addition, KRS are full-time employees, even if they are the staff of the board of directors. And for this reason they experience a "reflex" mistrust newly included in the Board of Directors members.
Finally, the CDC cannot audit the activities of the board of directors.
A quite clear and objectively justified control mission is vested in the corporate secretary.
Let us point out the main control tasks of the corporate secretary and his staff:
General organization and control of the implementation of various activities for the preparation and holding of the General Meeting of Shareholders, conducted by the management apparatus and specialized registrars;
Control over the acceptance and consideration of complaints and proposals of shareholders sent to the board of directors and executive bodies of the company;
Control over compliance by the financial services of the joint-stock company with the schedule for paying dividends to shareholders, as well as the price of shares in the event of their mandatory redemption and acquisition by the company;
Participation in monitoring the implementation of targeted decisions of the board of directors regarding the rights of shareholders
General organization and, in appropriate cases, control over the execution of the management apparatus of the requirements of shareholders to make copies of the company's documents requested by them;
Additional control over the execution by the management apparatus of the companies of the schedule for the implementation of share issues, including the exercise of the shareholders' right to priority buyback of shares;
Additional control over the execution by the company's management apparatus of state registration of changes and additions to the company's charter;
Additional control over the execution by the company's bodies of judicial acts that have entered into force, which affect the institute of shareholder rights.
Once again, attention should be paid to the fact that the shareholders of Russian OJSCs do not have to apply all the control modules described above. Ultimately, significant corporate circumstances turn out to be decisive in terms of the correct choice of the optimal structure of corporate control: strategic and tactical tasks solved by the company at this stage of its growth, the degree of shareholders' confidence in top managers, the degree of business diversification, etc.
This is also true with regard to the correct definition by the owner of the corporation of "zones of special attention" when modeling the system of optimal corporate control. In contrast to control by managers, which, as already noted, is supposed to “close” all zones of reproduction. production cycle company, it is advisable for shareholders to focus on the main points that economically ensure their ownership of the business. We believe that such objects of control include:
Monitoring the implementation of the most important business plans and budgets;
Monitoring the implementation of the norms of the charter and other leading corporate regulations (regulations and regulations);
Control of the movement of the most liquid assets that do not belong to the category of raw materials, materials and finished products (securities, real estate, etc.);
Overseeing transactions and leading HR decisions;
Monitoring the execution of decisions of the general meeting of shareholders, the board of directors, as well as the most important decisions of the board and orders for the company.
The mechanism for coordinating the interests of shareholders with managers of joint-stock companies is an integrated system that includes four important elements that ensure that the interests of the owner are taken into account. Firstly, it regulates relations within the company, maintains a balance between the various interests of shareholders, the board of directors and hired managers in case of conflicts and allows them to be resolved within the legal framework existing in the country. Secondly, it is the mutual balance of the company and its environment - the state, society and the business community, since many conflicts between the state and business, which can be resolved at the level of corporate governance, result in confrontation.
Corporate governance mechanisms generally include the following elements. The central body is the board of directors, as provided for by law. It is the board of directors that is called upon to protect their interests and build relationships between them and managers accordingly. Another important component of the system of balancing interests is the system for assessing the motivation of top managers. We are talking not only about material rewards, bonuses, but also about non-material incentives. As practice shows, this is a rather difficult task. With ordinary employees, it is even more or less clear how to solve it, but people who occupy senior positions, who have developed as individuals, highly professional managers, are no longer very interested in corporate events. They are always interested in further development as professionals. They are interested in working in large companies with long-term goals and prospects in the market, which will lead to their professional growth and increase their own value in the labor market. Therefore, interesting complex projects are a huge incentive for managers.
If we talk only about material compensation, we need to touch on the topic of bonus programs, bonus options. Unfortunately, due to the fact that the Russian and Ukrainian stock markets are underdeveloped, it is practically impossible to copy the Western experience exactly. It is necessary to discuss and legally fix the “rules of the game” in advance, so that the owners have a clear idea of the amount of bonuses that they are ready to transfer to managers, and managers understand the criteria by which the results of their work will be evaluated.
No less important is the issue of evaluating the performance of the company as a whole and the work of each manager. An effective tool is a balanced scorecard, since it allows you to create a comprehensive scheme with which to solve long-term business problems, take into account both financial and non-financial indicators, and give an objective picture of the performance of the enterprise.
Finally, a system of information exchange between managers and owners should be established. Many conflicts arise at this level of interaction. The owner believes that this is his business, and he has transferred full powers to managers. However, from the point of view of the owner, managers do not care about the cause and, roughly speaking, strive to "grab more." Managers, constantly feeling the control of the owner, feel a certain inferiority: On the one side, they are responsible for the company, and with another- control levers remain in the hands of the owner. In such a situation, conflicts are inevitable. That is why it is important to build a system of information exchange, and it is corporate governance that can solve this problem.
With the help of the board of directors (through regulatory documents), the owners must broadcast the company's goals, their expectations from the business, possibly certain restrictions and directions for the proposed development. Top managers must give an objective account of the day-to-day activities of the company and the results that it has achieved during reporting period so that shareholders can evaluate how the actions of managers correspond to their expectations and goals.
The technical part is also important - financial, legal issues, formalization of the behavior of all groups, primarily accounting and management accounting. Since now both Russian and Ukrainian companies are trying to attract Western investors, and they prefer to work according to Western accounting standards. Government authorities are also working to improve these processes and the transition of domestic companies to IFRS.
Also, a rather important issue is the legal support of the activities of managers, in particular, the provision of guarantees to managers in case of unforeseen circumstances. Often, senior managers complain about insecurity in the event of a sale of a business to another owner who can bring a team of new managers, or in a situation of merger (acquisition) of a company, when a manager may even be left without a job. Therefore, many managers are interested in guarantees in the form of monetary compensation.
As part of the improvement of corporate governance mechanisms, it is worth paying attention to the company's attitude to the internal and external environment, which is called the "code of conduct". This is a formal document that describes the rules of conduct between the three named market participants, establishes the "rules of the game", regulates the work of the meeting of shareholders, the board of directors, and procedural issues, since, as shown by arbitrage practice, are the most frequent reason for going to court.
The current stage is significant in that advanced management has fully realized the complexity of human resource management. And from trying to manage with simple technological schemes began to move on to building complex multifaceted systems that take into account the complexity of human relations.
Gradually, the understanding begins to come that the company's personnel lives and is managed according to the same laws as any other community, that when interacting with them, it is necessary to take into account its characteristics, its culture. There comes an understanding that corporate culture exists in any organization whether they know about it or not.
From the point of view of the company's goals, culture can be positive or negative, and on the other hand, it cannot be changed in an instant; corporate culture cannot be canceled or declared, it can only be interacted with in order to gradually change or develop.
It would be a mistake to assume that corporate culture is a product of purely internal processes for the company. Any organization is part of a system of public relations. And, in addition to employees, at least the society in the face of consumers of products and services, as well as the owners of the corporation, are interested in the results of its activities.
The work of the company to organize the interaction of all interested parties in order to build a consistent value field is the subject of the activity of the public relations department.
Within the framework of this activity, two main and closely related areas can be distinguished: the first is interaction with the external environment (external, or corporate PR) and the second is interaction with internal departments (internal, or intracorporate PR).
The specifics of interaction with internal divisions is due to two main factors:
for the employees of the organization, its activities are an integral and significant part of their own activities and therefore become significant for them. And they are the most “charged” for interaction with it, the most sensitive to any of its actions;
employees of the company, being carriers and conductors of this activity, see how much what is proclaimed in the organization and what is actually done in it correspond to each other.
By comparing the values proclaimed with how they are implemented, employees begin to better understand the true values that characterize the company. As a result, they conclude that, for what and how done in the company. It is at this stage that either a feeling of satisfaction with one's membership in this organization or, conversely, dissatisfaction with work in it arises.
If the organization proclaims the value of high-tech production, then this should be accompanied by equipping workplaces with appropriate equipment, conditions should be created for its efficient and competent operation. When it comes to producing high-quality products, quality control must be ensured. If it is said that the professionalism of employees is one of the most important values of the organization, then at the level of tangible actions, opportunities for their professional growth and the realization of their professional abilities should be provided. It makes no sense to talk about moral standards if the corresponding behavior of employees does not receive positive reinforcement, if the behavior of management discredits them.
Internal PR begins with a set of measures to understand, formulate and consolidate the foundations of corporate ideology in documents, i.e. purpose (mission) of the corporation, key goals and basic principles of its activities
Finding out the purpose of a corporation implies a detailed answer to the question: “Why does a corporation exist?”. In fact, this is a definition of the circle of people interested in its activities.
