Roundtable Breakast Discussion with Gennady Kolesnikov
Thursday, October 18, 2001
U.S. Chamber of Commerce
MR. WORKMAN: Good morning and welcome.
My name is Willard Workman. I'm the Senior Vice President
for International Affairs at the U.S. Chamber of Commerce,
and I'm also the Vice President at the Center for International
Private Enterprise, our affiliate.
Today the U.S. Chamber and CIPE welcome you to this roundtable
discussion of corporate governance in Russia with our special
guest, Gennady Kolesnikov, Deputy Chairman of the Federal
Commission for the Securities Market of Russia.
There are few topics more central to the Russian business
agenda than corporate governance. This morning the Deputy
Chairman will discuss and seek input on the recently drafted
Russian Corporate Governance Code. We at CIPE have been involved
in corporate governance activities for about 10 years. And
we think that this new code has the potential to influence
the way not only international investors look at Russian markets
but, equally important, domestic Russian investors look at
it.
The code is the result of an extensive drafting process organized
by the Federal Commission that involved leading international
and local corporate governance experts, including the Institute
for Stock Market Management, a long-time CIPE partner in governance
reform in Russia. We are currently supporting the Institute's
project to develop a follow-on training program for Russian
corporate directors.
With broad-based input from practitioners and legal experts,
the code, I believe I'm correct in saying, should be viewed
as a working document which seeks to operationalize corporate
governance principles at the company level and serve as an
effective management tool for Russian business and for business
leaders generally. The ideas and concepts underlying the code
have also been supported by the Russian Government, which
seeks its adoption as a priority for promoting investment
in the Russian economy.
Gennady Kolesnikov, Deputy Chairman,
Federal Commission for Russian Securities Market
MR. KOLESNIKOV: Thank you. Thank you, Mr. Chairman. I am
happy to be present here this morning and have a possibility
to briefly to explain what Federal Commission on Securities
Markets in Russia would like to achieve with this corporate
governance. I must apologize for my English, but I try to
be at least understandable.
In the view of the Federal Commission on Securities Markets,
corporate governance has become a key issue in Russia's developing
of a law-based market economy. The abuse of corporate power
by managers, owners, and controlling shareholders has harmed
both domestic and foreign investors and other stakeholders.
The lack of sound corporate practices has damaged Russia's
investment climate and is a contributing factor in Russia's
inability to attract the investment necessary for sustainable
economic development. It is also considered as a most crucial
obstacle to transforming Russia's businesses into successful
market-driven and globally competitive enterprises. The improvement
of corporate governance practices in Russia may produce a
multi-facet positive effect.
I would like to stress on four points. First, it contributes
to the search for an adjustable balance of interests of major
social groups and institutions--government, business, shareholders,
personnel, regional authorities, and local communities, and
just provides all the involved agents with a new perception
and new focus of their activities.
Second, efforts for better corporate governance focus on the
internal effectiveness of processes. While fostering higher
efficiency at a company level, they act as an effective and
visible factor of increasing effectiveness of capital use
nationwide.
And, third, in the Russian context, good corporate governance
can become the best if not the only efficient tool in fighting
corruption, and I suppose it's a very interesting subject
for most of the entities involved in anti-corruption activity.
Fourth, good corporate governance boosts intensity of Russian
investors and strengthens their potential, not only as economic
agents but as social and pro-reform political agents.
The Federal Commission, as the chief regulatory authority,
has put forward the program for improving corporate governance
practices. Its main components are improvement of legal and
regulatory framework, of which drafting the code is considered
as is considered as the core; information, public awareness
building, and dissemination of basic knowledge; development
of qualification and professional standards, training, and
certification.
The Russian cabinet meeting held in November 2000 adopted
a resolution that authorized the Federal Commission to coordinate
the activities of Russian related government agencies and
ministries, and to develop an action program aimed at improving
corporate governance in Russia. The Russian Prime Minister
has further confirmed this policy recently in a declaration.
In implementing the program of corporate governance improvement,
the Commission has been focusing its activities on the following
major directions:
First is making legal framework for good corporate governance.
To fuel the discussions on the code and corporate governance
issues in general, the Federal Commission has set up the Coordination
Council on corporate governance, a forum which represents
both issuers companies, investors, business associations,
securities market participants, and prominent experts.
We believe that the Coordination Council is able to encourage
a coalition of both business and government organizations
in support of the development of good corporate governance
principles and their putting into practice. The first such
Council session was held in November 2000 in St. Petersburg,
and the second one in March 2001 in Moscow, and the last one
September 18th in Moscow, and in this last session or meeting
on corporate governance this draft report was first presented
by Chairman of Commission Mr. Igor Kostikov.
To provide analytical support for the code drafting, the
Federal Commission, in cooperation with the Institute for
Stock Market and Management, which was mentioned here, ISMM,
an NGO acting as the Federal Commission key partner, has set
up three expert groups. Their objective was to initiate discussions
on the conceptual approaches and structure of the code, and
to encourage contribution from the business, expert, and public
communities.
These groups have produced a series of papers for discussion,
and to make the materials on corporate governance available
for the broad public and professional communities, ISMM, with
the Federal Commission, have launched a special web site,
www.rid.ru.
The Federal Commission has been taking part in the corporate
governance projects initiated by international organizations,
for instance, the roundtables on corporate governance in Russia,
held in Moscow by OECD, the Word Bank, and CIPE. We are also
involved in cooperation with IFC, the Financial Services Voluntary
Corps, the International Center for Accounting Reform, the
Prince of Wales International Business Leaders Forum, Russell
20:20, and other organizations.
While drafting the code, the Commission also works on drafting
new laws and bylaws, as well as amendments to the effective
laws, to improve corporate governance practices and to ensure
more efficient protection of investors through courts and
enforcement. The law-making plan includes about 20 legal acts
to be developed in the next two years. Specifically, it includes
amendments to the Federal Law on Joint Stock Companies, the
Administrative Code, the Criminal Code, the Federal Law on
the Securities Market, and also the drafting of the Insider
Trading, Money Laundering, and Investment Fund Laws.
The Federal Commission seeks to coordinate activities and
initiatives of other government authorities on this front,
and to establish working relations with the State Duma. We
believe that the drafting of the code will help to identify
loopholes in the effective laws and to bring adequate improvements
to it.
The second very important direction for this activity for
us is the public awareness and information campaign. The objective
of this component is to build high awareness of sound corporate
governance for high performance and investment attractiveness
of Russian companies, and for economic development and civil
society advance in Russia in broader sense among the main
stakeholder groups and corporate governance process participants--shareholders,
federal and regional lawmakers, local communities, business
association officers--and encourage their constructive communication
with management. These activities include the following:
A series of studies to identify the level of understanding
and vision of corporate governance by the above target groups,
and their relations with company management; development of
information and reference materials; a series of seminars
for the above groups, primarily in regions of Russia.
We expect the following results to be achieved:
Increased awareness of the above groups in corporate governance.
Stronger incentives for federal and regional lawmakers and
regional government officers involved in corporate governance
issues to build their expertise in these issues through specialized
professional training, and to develop communication with the
business on corporate governance issues.
A new agenda for shareholders associations: better preparation
for shareholder general meetings; selection and nomination
of independent corporate directors; pressure for management
compensation disclosure; more intensive communication with
regional authorities on corporate governance issues.
A new agenda for business associations: improvements in performance
of government representatives in joint stock companies; better
management of public property; in local communities, better
understanding for business operating in their regions, and
interconnection between successful business performance and
contributions by business to social goals.
We also try to achieve, as a third component, professional
training on corporate governance, and in this direction we
focus on two main subcomponents. The first one is development
and introduction of professional and qualification standards
for corporate directors and regulators.
The Commission seeks to develop high professional standards
for managers, corporate directors and regulators, and to introduce
them to their routine practices through qualification training
and certification procedures and multi-faceted continuous
professional development courses. This work could be most
efficiently done, as we expected, by Russian Institute of
Directors.
And the second is corporate governance enforcement support.
The Commission believes the key factor for implementation
of these corporate governance rules will be enforcement. So,
the objective of this subcomponent is to raise understanding
of corporate governance issues among the judges, law protection
and enforcement officers, and improve their practices of corporate
governance dispute solution.