The answer to the question: "Where is the corporation heading?" - allows you to formulate key goals that indicate the main directions of the corporation's activities within its mission. Directions of action, not concrete results. Unlike step goals, they point employees in the direction they are looking for solutions, rather than the solutions themselves. Their main task is to guide and unite, not to achieve.
Having determined why and where the corporation is moving, it is still necessary to determine how it moves. Thus, the basic principles of activity are formulated. The principles describe the strategic priority qualities of activities (the nature of doing business), with the help of which the corporation achieves its goals, and also describes its area of responsibility in interaction with interested groups (shareholders, employees, consumers, society). In fact, this system acts as a set of basic restrictions on activities within its certain areas, sets the personnel guidelines for movement within the chosen direction.
At the same time, the position formed in this way becomes for employees the most important condition for the competent setting of their own tasks. It sets a certain direction in individual activity, allows you to build individual strategies, form your own criteria for behavior, predict the quality of one or another of your actions. And, as a result, it is a condition for increasing the employees' sense of certainty and stability in relations with the organization, and these are the most important factors for increasing the motivation of activities.
In order for certain corporate ideas to become part of the worldview, to control human behavior, it is necessary to fulfill at least a number of conditions: first, it is necessary to present the ideas themselves; Secondly, show in one way or another examples of the implementation of these ideas in behavior; third, use mechanisms to reinforce positive behavior and mechanisms to condemn actions that discredit ideology. In the context of the purposeful development of corporate culture, advocacy should be a constant and multifaceted process.
The minimum plan for propaganda activities in a corporation begins with familiarizing employees with a package of documents that enshrine the foundations of the basic ideology. These can be Mission Statement, Declaration of Goals, Values and Principles of the Company's Activities, Code of Corporate Ethics for the Company's Employees, etc. These documents should be easily accessible to everyone. With their help, not only the task of informing employees about the values accepted in the company, but also the task of their legitimization is solved.
The next element of this activity may be an information campaign in the corporate media. One of the most important tasks of their activities should be to promote the core values of organizations. It is necessary that the media do not just retell the content of ideological documents, but explain the meaning of the core values, illustrate all the variety of methods of their implementation existing in the corporation, thereby showing examples and setting clear boundaries of behavior approved and disapproved in the corporation. Moreover, we should talk about both “production” and “non-production” behavior.
The most important element is also the demonstration of the behavior of the leaders of the corporation in relation to its core values. The more active the position of managers in the implementation of the proclaimed values, the more clearly their positive attitude towards these values is manifested, the more confidence the employees have, the more they begin to focus on these values in their own activities.
In PR activity on internal public relations, it is very important to maintain and develop old, as well as create new corporate traditions, development of corporate symbols.
It is no secret that traditions are the most important mechanism for the transfer of cultural experience, which includes historically established forms of activity and behavior, as well as the values, customs, rules, etc. associated with them. Actually corporate traditions are influenced by national, regional and industry traditions, which acquire their own special specifics within the framework of the corporation's activities.
Careful attention to the traditions of the organization and careful work to support and develop them are the most important conditions for the balanced development of the corporate culture of the organization.
A special area of activity for the development of relations with the internal public is a reputation audit. This is an internal analytical activity, the main task of which is to assess the contribution of the values declared by the company to the methods of their implementation and the development of proposals for correcting certain impacts on the company's corporate culture.
Reputational audit should be subject to both the production and non-production processes currently operating in the corporation, and those that are just about to be implemented. In fact, any decision that can affect a change in the life of a corporation must be subjected to a reputational audit and adjusted in accordance with the main provisions of its corporate culture. At the same time, a reputation audit will make it possible to meaningfully make changes to the main ideology of the corporation. This area of activity is an important condition for the purposeful and systematic development of the company's corporate culture, and internal PR as an independent activity within the framework of the corporate management system. In this case, internal PR is considered as one of the elements of corporate governance, i.e. understanding of internal PR in the narrow sense.
In a broad sense, internal PR is a managerial position characterized by the fact that any action of a corporation is considered from the point of view of the purposeful development of corporate culture. And then the activities of internal public relations become the background against which corporate governance is carried out. In this case, even a reputational audit turns into a permanent element of the activity of each manager, and his own behavior becomes the most effective means of promoting corporate ideology.
Reputation is an intangible asset, poorly protected from risks and failures, but opening up new opportunities and generating income. This asset, being an element of the corporation's corporate governance mechanism, has a direct impact on the company's market value and the possibility of attracting investments in financial markets.
Evaluation of the opinions of top officials of companies on the management of corporate reputation was carried out in the West, carried out regularly, but in Russia and Ukraine it has not been carried out more than once. 175 senior executives of leading Russian companies - those who shape not only the image of Russian business, but also the country's economy as a whole, took part in the survey, the main results of which are presented in the article brought to your attention.
The largest Russian companies Yukos, TNK-BP, AFK Sistema, Svyazinvest, Aeroflot, well-known companies Wimm-Bill-Dann, Pyaterochka took part in the first study of this kind. , Rosinter, Pharmacy Chain Z6.6, financial institutions and banks Troika Dialog, Alfa-Bank, Avangard, and Ingosstrakh. Survey participants represent companies whose total annual turnover exceeds $100 billion. USA. The majority of respondents (65%) are open or closed joint stock companies, the shares of more than 20% of the companies participating in the survey are traded on the Russian and/or Western stock markets. The study was organized and conducted by Tht PBN Company, a communications strategy agency, and IRG, a market research company, in collaboration with Renaissance Capital, a leading investment bank, and Taylor Rafferty, a reputable investor relations company in Russia.
About 23% of survey participants say that Russian business enjoys a good reputation, and just over one tenth consider it a positive reputation Russian business in the West. At the same time, 80% of the surveyed executives positively assessed the reputation of their own companies; 70% said that the last two years have been successful for them in terms of achieving the strategic goals of their business.
Such a sharp contrast can be explained, on the one hand, by some embellishment of the real situation in individual companies headed by market participants. On the other hand, according to respondents, the perception of Russian business in Russia and abroad is influenced by a number of subjective factors.
The results of the survey show that respondents are aware of the importance of reputation management as one of the most important functions of a company leader, which has a direct impact on business success. Nearly three-quarters of those surveyed agreed with the statement that reputation management "is a key component in achieving a company's strategic goals" and almost 90% said that reputation management is one of the main functions of a leader.
It is noteworthy that the leaders of leading Russian companies believe that corporate reputation has a greater impact on a company's access to external financing and its market capitalization rather than profit and profitability. This opinion once again emphasizes the importance of investing in corporate reputation, especially for those companies that pursue an active policy of raising capital in the financial markets of Russia and the West.
Company executives are aware of the need to improve corporate reputation to increase its capitalization and facilitate access to capital, but many have yet to implement effective practices of reputation management, corporate governance and business transparency. At present, the activity of the majority of Russian and Ukrainian companies is concentrated around establishing relations with the media and other target audiences, as well as sponsorship and campaigns to improve the reputation of company managers. Less attention is paid to the strategic aspects of reputation management, such as: identifying risks to the company's reputation and developing plans to manage these risks, conducting research to measure reputation, etc.
Speaking about the reputation of the company, one cannot ignore the problem social responsibility company. In everyday life, there are several opinions about what social responsibility of business is, if we proceed from the fact that this is a system of social partnership between business and society, then it is obvious that it is implemented through investments and business projects, which are most often aimed at protecting health, a healthy lifestyle , labor safety, personnel development, that is, for internal investments in social assets. This is one part, and the second part is environmental protection and resource conservation, support and development of the local community, development of social infrastructure. These social investments can conditionally be called external. At present, business takes over the financing of those areas to which the state has access. But here there are sharp contradictions with the principles of company management. Such a diversion of funds for social programs is not entirely consistent with the desire of shareholders to maximize profits. Finding the optimal balance between the interests of specific shareholders and the interests of society is the main task that the management of companies has to solve. In order for a particular shareholder not to accuse managers of stealing his money, it is necessary to develop an action plan that takes into account the interests of society and the interests of the company, calculate how much this or that social initiative will cost, and, most importantly, it is necessary to measure the effectiveness of implemented social initiatives.
In order for companies to engage in charity and sponsorship without detriment to their own efficiency and the interests of shareholders, it is necessary to integrate social initiatives into the strategy for developing their own business. Only in this case can we talk about the social responsibility of business as a tool to ensure its strategic stability and strategic security.
In conclusion, it should be noted that, like the logic of life, there is also the logic of management and the logic of the company's development cannot be neglected. You can use any well-known management tools, but they will not give any effect if they are not adequate to the stage of development of the company. Therefore, it is necessary to choose management tools depending on the stage of development of the company and financial resources and most importantly - is there a need for it.
Kostenchuk, I Intra-corporate PR and development of corporate culture // Management of the company. -2002. - No. 10 (17) P.24Reputation management and investment attraction: two sides of the same coin. // Journal of company management. -2005. -No. 01. (No. 44) -S.70
For more details, see Asaul, A. N. Social responsibility as a priority for socio-economic development of business // Priorities of socio-economic development: Sat. scientific mat. of the annual 43rd meeting of St. Petersburg scientific councils on economic problems on May 12, 2005. - SPb: SPbGASE.-2005
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Which companies need corporate governance, and what exactly does it consist of? How to organize it correctly? Answers to the most important questions of corporate governance - later in the article.
In this article you will read:
- Which companies need corporate governance in the enterprise
- Who is the subject of corporate governance
- What are the principles of corporate governance
- Are there corporate standards
- Who exercises external and internal control in the corporate governance system
Corporate Governance- this is the management of the organizational and legal registration of business, optimization of organizational structures, building intra- and inter-firm relations of the company in accordance with the adopted goals.
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Corporate governance in an enterprise: which companies need it
Efficient corporate governance at the enterprise mainly improves the financial performance of the enterprise, the quality of decisions made in management, reduces the cost of capital raised and increases the value of the company. It is clear to investors what management concept the company adheres to, what owner it belongs to and the level of management actions.
If the company's management has correctly built a corporate governance system, then investors will agree to even a smaller return on invested capital. Those companies that use such a system can implement those projects that competing companies are not capable of.
So, the introduction of corporate governance in a company is necessary if the management:
- wants to reduce business costs;
– strives for effective, controlled, transparent management;
– carries out reorganization in order to give practicality, achieve the greatest results;
– intends to attract investments from banks, individuals and legal entities;
– came to a decision to list shares on domestic and foreign stock exchanges to increase capitalization.
There are enterprises that do not attract investment capital, but interact with banks, so corporate governance is a way for them to inspire the confidence of banks. Lenders need to see the level of qualification of the company's employees, risk assessment, and the feasibility of the system of decisions made in the company.
Practitioner tells
Dmitry Khlebnikov
There are three ways to introduce or develop a corporate governance system in a company. The first is to use the services of consulting companies. The second is to hire employees and manage on your own. The third is the combined option that we are going for.
Subjects of corporate governance.
There are the following types of business entities to improve the efficiency of corporate governance:
subjects of internal management;
subjects of external infrastructure that affect the present situation and the development of the organization in the future.
The subjects of internal management include the highest management bodies and officials who participate in the activities of the company, that is, it can be a general meeting of shareholders, founders, board of directors.
The subjects of external infrastructure that affect the position and development of the company in the future include: the state, associations of individuals that affect the activities of the company, or those individuals who depend on the company.
These two groups are important for the effective operation of the company, since any change in the position of one of the participants may lead to a change in the position of the entire company. At the same time, it is easier to influence the internal structure, since the governing bodies have levers and incentives.
Principles of Corporate Governance
1. Justice. Here it is necessary to provide opportunities for shareholders to exercise and protect their rights in accordance with the regulatory legal acts of the Russian Federation, the charter of the company on important issues.
2. Openness. Provision of information to shareholders on the principle of availability and regularity.
3. Accountability. Whereas the executive body, that is, the general director manages current work company, the performance results should be considered by the supreme management body of the company - the general meeting of shareholders.
4. Controllability of financial and economic activities. The system of control over the financial and economic activities of the company is needed to ensure the confidence of investors and management bodies. This control is carried out by the Board of Directors, the audit commission, the auditor of the company. The auditor of the company is approved by the general meeting to confirm the annual financial statements.
Practitioner tells
Dmitry Khlebnikov, director of the transformation management center of OJSC MMC Norilsk Nickel, Moscow
Establishing managerial and financial boundaries allows you to make the company more transparent. The fact is that large companies practice the so-called boiler method of financing.
This is more convenient from an accounting point of view and from the point of view of allocating costs by cost items. But effective and transparent management should be based on the allocation of costs not by items, but by cost objects. Try it and the effect will be amazing. You look at your business with different eyes.
Where can I get acquainted with corporate standards
Many countries have codes of corporate governance, which reflect the accepted standards and norms that establish and regulate corporate relations. It will be interesting to familiarize yourself with the following codes:
The Combined Code of the London Stock Exchange is a corporate governance recommendation for companies wishing to be listed on the London Stock Exchange.
Code of Corporate Conduct of the Russian Federation.
Principles of corporate governance of member countries of the Organization for Economic Cooperation and Development.
The code should be chosen taking into account the objectives of the company, for example, if it is necessary to conduct an IPO in London, take into account the Combined Code of the London Stock Exchange. If you wish to take part in the listing on the domestic stock exchange, follow its rules. Please note that there is no requirement that all provisions of the code be complied with. However, in case of non-compliance, it is worth publicly reporting the reasons for non-compliance.
The mechanism of external (outsider) control
External or outsider control consists of:
1. Corporate legislation, which in Russia is represented by the Civil Code, the laws “On Joint Stock Companies”, “On the Securities Market”, “On the Protection of the Rights and Legitimate Interests of Investors in the Securities Market”, regulations of the Federal Securities Commission, the Ministry of Justice, etc. In those countries where outsider control prevails, the interests of shareholders are protected by law. Russian legislation protects the interests of minority shareholders more than in other countries.
2. Control from the financial market, due to the threat (futile work of managers) of the company's takeover or its transfer to the ownership of other persons, which leads to a change or change in the management team.
3. Control on the part of borrowers, in order to avoid the threat of bankruptcy in the event of default on debts due to the inefficient work of managers.
5. Control by independent directors who protect the interests of shareholders and top management.
6. Comprehensive informing by top managers of owners.
7. An effective system for assessing and remunerating managers.
The greater the share of shares owned by managers (the threshold is 30%), the lower the likelihood of agency conflicts and the more difficult it is to carry out a takeover.
Linking to higher profits and the market value of shares by handing them securities worth between 1/3 and 2/3 of the amount of managers' salaries is one of the incentives to increase the return on their work. This is done to give confidence to investors who do not hold a controlling stake.
- Current assets of an enterprise: concept, management and analysis
Outsiders exercise control over the company by electing a board of directors through which managers are selected to influence decisions on important matters of the company's operations.
Despite the apparent stability of this system, riskiness prevails here.
What are the imperfections of outsider control methods:
There is a risk of managers exercising real power if outsiders are unwilling or unable to have influence;
When striving to maintain a high level of stock quotes and a greater likelihood of their reset by holders in the event of a drop in income, which gives management a reason for momentary projects;
There are many ways to counteract absorption.
Implementation of internal control in the corporate governance system
There are three levels of management in companies:
- meeting of shareholders, which determines the general goals of the company;
- the board of directors, also known as the supervisory board, determines the tasks and ways to achieve them;
- managers to achieve their goals.
These three levels of authority are enshrined in the company's charter and in the federal law "On Joint Stock Companies".
According to article 48 of this regulatory legal act, the exclusive competence of the general meeting of shareholders includes:
introduction of amendments and additions to the charter of the company or approval of the charter of the company in a new edition;
reorganization of society;
liquidation of the company, appointment of a liquidation commission and approval of interim and final liquidation balance sheets;
determination of the quantitative composition of the board of directors (supervisory board) of the company, election of its members and early termination of their powers;
determination of the number, nominal value, category (type) of declared shares and the rights granted by these shares;
an increase in the authorized capital of the company by increasing the par value of a share or by placing additional shares, if the charter of the company in accordance with this Federal Law does not place the increase in the authorized capital of the company by placing additional shares within the competence of the board of directors (supervisory board) of the company;
reduction of the authorized capital of the company by reducing the nominal value of shares, by acquiring by the company of a part of the shares in order to reduce their total number, as well as by redeeming the shares acquired or redeemed by the company;
formation of the executive body of the company, early termination of its powers, if the company's charter does not refer these issues to the competence of the board of directors (supervisory board) of the company;
election of members of the audit commission (auditor) of the company and early termination of their powers;
approval of the auditor of the company;
approval of annual reports, annual financial statements, including profit and loss statements (profit and loss accounts) of the company, as well as distribution of profits, including payment (declaration) of dividends, and losses of the company based on the results of the financial year;
determination of the procedure for conducting the general meeting of shareholders;
election of members of the counting commission and early termination of their powers;
splitting and consolidation of shares;
making decisions on the approval of major transactions and transactions with interest in cases provided for by law;
acquisition by the company of placed shares;
decision-making on participation in holding companies, financial and industrial groups, associations and other associations of commercial organizations;
approval of internal documents regulating the activities of the company's bodies.