In pursuing the above objective, we intend to hold pilot
training of trainers of the Academy of Justice, General Attorney
Office institute, Tax Police Academy, and Interior Ministry
institutes, and to help introducing training courses into
training programs of these institutions, and to facilitate
updating and improvement of training courses.
And to follow all these laws, we try to establish institutional
or at least to support establishment of institutional infrastructure
for good corporate governance. The Russian Institute of Directors
is the best institution to act in such capacity.
The reason for establishing such organization is that in
Russia's economic context, the boards of directors have a
particularly important role to play in improving corporate
governance in Russian companies. Many Western and Russian
experts agree that general improvement of corporate governance
practices in Russian companies primarily depends upon the
introduction of the corporate directors institution in Russian
business. Institutions of this kind have proven their effectiveness
in other countries. Over the recent years, such institutes
were established in a number of emerging market economies.
So, our goals are ambitious. We try to create a new investors
relation environment in Russia. We try to change the mentality
of all the agents involved, especially in the region; and,
finally, to enhance business and social life standards in
Russia. And definitely the Chairman of the Federal Commission,
my boss, Igor Kostikov, would like to coordinate our activity
with NGOs and business associations.
Questions
Thank you for your attention, and I will try to answer the
questions and to receive the comments.
MR. BUSH: I have two questions. It says somewhere that the
corporate governance is aimed at companies who have over 1,000
shareholders. I would have thought you would aim primarily
at small and medium size businesses. President Putin the other
day was addressing a meeting of the SMEs. I think he realized
the importance of it. This is where growth is going to come
from. Why not aim it more at them, because I think the larger
companies are where they have a better grasp, actually, but
the growth will come in small and medium size enterprises.
Also, where you have to go to register shares. If it is not
convenient this ill be a disincentive.
MR. KOLESNIKOV: As far as medium and small business, we thought
we should start from something, and in this draft report we
start from the companies who have at least 1,000 shareholders.
If we succeed here, we support the Committee on the Small
Business for also this corporate conduct.
On registering shares. We have 15 regional offices all around
Russia, and all of them have the power to register the shares,
the Federal Commission in Moscow and 15 of our regional offices.
We like to have more, but we need the resources from the government.
MR. WORKMAN: I have a question, Mr. Chairman. You talk about
the Russian Institute for Directors. Could you talk a little
more about this organization and how it works?
MR. KOLESNIKOV: Yes, in fact, we are just in the very beginning
of the creation of such an organization, but it is wholly
private business, and no one government agency. We always
support such initiative, but first step was done by private
sector, business community, and the largest business enterprises
were interested in this corporate governance because they
are interested to receive the money from the investors. They
establish such initiative to create a partnership and make
the Russian Institute of Directors.
And now this initiative is in the very beginning, and the
main goal of this Russian Institute of Directors is the training
of independent directors, comprehensive research, how it works,
and in the countries with a good corporate governance tradition
it is a long tradition, and to prepare to take courses for
independent directors in Russia, to improve the standards
of the governance in Russia.
MR. WORKMAN: So it would become a principal mechanism by
which you reach out and, one, help establish the standards,
the professional standards and, two, train other members of
the Russian business community on corporate governance and
the standards for professional conduct. Is that correct?
MR. KOLESNIKOV: Yes. We strongly support such initiative,
and our perspective is a key tool to achieve such goals there,
to create new standards and to prepare the people.
Mr. MATEEV: Mr. Chairman, what are the means of training?
In other words, what constitutes training corporate boards?
MR. KOLESNIKOV: We are not supposed to train corporate boards.
We suppose this Russian Institute of Directors and many other
institutes, they are likely to train them. We don't create
such a program, but in our opinion first of all they should
explain, I guess, what is good corporate conduct, what should
be the relationship with investors, with shareholders, how
to prepare in their meetings, what is the responsibility for
members of directors board, and what it means, independent
directors.
It's not easy to find really independent directors, and not
only in Russia, you know, and it's a problem. And we should
create special training, or not we, but with our support,
they should create a special training program and use the
international experience. And we hope CIPE will be very useful
in this direction.
Mr. McINTOSH: If I could just return to the issue of training
again, briefly, you mentioned a number of laws that you're
currently drafting and working on, such as insider trading
and also security markets laws, and also the importance of
enforcement and increasing understanding for judges and law
enforcement. Can you tell us whether there are any funds being
made available to do that kind of specific training for the
law enforcement and the judicial branch?