To run a business, managers must have authority, and to manage effectively, they must be held accountable for using that authority.
Peter Drückner writes that outside of responsibility, "professional managers become enlightened tyrants, and enlightened tyrants, whether they be Platonic rulers or chief executives of companies, can neither govern nor sit on their thrones" and this cannot be argued with.
The need to develop and improve corporate governance
The development of corporate governance contributes to the achievement of positive effects:
- increasing the investment attractiveness of the company;
- investments for the long term; performance improvement;
- reducing costs for obtaining bank loans;
- increase in the market value of the company;
- facilitating access to capital markets;
- enhancing the image and reputation of the company.
Investors mainly pay attention to how corporate governance is organized in Russia. They have the following goals:
conducting comparative analysis fundamentals of corporate governance in companies of various industries, organizational and legal form of ownership, scale, etc.;
understanding the specifics of the company; determining the degree of transparency of operations;
forecast and assessment of possible risks; obtaining information for final management decisions.
The introduction and application of the fundamental principles of corporate governance in the practical activities of the organization will have a direct economic effect. Improvement of the existing corporate governance system gives domestic business structures the opportunity to receive an additional premium to the price of their own shares, the amount of which will be from 20 to 50%.
The effect of corporate governance
The amount of savings, the amount of income brought by the optimization and transparency of management determines the effectiveness of the corporate governance system. However, the main indicator is the amount of funds for potential investors to invest in a company with corporate management.
In the US and UK, investors can pay up to 18% more for shares of companies if they are convinced of effective corporate management than for shares of companies with the same financial performance, but imperfect method of management.
Practitioner tells
Dmitry Khlebnikov, Director of the Change Management Center at OJSC MMC Norilsk Nickel, Moscow
It is impossible to calculate the direct benefit from the development of the management system, too many different factors affect the capitalization and profit of the company. How to calculate the benefit from reducing the workload of the head of the company? How to measure the effect of eliminating unnecessary work and firing "functional homeless people"? How to evaluate the consequences of the enthusiasm that a manager has when he faces clear and precise tasks, when he has real control levers and responsibility for results?
For example, over the past two years, the total capitalization of the Norilsk Nickel group of companies has grown by 170%, but I cannot estimate what share of our work in this value. During the first quarter of this year, administrative costs decreased by 5%, but it is impossible to attribute this effect only to the work of the change control center, the decisions of the head of the company, or the increase in the efficiency of individual leaders.
The cost of borrowing for our company decreased by 1%. Against the backdrop of hundreds of millions of US dollars with which we operate, these are huge amounts, but I don’t know how much money to attribute to our activities. We work together and we have common results. But the fact that the management and shareholders of the largest mining and metallurgical company support the transformations we have begun speaks volumes.
Information about the author and company
Dmitry Khlebnikov, director of the transformation management center of OJSC MMC Norilsk Nickel, Moscow. Norilsk Nickel is Russia's largest and one of the world's largest mining and smelting enterprises. Produces copper, nickel, platinum, palladium and platinum group metals. The company's share in Russia's GDP is 1.9%, in industrial production - 2.8%. The company is a "region-forming" company for the Norilsk industrial region.
1. The role of corporate management efficiency in increasing the viability of entrepreneurship.
Productivity and efficiency play a key role in increasing the viability of national entrepreneurship and, accordingly, the management system of both the entire economy as a whole and individual enterprises. The effectiveness of the management system is largely determined as the ratio of the results of the work of the personnel of the enterprise and the resources used to obtain them.
Efficiency can usually be measured in quantitative terms, since it is possible to give a monetary value to its inputs and outputs. The relative efficiency of an organization is called productivity. With regard to productivity, it is defined as the ratio of the number of output units to the number of input units, or, in other words, it has a quantitative expression. If, with an increase in the volume of output, it has a lower quality, we are talking about a decrease in productivity. The same is true if the number of defects is high. Thus, quality is the key to productivity.
Clearly, productivity at all levels of an enterprise is the determining factor for survival and success in a competitive environment. A competitive corporation is an effective business system capable of gaining and retaining a significant market share, and, consequently, ensuring income growth and financial well-being. The consequence of high competitiveness is: the availability of own opportunities for financing the development of science and production, stability and resistance to changes in the market, the ability to fulfill defense orders with high quality and on time, high attractiveness for investors and creditors, and additional opportunities for solving social problems.
In the era of globalization, a developed system of cooperation should strive to concentrate on those elements of the production chain that are of the greatest value and importance in terms of the competitive advantages of the enterprise. An efficient corporation should retain only those operations that cannot be effectively performed by competitors or are essential to maintaining market leadership. Everything that can be implemented by individual divisions or branches should be transferred to cooperation partners. This, on the one hand, will allow the corporation itself to concentrate organizational and financial resources on the most important direction, on the other hand, it will ensure the flexibility and stability of its constituent units and units.
More sales results in a more productive organization more money in order to invest them in resources, including the best factories, the best equipment, the best technology, which can further improve productivity. And if the gap becomes large, then less productive organizations will eventually fail.
The productivity and efficiency of the activities of managers at all levels depend not least on the level of their theoretical knowledge and practical skills in the field of business management, their creative approach to solving problems facing individual units and the enterprise as a whole, and the ability to find the most optimal ways to achieve fundamental goals. enterprises. Each specialist in the development and implementation of new technologies, materials and products, feasibility studies for the expansion and diversification of production must be sure that the manufactured products will be in demand in the market. This requires certain knowledge in the field of innovation, marketing, planning, formation of investment capital, production costs, etc. Thoughtful, clear setting of goals and objectives for their achievement, maximum use of relevant economic information and levers of the control mechanism in the conduct of applied scientific research, design, production - economic and foreign economic activity will allow you to make optimal decisions that provide organizations with the highest productivity, i.e. the best results with the least effort.
Considering the problem of management efficiency, it is impossible not to touch upon another very important issue concerning the provision of a competitive advantage in modern conditions, achieved mainly through the introduction of innovative technologies, a high level of intellectual scientific potential of personnel, a highly skilled workforce, a developed marketing infrastructure, etc.
The effectiveness of the corporate type of entrepreneurship is achieved by:
Providing an organizational and managerial structure of market orientation both for the entire corporation as a whole and for its individual divisions;
Orientation of all divisions of the corporation to innovative technology, new methods of organizing labor, production, marketing services, etc.;
Stimulation of labor motivation of each business entity;
Ensuring highly profitable production in each production unit of the corporation.
It is also important to take into account the fact that “the speed and volume of product sales allow management to decide how successfully the company is operating towards achieving the desired results.
2. Modern concepts on the problems of corporate efficiency
With regard to the problem of corporate efficiency among specialists, there are disputes and discussions between adherents of two concepts - equity capital and groups interested in the success of the enterprise. The essence of these disputes is what goal should be pursued by the management of enterprises: a stable increase in the value of equity capital or consideration and implementation of the interests of other groups associated with the activities of the enterprise. Leading mainly microeconomic arguments, supporters of the concept of equity capital reproach their opponents with the fact that they are more interested in strengthening their own position than in strengthening the position of the enterprise by increasing its value. Supporters of the concept of interest groups accuse the adherents of the concept of equity capital that, advocating only for immediate profit, they forget about the long-term goals and interests of the corporation. There are also economists who are in favor of achieving a reasonable balance of interests of the disputing parties.
According to the Swiss economist and political scientist V. Gil, the concept of equity capital is designed to provide the management system with the most rational and efficient management of the enterprise, guaranteeing it a stable strategic success, maintaining its market segment and a strong position in the competitive environment. However, as Gil rightly emphasizes, the management of the enterprise should be aware of the fact that, along with the shareholders, there are other interested groups and organizations that can present their own claims. It is also necessary to take into account the fact that in addition to individuals, institutional investors often act as shareholders, including pension funds, insurance companies, and charitable organizations. In this context, the political task of the governing system is to satisfy these claims while maintaining the competitiveness and legitimacy of the enterprise. As such, the concept of stakeholder groups is often seen as synonymous with corporate social responsibility.
3. Indicators and methods for evaluating the effectiveness of corporate management.
The main indicator by which you can evaluate the activities of the head is the manageability of the enterprise. For a Russian leader, manageability comes down primarily to control over production. An important indicator of effective management is also the level of implementation of the decisions made.
The management system is fully responsible for the development and implementation of a strategy designed to ensure the company's stable position in the market and increase its market value. Ideally, the task of the control system is to aim the system of indicators and standards of the company to maximize profit per unit of cost per unit of time or in the long term. Evaluation of the results of the enterprise, the choice of the main directions and achievable rates and development options, the incentive system for employees, the entire strategy of the enterprise must be built on the basis of this criterion. This, in turn, suggests that when planning factors of production and forming a portfolio of orders, priority should be given to those goods and services that are capable of providing the maximum increase in profits.
Increasing competitiveness can be achieved through the targeted introduction of innovative technologies. It is not enough only to increase the market share and profit of the corporation, it is also necessary to ensure the inflow of new capital investments and a high level of added value.
The indicator of management efficiency in this context is the excess of the total income of the enterprise of the sum of indicators of individual units. If such a goal turns out to be unattainable, then preference should be given to the division of the corporation, and each of the separated economic units should be able to independently act on the commodity and capital markets. It is supposed to abandon the principle of subsidizing individual unprofitable economic units, which are either subject to restructuring to make them profitable, or must be sold at auction.
Of particular importance for ensuring the effectiveness of the management system is the development of creative solutions, in the process of which all levels of management should be involved. How larger enterprise, the more important for him are the issues of planning and optimizing the management system and structure. In large companies, as noted by many domestic and foreign sources, over time, the phenomenon of "decrease in manageability" occurs. It is expressed in the fact that a well-organized successful enterprise cannot develop further without reducing efficiency. At such enterprises in the West, especially in the USA, special management consulting firms began to be created, aimed at improving the management system. This allowed them to form schools that reflect the management strategy and organizational policy of the leadership.
4. Factors of effective corporate management
The management system, no matter how perfect it may be, in itself does not guarantee an increase in the efficiency of the functioning of the organization. The management process is a tool based on taking into account environmental factors. In the planning process, the management of the enterprise determines the main goals of the organization, ways and means of their optimal achievement, based on an assessment of the needs and environmental factors that in one way or another are able to hinder or contribute to their implementation. Most management decisions have both positive and negative consequences. Effective management is a complex process that requires making the deliberate sacrifices necessary to achieve the main goal of the enterprise.
The most successful and prosperous enterprise is considered in the case when it achieves an annual reduction in the cost of a unit of production, but not at the expense of its quality. Important means of increasing the efficiency of production are the transition to updating equipment, technology, design solutions, changes in the assortment, replacement of manufactured products in the race for demand or ahead of it. In a market economy, the productivity and efficiency of an enterprise are largely determined by the sales markets. Because of this, the attractiveness of the environment as an indicator of growth, capacity and quality of the market is of particular importance for the corporation. Factors contributing to a noticeable improvement in relations between the manufacturer and customers are, first of all, the frequent change in the range of products supplied, the time of the production cycle, the quality and timeliness of delivery, etc.
The effectiveness of corporate governance is largely determined by the depth of understanding of reality, or, in other words, a clear vision of the determining factors of production and its development. The optimization of corporate governance, carried out on the basis of sound knowledge and skillful practice, is the choice of the right strategic and tactical goals.
One of the important factors contributing to the increase in the efficiency of the management system is the presence of clearly and clearly formulated strategic guidelines. In turn, the main goal of the management system is to increase the efficiency of the corporation. Therefore, it is not surprising that, resorting to innovations in production, allocation of resources, marketing and carrying out structural transformations of both the corporation itself and its management system, corporate leaders justify their actions by striving to get ahead of certain possible steps of competitors that could damage their market positions. .
An indicator of the economic effect from the implementation of innovations is the excess of the cost of results over the total cost of resources expended to obtain these results. When calculating the economic effect, first of all, the results should be taken into account not only in the specific place of application of innovations, but also in related industries in terms of their impact on the final indicators of the development of the entire national economy.
If the costs of the management process exceed the positive result from its use, then the question naturally arises of either completely rebuilding the entire management system, or taking steps to improve one or another of its nodes, or thinking about some other form of organization or streamlining. corporation activities. This is especially true for small enterprises that do not have full independence and therefore seek to be included in the technological process of a large company.
Normally operating corporations have opportunities to improve efficiency by minimizing management costs and improving the internal structure. In such a corporation, management should strive to obtain comprehensive information about the volume of sales provided by the effective demand of consumers of its goods and services. For production, products should be selected that meet the requirements of full self-sufficiency and self-financing, i.e. allows for expanded reproduction at the expense of sales proceeds. It is necessary to calculate the minimum required level of profitability of production, assuming such an amount of profit remaining at the disposal of the company, which would be sufficient.
According to a number of researchers, in such corporations, an important factor in improving efficiency can be the transition from a functional-structural model of a company to a process-role one. This will make it possible to reduce the overall management costs, since this approach involves a rather noticeable reduction in hierarchy levels, the transition from a cumbersome hierarchical to a horizontal, or so-called network, type of management, which provides for a more or less significant reduction in the gap between the manager and the managed, resulting in the reduction to minimize the cost of the organizational and managerial structure.
To solve the problems of minimizing management costs and increasing profitability, many enterprises change their structural unit using evolutionary network principles or more radical reengineering technologies, which, as a rule, lead to a fundamentally new company structure as a set of coordinated business processes.
When identifying and evaluating factors that have a significant impact on the efficiency and effectiveness of production and management, it is important to take into account institutional aspects, including primarily the regulatory and legislative framework. From this point of view, in order to form and strengthen an effective economic system in Russia that meets world standards, it is necessary to create world-class technological and economic institutions that fully take into account both the world experience of entrepreneurship and the national, historical, sociocultural traditions of the country that have a significant impact on the forms and nature of Russian entrepreneurship.
Of course, in this case, great emphasis should be placed on the policy of innovation, investment and restructuring of industrial production. In this regard, the management system must constantly have a strategy aimed at preventing political, commercial and other risks that can have a significant negative impact on the efficiency and effectiveness of the enterprise.
One of the important problems of Russian enterprises is that current interests are put above promising ones, strategic goals are sacrificed for momentary success.
As the experience of Russian corporations in recent years shows, the formal transparency and openness of some of them in relation to small shareholders increased precisely as control was consolidated in general and, in particular, the assets of subsidiaries.
The basics of modern corporate governance theory say that an unreasonable plan deprives performers of any motivation and interest in its implementation.
Mergers and acquisitions are seen as a way to reduce costs, increase profits, expand market share, effective use new technological, market, diversification opportunities, etc. However, as experience shows, mergers and acquisitions do not always and necessarily bring the expected results, which, in particular, is evidenced by the fact that often previously merged companies break up.
Low dynamic capabilities, such as low innovation capacity, inability to quickly adapt to market changes and manage knowledge, are the main reasons for the weak competitive position of Russian companies. From this point of view, it is especially important to emphasize that for success in competition what matters is not what assets a given company has in a particular period, but the speed with which it is able to create the necessary assets and develop them. As for external and internal factors, they provide corporations with significant, threshold competitive advantages. However, we must not forget that it takes a significant period and experience in the relevant industry to create and develop these advantages.
5. Principles of functioning of high-performing organizations
The main principle of the functioning of highly efficient organizations is the principle of minimizing costs and increasing the profitability of enterprises.
A significant part of the forms and ways of reducing production costs, in fact, is available to all forms of business organization - from large corporations to small firms - and in this respect has nothing to do with the forms of enterprises. However, the following three forms play a significant role in the differentiation of enterprises:
Economies of scale;
Specialization;
Production flow management.
To reduce costs through expansion, a firm must develop products and sales organization for a very large market. To cut costs through specialization, firms focus on a narrow market segment with less product variety. Economies of scale are common in large firms, while specialization strategies are common in small firms. Which of the methods provides lower costs depends on the technology of production and marketing, and on the requirements of consumers for this industry.
Over the past decade, the most successful international corporations have reshaped their businesses along the lines of high-performing organizations in the US, Europe, and Japan, which have proven to be superior to traditional structures.
The main principles of such systems are:
Orientation of production units to consumers;
Delegation of authority and responsibility to a lower level;
Modernization of management structures in the direction of reducing the central offices;
Reengineering of business processes based on the widespread use of information technology;
The presence of well-defined criteria for evaluating effectiveness.
However, as experience has shown, it is integrated structures that are tightly controlled from the center that, as a rule, lead to the loss of competitive positions.