MR. KOLESNIKOV: In fact we are in discussion with USAID and
with World Bank to support us with this direction of our activity,
to train the law enforcement agencies.
MR. KLEINMAN: I wanted to ask a question, though, and I wanted
to refer to one of your predecessors, Mr. Vasilyev, who always
used to say that corporate governance will only ever take
hold when Russians decide to do it in their own interest,
and he used to refer specifically to the lack of institutional
investors to impose that sort of discipline on companies.
And we know that still in Russia these organizations are lacking.
I'm referring to mutual funds, pension funds, insurers.
What is being done in order for these institutions, obviously,
to develop more broadly? I know there are some proposals for
private pension funds, etcetera, but specifically what will
be their fiduciary responsibility as it relates to corporate
governance? Is there any separate legislation? Is there a
separate set of norms underway?
MR. KOLESNIKOV: It is our responsibility to change the standards
in a way to police such market participants like advisors
or like pension funds and so on, because they are involved
in security market activity.
MR. WORKMAN: The input programs actually serve two purposes.
One, you get input from all across Russia but, two, it's also
a way to increase public awareness or public education, because
by having a seminar and raising the questions, in the process
of engaging the Russian companies, they are being educated.
They are being made aware of the process. So it's really a
two-for-one exercise. CIPE's experience, John, if you care
to elaborate, we felt that these were very worthwhile.
MR. SULLIVAN: Well, actually I wasn't there. Our former CIPE
staffer, Steve Dean, was there at several of these regional
programs, and also we brought regional people into Russia,
into Moscow for some of the OECD, World Bank, Security Commission
dialogues on corporate governance. If you don't have the market
participants--and I say that knowing that Gennady was a market
participant in St. Petersburg prior to his role now--if you
don't have them involved in developing and having ownership
of codes like this, you have no chance of it becoming a living
document, of something that people might internalize and use
on a day-to-day basis in their companies.
Actually, though, I had just two small questions that you
may have mentioned but I missed. One was the international
accounting standards. I know you're planning to bring those
into being in the near future, making a shift from the current
Russian accounting standards. Will that be made obligatory
at some point in the future for listed companies?
And then, secondly, could you say a little bit more about
some of the acts that you're planning to amend? You mentioned
two that caught my ear. One was insider trading and the other
was money laundering. I suppose those will be acts that are
developed within the government itself and proposed to parliament.
What would be the time frame on some of that?
MR. KOLESNIKOV: Yes. Concerning international accounting
standards, we are not a leading body in Russia. It's definitely
Minister of Finance, and maybe Minister of Economy. And as
far as I know, it should be obligatory but not earlier than
2004. But in our opinion, for the largest companies who issue
RDR (?), for example, they now are possible to check them
and they do, provide to international accounting standards,
because without it's not possible to establish RDRs. And in
our opinion it will be better if nonobligatory, the companies
who have a possibility to provide the international accounting
standards.
And concerning the law, the money laundering law, it's in
the second hearing in the Duma, and it's in high priority
for our Russian Government, and I suppose it will be signed
by the President in this year, really shortly, and especially
this, all this terrorism on 11 September.
And the insider trading law, it is only a draft, and it's
still in discussion what should be in this law in Russia,
because now we have more particular recognition what it means.
There are different forms of view in Russia, what it mean,
the insider trading. I think for the next Duma session we
succeed, we get government to put in, in the Duma, the draft
of this law.
MR. VOGEL: It seems to me that the only incentive companies
ever have to adopt codes like this is their belief that this
helps them to raise capital, and that therefore it seems important--and
maybe you could comment on how you are doing this--to make
it very clear to businesses in Russia that many other institutions
view this as a prerequisite for capital raising. And therefore
you should know that this is seen as a prerequisite for raising
capital.
In that vein, the OECD governance principles which seem to
be reflected in many respects in here, and the World Bank,
and you are working on, are excellent, but in a way they are
a little dated. It was interesting from my perspective, looking
at this from an anti-corruption perspective, development of
the new U.K. law which demands that pension funds publicly
disclose the ethical basis upon which they invest in companies.