For all the differences between these and other approaches, they have in common that competitive advantage stems fundamentally from improvement, innovation, and change. Firms gain advantages over international rivals as they capture a new basis for competition or find new and better ways to compete the old way. In this regard, the so-called method of competitive forces, developed by M. Porter, is of interest. In particular, he argued that the firm's actions should be aimed at creating external competencies by capturing weakly protected profitable market positions, as a result of which the firm will be able to receive greater profits than before. According to Porter, the structure of industry has a strong influence on the rules of competition and the choice of strategies available to firms. Here the object of strategic management, analysis and decision-making is a certain product or type of service.
In many corporations, attention is shifting from the traditional argument about the strengths and weaknesses of organizations to the approach that an enterprise achieves long-term competitive advantage by strengthening its internal competencies, such as productivity and efficiency. At the same time, special attention is focused on company-specific capabilities and assets that determine the success of a company: a highly effective marketing system, efficient production, a strong business intelligence unit. It is assumed that a firm that has reached a high organizational and technological maturity is able to compete in any markets with any firms.
Another well-known way to achieve a competitive advantage is to achieve a monopoly position in the relevant market segment through the complete suppression of competition.
Managers should make great efforts to approve such forms of behavior that, without damaging either the reputation of the corporation or its competitive interests, would facilitate the search for new opportunities that could be used by all interested parties to make optimal decisions, designed to ensure maximum efficiency as individual departments, and the corporation as a whole, both for each specific period of time and for the future. One of the directions of such searches could be the development and implementation of measures and steps designed to prevent possible negative consequences of the enterprise's activities for a single person, certain social groups, society and the natural environment.
At the same time, it is important to take into account that, as a rule, weak, uncompetitive firms that use their resources inefficiently, and not successful firms that occupy a strong position in the market and in a competitive environment, fall into the field of view of stock exchange speculators who play for a fall in the share price. Successful enterprises have more opportunities to protect their interests and more or less successfully achieve their goals.
6. Modern tools to improve management efficiency
One of the tools for the efficiency and effectiveness of enterprises has become the so-called concept of comprehensive quality management (Total Quality Management - TQM), which took shape in the mid-80s, primarily in corporations in Western countries interested in securing their competitive positions both in national and international markets. world market from the unbridled expansion of Japanese goods. According to experts, A. Shewhart, W. Edward Deming, J. M. Juran, Feigenbaum, F. Crosby, K. Isikova and others made a particularly significant contribution to the development and implementation of this concept. The essence of this concept is that the whole the activity of the enterprise is concentrated on achieving one main goal, namely, on meeting the needs of the consumer. It is the focus on achieving this goal that serves as a condition for making other strategic decisions. It is especially important here that the achievement of high quality is ensured by the participation in its implementation of all employees, without exception, on the job. Moreover, the role of a dedicated quality control function is decreasing, and the role of quality control at each workplace is increasing. An important role in the development of this approach was played by the so-called quality circles, created at Japanese enterprises and then borrowed by Western enterprises. These groups of employees or workers, whose goal is to improve the quality of their products, at regular voluntary meetings discuss proposals for improving it. A number of provisions of the concept of TCM are reflected in the series of standards developed by the International Organization for Standardization 1SO 9000, which establish a certain minimum of requirements to be observed to ensure quality and regulate relations between the manufacturer and consumer of products.
The TQM concept is based on the following fundamental principles:
Orientation of all activities of the organization to consumers, on the satisfaction of whose requirements the success of the organization depends;
Continuous improvement of production and activities in the field of quality assurance;
Participation of all personnel in solving quality problems;
Shifting the center of gravity of quality assurance efforts towards improving personnel management;
Prevention of quality inconsistencies with consumer requirements, and not their elimination;
Quality assurance is seen as continuous process improving the activities of the organization, and the quality of the final product - as a consequence of achieving quality at all stages of its production.
One of the means of improving the activity of the organizational-management system is the so-called benchmark marketing. Not being just a tool for collecting information, even in a limited form, it gives an idea of its own considerable capabilities. In the case of involving a fairly significant number of company employees in it, it is possible to obtain a large number of rationalization proposals that can be used with great benefit in the interests of the corporation. We are even talking about the possibility of changing not only tactical, but also strategic settings of the company. Benchmarking has the following goals:
Determining the competitiveness of the company and its weaknesses;
Awareness of the need for change;
Selection of ideas for cardinal improvement of business processes;
Identifying best practices for companies of this type;
Development of innovative approaches to improving business processes;
Development of new methods to improve the quality of services provided and work efficiency, etc.
Thus, benchmarking contributes to the formation of a different style of work, a new stimulating and competitive intra-company culture.
Depending on the goals, there are several types of benchmarking:
interior- comparison of the nature and quality of work of similar units within the company, often the same unit for a certain time. This is the initial step an enterprise needs to take;
competitive- comparison of the quality of work of this company with its competitors in the market. In practice, such a comparison is made constantly, since it is an essential part of the business strategy;
functional(at the industry level) - an assessment of the company's position in the industry. This is necessary to compare cost-benefit indicators with indicators of organizations similar in nature to the work performed. However, care should be taken when interpreting the data, as such a comparison may not be correct in all cases.
Strange as it may sound, the practice of corporate governance has been around for centuries. Recall, for example: Shakespeare's "The Merchant of Venice" describes the unrest of a merchant who is forced to entrust the care of his property - ships and goods - to other persons (in modern terms, to separate property from control over it). But a full-fledged theory of corporate governance began to take shape only in the 80s. the last century. True, at the same time, the slowness of comprehending the prevailing realities was more than compensated by the research "boom" and the intensification of regulation of relations in this area. Analyzing the features of the modern era and the two previous ones, scientists conclude that in the XIX century. entrepreneurship was the engine of economic development, in the 20th century - management, and in the 21st century. this function moves to corporate governance.
In this article, we will analyze the main theoretical concepts that are used in this area, consider the benefits of creating an effective corporate governance system, and present the results of a special study conducted in four Russian regions.
Corporate governance: what is it?
Right now in developed countries the foundations of the system of relations between the main actors of the corporate "spectacle" (shareholders, managers, directors, creditors, employees, suppliers, buyers, government officials, residents of local communities, members of public organizations and movements) have already been clearly defined. Such a system is created to solve three main tasks of the corporation: ensuring its maximum efficiency, attraction of investments, fulfillment of legal and social obligations.
Corporate management and corporate governance are not the same thing. The first term refers to the activity professional specialists in the course of conducting business operations. In other words, management is focused on the mechanisms of doing business. The second concept is much broader: it means the interaction of many individuals and organizations related to the most diverse aspects of the functioning of the company. Corporate governance is at a higher level of company management than management. The intersection of the functions of corporate governance and management takes place only when developing a company's development strategy.
In April 1999, in a special document approved by the Organization for Economic Cooperation and Development (which unites 29 countries with developed market economies), the following definition of corporate governance was formulated: "Corporate governance refers to the internal means of ensuring the activities of corporations and control over them ... One of the key elements for improving economic efficiency is corporate governance, which includes a set of relations between the board (management, administration) of the company, its board of directors (supervisory board), shareholders and other interested parties (stakeholders).Corporate governance also defines the mechanisms by which the goals of the company are formulated, the means of achieving them and controlling its activities are determined" (1). The five main principles of good corporate governance were also detailed there:
- The rights of shareholders (the corporate governance system should protect the rights of shareholders).
- Equal treatment of shareholders (the corporate governance system should ensure equal treatment of all shareholders, including small and foreign shareholders).
- The role of stakeholders in corporate governance (the corporate governance system should recognize the statutory rights of stakeholders and encourage active cooperation between the company and all stakeholders in order to increase social wealth, create new jobs and achieve financial sustainability of the corporate sector).
- Information disclosure and transparency (the corporate governance system should provide timely disclosure of reliable information about all significant aspects of the functioning of the corporation, including information about the financial position, performance results, composition of owners and management structure).
- Responsibilities of the board of directors (the board of directors provides strategic guidance to the business, effective control over the work of managers and is obliged to report to shareholders and the company as a whole).
Quite briefly, the basic concepts of corporate governance can be formulated as follows: fairness (principles 1 and 2), responsibility (principle 3), transparency (principle 4) and accountability (principle 5).
In developed countries, two main models of corporate governance are used. The Anglo-American operates, in addition to Great Britain and the USA, also in Australia, India, Ireland, New Zealand, Canada, and South Africa. The German model is typical for Germany itself, some other countries of continental Europe, as well as for Japan (sometimes the Japanese model is distinguished as an independent one).