The Germans and the French are both thinking of following
that, having similar laws, and now I gather the E.U. Commission
is looking at this, which in other words again is this question
of incentives and endorsements.
It is much harder for a pension fund in the U.K. today to
invest in a tobacco company and justify it on ethical grounds,
and this public disclosure by pension funds or institutional
investors--your question--adds, if you will, a real sanction
on companies. And I wonder if you are thinking of any sort
of laws along the lines of the U.K. one or the E.U. ones.
Another point, it seems to me, looking through this quite
carefully, is that I think it's very good but there needs
to be some extra component on the ethics side, I think. And
the question is whether you imbed it in the code or it's separate.
My feeling is, perhaps, and others may disagree, that you
have gone probably far enough in the code itself, but that
it would be enormously useful to have a separate annex that
was always published at the same time that this was published,
that goes into some detail about the ethical aspects of corporate
management and corporate leadership.
I don't quite share the view of some people here that corporate
governance codes are terribly helpful in fighting corruption,
because there are huge numbers of corrupt companies in the
world that have corporate governance codes and that are listed
on stock markets that require corporate governance codes.
And the key question is whether the managers and the directors
of the companies really buy into the ethical mandate that
the codes require.
And hence the suggestion that perhaps you could think of
getting someone, maybe like the Ethics Resource Center, to
help you to develop a clean annex that goes quite specifically
into the nuts and bolts of corporate ethics codes and corporate
ethics officers and what is required there, but it is separate
rather than plugging it all together. I don't know if you
have thought of that.
My final point is, really I think it's tremendous what you
said about public information and training, but ultimately
it seems to me that if these are to be truly living documents
and the public information is to be meaningful, corporations
have to have a very strong requirement to publicly disclose
information and to work very cooperatively with the media
and with others. If that doesn't happen, you know, there is
a trust issue.
MR. KOLESNIKOV: Yes, I agree with all the points you mentioned.
We are only in the very beginning on the way. If the people
remember, only two years ago if we tried to discuss about
corporate governance in Russia, most of the people smiled
and asked what we are talking about, and now it's not possible
to include everything in this code of corporate conduct.
I suppose disclosure and transparency will be a good tool
for anti-corruption conduct, and it's not only law or it's
not only obligatory, it's much more ethics also. But we are
short on resources. We cannot do all the things simultaneously.
Definitely we understand it should be amendments, or maybe
not amendments but another documents like ethics code for
independent directors or for the people who are involved in
making decisions and so on. But this is only the very beginning
of the process, and we understood this clearly.
MR. WORKMAN: If I could just make a comment on the ethical
basis for investment, and we're familiar with the British
form, I think most American investors are.
We have legislation pending, for example, in the U.S. Congress
that would require that--that would codify the Securities
and Exchange Commission ruling that companies which have investments
in certain countries disclose that they have investments in
those countries, so investors can make a judgment as to whether
or not they want to be involved in an American oil company
which is doing pipeline repair in Burma, a perfectly legal
enterprise, but that would be information that some are suggesting
all investors should be aware of.
And I think the process that the Russian Government and the
Russian private sector is beginning to go through will allow
those kinds of questions to be examined and addressed, and
hopefully they will come up with better answers than we have
been able to come up with in dealing with that issue.
This gets to be a very tricky, from a business point of view,
this gets to be a very tricky exercise, because the first
responsibility of a company is not someone's social agenda.
The first responsibility of a company is to make a profit,
and that's why people--principally, that's the first and foremost
reason why people invest in private enterprises that are on
the public markets.
If other people want to do specialized investment in companies
that make a certain type of ice cream a certain way, then
that's fine, let the market work that way. But we, at least
at the U.S. Chamber, get very leery about codes of conduct
that dictate a certain type of behavior in the market based
on a social agenda that isn't necessarily accepted by everybody
in the country.
I think those of us that are committed to a truly open free
enterprise system and a free market system understand that
we have to be very careful about overlaying someone else's
particular agenda on how the market works.
MR. MEYER: First of all, I'm glad that you said that because
I certainly echo those remarks. But I'm looking at the document,
and I have not worked through all of it, but I think the title
of it seems to me somewhat misleading in the sense that it
is says a code of corporate conduct.
It seems to me this is a much more fundamental document.