The Anglo-American model operates where a dispersed share capital structure has formed, i.e. dominated by many small shareholders. This model implies the existence of a single corporate "headquarters" - the board of directors, which performs both supervisory and executive functions. The proper implementation of both functions is ensured by the formation of this body from non-executive directors, including independent directors ("controllers"), and executive directors ("managers"). The German model develops on the basis of a concentrated shareholding structure, in other words, when there are several large shareholders. In this case, the company management system is two-level and includes, firstly, the supervisory board (it includes representatives of shareholders and employees of the corporation; usually the interests of the personnel are represented by trade unions) and, secondly, the executive body (board), whose members are managers. A feature of such a system is a clear separation of the functions of supervision (given to the supervisory board) and execution (delegated to the board). In the Anglo-American model, the board is not created as an independent body, it is actually "embedded" in the board of directors. The Russian model of corporate governance is in the process of formation, and it shows the features of both models described above.
Effective corporate governance: the importance of implementing the system, the cost of its creation, the demand from companies
Companies with high corporate governance standards tend to have better access to capital than poorly managed corporations and outperform the latter in the long run. Securities markets, which are subject to strict requirements for the corporate governance system, help to reduce investment risks. Typically, such markets attract more investors who are willing to provide capital at a reasonable price, and are much more effective in bringing together wealth holders and entrepreneurs in need of external financial resources.
Efficiently managed companies contribute more significantly to the national economy and the development of society as a whole. They are more financially sustainable, creating more value for shareholders, workers, local communities and countries as a whole. This is in contrast to poorly managed companies such as Enron, whose failures cause job losses, loss of pension contributions, and can even undermine confidence in the stock markets.
Facilitating access to the capital market
The practice of corporate governance is a factor that can determine the success or failure of companies when entering the capital market. Investors perceive well-managed companies as friendly, inspiring more confidence that they are able to provide shareholders with an acceptable level of return on investment.
New share registration requirements adopted by many of the world's stock exchanges make it necessary for companies to comply with increasingly stringent corporate governance standards. There is a clear tendency among investors to include corporate governance practices in the list of key criteria used in the process of making investment decisions. The higher the level of corporate governance, the more likely it is that assets are used in the interests of shareholders, and not stolen by managers.
Reducing the cost of capital
Companies that adhere to proper corporate governance standards can achieve a reduction in the cost of external financial resources used by them in their activities and, consequently, a reduction in the cost of capital in general. This pattern is especially true for countries such as Russia, where the legal system is in the process of formation, and judicial institutions do not always provide effective assistance to investors in case of violation of their rights (2). Joint stock companies that have managed to achieve even small improvements in corporate governance can receive very significant advantages in the eyes of investors compared to other JSCs operating in the same countries and industries.
As you know, in Russia the cost of borrowed capital is quite high, and there is practically no attraction of external resources through the issuance of shares. This situation has developed for many reasons, primarily due to the strong structural deformation of the economy, which creates serious problems with the development of companies as reliable borrowers and objects for investing shareholders' funds. At the same time, the spread of corruption, insufficient development of legislation and weak judicial enforcement and, of course, flaws in corporate governance play a significant role (3). Therefore, an increase in the level of corporate governance can have a very quick and noticeable effect, ensuring a decrease in the cost of a company's capital and an increase in its capitalization.
Promoting Efficiency
Good corporate governance can help companies achieve high performance and efficiency. As a result of improved management quality, the accountability system is becoming clearer, the oversight of the performance of managers is improving, and the link between the reward system of managers and the company's performance is being strengthened. In addition, the decision-making process of the board of directors is being improved by obtaining reliable and timely information and increasing financial transparency. Effective corporate governance creates favorable conditions for succession planning and sustainable long-term development of the company. Studies show that good corporate governance streamlines all the business processes that take place in the company, which contributes to the growth of turnover and profit while reducing the volume of required capital investments (4).
Implementing a clear accountability system reduces the risk of managerial conflict with shareholder interests and minimizes the risk of company officials cheating and making transactions in their own interests. If the transparency of a joint-stock company increases, investors get an opportunity to penetrate the essence of business operations. Even if the information coming from a company that has increased its transparency turns out to be negative, shareholders benefit from a reduction in the risk of uncertainty. Thus, incentives are formed for the board of directors to conduct a systematic analysis and risk assessment.
Effective corporate governance, which ensures compliance with laws, standards, rules, rights and obligations, allows companies to avoid the costs associated with litigation, shareholder claims and other business disputes. In addition, the resolution of corporate conflicts between minority and controlling shareholders, between managers and shareholders, as well as between shareholders and stakeholders is improving. Finally, executive officials are able to avoid harsh penalties and imprisonment.
Reputation improvement
Companies that adhere to high ethical standards, respect the rights of shareholders and creditors, and ensure financial transparency and accountability, will develop a reputation as zealous guardians of the interests of investors. As a result, such companies can become worthy "corporate citizens" and enjoy greater public confidence.
The cost of effective corporate governance
The organization of an effective corporate governance system entails certain costs, including the costs of attracting specialists, such as corporate secretaries and other professionals, necessary to ensure work in this area. Companies will have to pay remuneration to external legal advisers, auditors and consultants. The costs associated with disclosure can be significant. additional information. In addition, managers and board members will have to devote a lot of time to solving emerging problems, especially at the initial stage. Therefore, in large joint-stock companies, the implementation of an appropriate corporate governance system usually occurs much faster than in small and medium-sized ones, since the former have the necessary financial, material, personnel, information resources.
However, the benefits of such a system far outweigh the costs. This becomes apparent if, when calculating economic efficiency, we take into account the losses that may be faced by: employees of firms - due to job cuts and loss of pension contributions, investors - as a result of the loss of invested capital, local communities - in the event of a collapse of companies. In an emergency, systemic corporate governance problems can even undermine confidence in financial markets and threaten the stability of a market economy.
Demand from companies
Of course, a system of proper corporate governance is needed primarily by open joint-stock companies with a large number of shareholders that do business in industries with high growth rates and are interested in mobilizing external financial resources in the capital market. However, its usefulness is undeniable for open joint stock companies with a small number of shareholders, closed joint stock companies and companies with limited liability, as well as for companies operating in industries with medium and low growth rates. As already mentioned, the introduction of such a system allows companies to optimize internal business processes and prevent conflicts by properly organizing relations with owners, creditors, potential investors, suppliers, consumers, employees, representatives of government agencies and public organizations.
In addition, any company seeking to increase its market share sooner or later faces limited internal financial resources and the impossibility of a long-term increase in debt burden without increasing the share of equity in liabilities. Therefore, it is better to start implementing the principles of good corporate governance in advance: this will ensure the future competitive advantage companies and thereby give it the opportunity to get ahead of rivals. In other words, the soldier who does not dream of becoming a general is bad.
So, corporate governance is not a fashionable term, but quite a tangible reality. In countries with economies in transition, it is characterized by very significant features (as well as other attributes of the market), without understanding which it is impossible to effectively regulate the activities of companies. Consider the specifics of the Russian situation in the field of corporate governance.
Results of the study "Corporate Governance Practice in Russian Regions"
In the fall of 2002, the Interactive Research Group, in cooperation with the Association of Independent Directors, conducted a special study of corporate governance practices in Russian companies. The study was commissioned by the International Finance Corporation (a member of the World Bank Group), supported by the Swiss State Secretariat for Economic Affairs (SECO) and Senter International agency of the Dutch Ministry of Economy (5).
The survey involved senior officials of 307 joint-stock companies representing a wide range of industries and operating in four regions of Russia: Yekaterinburg and Sverdlovsk region, Rostov-on-Don and the Rostov region, Samara and the Samara region, St. Petersburg. The uniqueness of the study lies in the fact that it focuses on the regions and is based on a solid and representative sample. The average characteristics of the respondent firms are as follows: the number of employees - 250, the number of shareholders - 255, the sales volume - $1.1 million. supervisory boards), other members of the boards of directors, general directors or their deputies.
The analysis made it possible to reveal the presence of certain general patterns. In general, companies that have achieved some success in terms of corporate governance practices include those that:
- more in terms of turnover and net profit;
- feel the need to attract investment;
- hold regular meetings of the board of directors and the board;
- provide training for members of the board of directors.
Based on the data obtained, several key conclusions were made, grouped into four large groups:
- commitment of companies to the principles of good corporate governance;
- activities of the board of directors and executive bodies;
- shareholder rights;
- disclosure and transparency.
1. Commitment to the principles of good corporate governance
To date, only a few companies have made real changes in corporate governance (CG), so it needs serious improvement. Only 10% of companies can assess the state of CG practice as “relatively good”, while the share of companies with unsatisfactory CG practice is 27% of the sample.
Many companies are not aware of the existence of the Code of Corporate Conduct (hereinafter referred to as the Code), which was developed under the auspices of the Federal Commission for the Securities Market (FCSM) and is the main Russian corporate governance standard. Although the Code is targeted at companies with more than 1,000 shareholders (more than the average number of shareholders in the sample), it is applicable to companies of any size. Only half of the respondents are aware of the existence of the Code, of which about one third (i.e. 17% of the entire sample) have implemented its recommendations or intended to do so in 2003.
Many companies plan to improve their CG practices and would like outside help to do so. More than 50% of the firms surveyed intend to use the services of CG consultants, and 38% of respondents intend to organize training programs for board members.
2. Activities of the Board of Directors and EXECUTIVE Bodies Board of Directors
Boards of Directors (Boards) go beyond the scope of their competence under Russian law. The boards of directors of some companies are either not aware of the limits of their powers, or deliberately ignore them. Thus, every fourth Board of Directors approves an independent auditor of the company, and in 18% of respondent firms, the boards of directors elect members of the Board of Directors and terminate their powers.
Only a few members of the SD are independent. In addition, the problem of protecting the rights of minority shareholders is a matter of concern. Only 28% of surveyed companies have independent board members. Only 14% of respondents have the number of independent directors in line with the recommendations of the Code.
There are practically no committees in the structure of boards of directors. They are organized only in 3.3% of the companies participating in the study. Audit committees have 2% of respondent firms. None of the firms has an independent director as chairman of the audit committee.
Almost all companies meet the requirements of the Joint Stock Companies Law regarding the minimum number of directors. 59% of companies in the Board of Directors do not have women. The average number of SD members is 6.8, and only one of the SD members is a woman.
Board meetings are held quite regularly. On average, board meetings are held 7.9 times a year, which is slightly less than the Code, which recommends such meetings to be held every 6 weeks (or about 8 times a year).
Only a few companies organize training for their board members, and very rarely do they turn to independent consultants on corporate governance issues. Only 5.6% of respondents provided training to board members during the previous year. Even fewer companies (3.9%) used the services of CG consulting firms.
The remuneration of the members of the Board of Directors is at a low level and, quite likely, is incomparable with the responsibility assigned to them. 70% of companies do not pay the work of directors at all and do not compensate them for the expenses associated with their activities. The average remuneration of a member of the Board of Directors is $550 per year; in companies with less than 1,000 shareholders - $475, and in companies with more than 1,000 shareholders - $1,200 per year.
The corporate secretary in companies with this position, as a rule, combines his main job with the performance of other functions. 47% of respondents indicated that they have introduced the position of a corporate secretary, whose main duties are to organize interaction with shareholders and help in establishing cooperation between the Board of Directors and other management bodies of the company. In 87% of such companies, the functions of a corporate secretary are combined with the performance of other duties.
Executive bodies (board and CEO)
Most companies do not have collegial executive bodies. The Code recommends the formation of a collegial executive body - the board, responsible for the day-to-day work of the company, but only one quarter of the respondent firms has such a body.
In some companies, collegial executive bodies go beyond the scope of competence provided for by Russian law. As in the case of the Board of Directors, collegial executive bodies either do not fully understand or deliberately ignore the limits of their powers. Thus, 30% of collegial executive bodies make decisions on conducting extraordinary audits, and 14% approve independent auditors. Further, 9% elect senior executives and board members and terminate their powers; 5% elect the chairman of the board and the general director and terminate their powers; 4% elect the chairman and members of the Board of Directors and terminate their powers. Finally, 2% of the collegial executive bodies approve an additional issue of the company's shares.
Board meetings are held less frequently than recommended by the Code. Meetings of the collegial executive body are held on average once a month. Only 3% of companies follow the Code's recommendations to hold meetings once a week. At the same time, the results of the study show that the more often board meetings are held, the higher the profitability of companies.
3. Rights of shareholders
All surveyed companies hold annual general meetings of shareholders in accordance with the requirements of the law "On Joint Stock Companies".
All respondent firms comply with legal requirements regarding the information channels used to notify shareholders of a general meeting.
The majority of participants in the study inform shareholders about the holding of the meeting in the proper way. At the same time, 3% of companies include additional issues on the agenda of the meeting without proper notification of shareholders.
In a number of companies, the Board of Directors or collegial executive bodies have appropriated certain powers of the general meeting. In 19% of firms, the general meeting is not given the opportunity to approve the board's recommendation to appoint an independent auditor.
Although the majority of respondents notify shareholders of the results of the general meeting, many companies do not provide shareholders with any information on this issue. Shareholders of 29% of surveyed companies are not informed about the results of the general meeting.
Many firms do not meet their obligations to pay dividends on preferred shares. Almost 55% of the surveyed companies with preferred shares did not pay declared dividends in 2001 (the number of such companies turned out to be 7% more than in 2000).
It is not uncommon for declared dividends to be paid late or not at all. The results of the study show that in 2001, 35% of companies paid dividends after 60 days had elapsed from the date the payment was announced. The Code recommends that payment be made no later than 60 days after the announcement. At the time of the study, 9% of companies had not paid dividends declared based on the results of 2000.
4. Disclosure and transparency
94% of companies do not have internal disclosure policy documents.
The ownership structure is still a well-kept secret. 92% of companies do not disclose information about major shareholders. Almost half of these firms have shareholders owning more than 20% of the authorized capital, and 46% have shareholders owning more than 5% of the outstanding shares.
Almost all responding firms provide shareholders with their financial statements (only 3% of companies do not).
In most companies, audit practices leave much to be desired, and in some firms, auditing is carried out in a very sloppy manner. 3% of respondent firms do not conduct an external audit of financial statements. Internal audit absent in 19% of companies with audit commissions. 5% of the study participants do not have an audit commission provided for by the law "On Joint Stock Companies".
The way in which many respondent firms approve the external auditor raises serious concerns about the independence of the latter. According to Russian law, the approval of the external auditor is the exclusive prerogative of the shareholders. In practice, auditors are asserted: in 27% of companies - boards of directors, in 5% of companies - executive bodies, in 3% of companies - other bodies and persons.
Board audit committees are organized very rarely. None of the companies in the sample has an audit committee composed entirely of independent directors.
International financial reporting standards (IFRS) are beginning to spread, and this is especially true for companies that need to attract financial resources. 18% of surveyed firms currently prepare IFRS financial statements, and 43% of respondents intend to implement IFRS in the near future.
Based on the results of the survey, the respondent companies were assessed in accordance with 18 indicators that characterize the practice of corporate governance and were divided into the four groups indicated above.
- training of members of the Board of Directors;
- increase in the number of independent directors;
- formation of key committees of the Board of Directors and approval of an independent director as the chairman of the audit committee;
- accounting in accordance with international financial reporting standards;
- improved disclosure of information about related party transactions.
Based on 18 indicators, a simple corporate governance index was built. It allows for a quick assessment of the general state of CG in the respondent companies and serves as a starting point for further improvement of CG. The index is built as follows. The company receives one point if any of the 18 indicators is positive. All indicators have the same meaning for determining the situation in the field of corporate governance, i.e. they are not assigned different weights. The maximum number of points is therefore 18.
It turned out that the CG indices in the companies participating in the study differ significantly. The best AO received 16 out of 18 points, the worst - only one.
At least ten positive indicators have 11% of the companies in the sample, i.e. only every tenth joint-stock company has CG practices that can be generally considered to be in line with the relevant standards. The remaining 89% of respondents fulfill less than 10 out of 18 indicators. This indicates the need for serious work to improve the practice of corporate governance in the vast majority of joint-stock companies represented in the sample.
Thus, Russian companies have a lot of work to do to improve the level of corporate governance. Those who manage to achieve success in this area will be able to increase their efficiency and investment attractiveness, reduce the cost of attracting financial resources, and, as a result, gain a serious competitive advantage.
- OECD Corporate Governance Principles. 1999-S. 5, 9- (www.oecd.org/dataoecd/46/38/435443o.pdfl.
- See Corporate Governance, Investor Protection and Performance in Emerging Markets // World Bank Policy Research Working Paper. 2818. April 2002.
- See Opacity Index. - PricewaterhouseCoopers. January 2001
- Gompers P., IshiiJ., Metrick A. Corporate governance and equity prices // NBER Working Paper. No. w8449. August 2001.
- The full text of the report is available on the Corporate Governance in Russia Project website (http://www.2.ifc.org/rcgp/Documents/IFC_CG_survey_rus.pdf).
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