It really, from a corporate lawyer's standpoint, looks like
a company law document in many respects. It goes beyond disclosure.
It talks about what institutions, what the board of directors,
the secretary, major corporate functions. It's much more than
just a code of conduct, would you agree?
MR. KOLESNIKOV: Yes. The experts and the people who were
involved in reviewing this draft, received a lot of criticism.
It is much more detailed. But the principles, the OECD principles,
they are clear, but definitely it's not enough. And what we
tried to do, and what the code tried to do, to the procedures,
a lot of procedures, because there were a lot of investors
claiming, when we start, and to explain to all parties how
it should be done, we created such a document. And because
not all procedure is clear in the framework of existing law,
we try to provide this code as a code of good behavior.
And maybe, and we stress again, it's only a draft, a draft
and materials for public discussion. And after or doing discussion
we should adopt the arrangement, and maybe it will be not
so detailed after the review steps.
MR. DEANE: The first question I have is this. There was a
published report here in the U.S. that expressed some surprise
about the process that produced this report, and I should
say I think it's a great product, but that report said that
there was one track in which there were all these roundtable
discussions around the country, and that was to lead to a
product, but that suddenly, out of the blue this thing appeared
that was written by Kudare Bros.
And so the question I have, since you are now available,
to ask you directly, is what was the process of producing
the code? What was the relationship between the grassroots
effort and the Kudare Bros.?
MR. KOLESNIKOV: Okay. The process, as I tried to explain
in my speech, we, the Federal Commission as initiator of this
project, we set up this Coordination Council, and we set up
together with the Institute for Market these expert groups,
and all these expert groups involved a lot of people from
the business community, from market participants who are experts,
and so on. And we set up this Coordination Council to discuss
all the principles in the paper. What was done was these expert
groups and roundtables and discussion.
And set up a grant to prepare the code, and the winner, after
the procedure was finished, the winner was Kudare (?) Bros.
And in fact they finalized the text, they summarized all the
materials after discussion, and they also made a comprehensive
analysis with other codes existing in other countries. And
what was their role of lawyers to finalize this code and to
provide it to the people for public discussion. That's it.
MR. MATEEV: What kind of method is there for enforcement
of the code on the corporate boards and the corporate governments?
MR. KOLESNIKOV: First of all, now we change our standards
for disclosure, and we require from the companies, from the
companies who have more than 1,000 shareholders, as a first
step to in their annual reports or in their quarterly reports,
to disclose if they follow or not this corporate conduct code.
The second step is we discuss changes, to change their rule
and that of the company also, to input in their report what
they are doing with corporate governance principles in their
enterprises. And if they not cooperate, it will be difficult
to be them.
Also I guess I mentioned there are amendments to the criminal
code, and they should be enacted I suppose this session of
the Duma and finalized; to have criminal responsibility of
you are not properly disclose all the items, including the
corporate governance.
MR. YESOLITIS: Following up on that, do you have any specifics
of what might be in those criminal codes, what additions,
and what actions will be taken to hold people and companies
responsible for their actions that might be misleading?
MR. KOLESNIKOV: For us it takes time to verify what actions
were. Now we have the power for penalty it is not still in
law, but law defines very clearly in which cases the Commission
have the power to penalize the companies. But everything is
changed about some other points, and definitely we have the
power to enforce the company.
MR. WORKMAN: I'll take this opportunity to ask you the question
about what we were talking before we began the roundtable.
Could you describe how the Russian markets have reacted to
the events of September 11th over the past five or six weeks?
I think that would be constructive for everybody.
MR. KOLESNIKOV: Yes. Definitely the Russian security market
is a part of global market, but when we analyzed what was,
in Russian market what was a crisis for Russia, we see after
September 11th the market was not crashed even in the first
days, when the New York Stock Exchange was closed.
And for us, for the Commission, it means definitely we are
related with global market, but it means, other side, we have
our domestic investors now, and for such reason the prices
on the market were more stable in Russia. And we saw it also
attracted international investors to the market, because if
you have domestic investors, a market is more stable.
MR. MATEEV: Did you see more an increase in the bond investments
rather than share investment in Russia, after the attack?
MR. KOLESNIKOV: After September we have no such information
particularly, but last year definitely we see the bond trading
was much more active. It also, the way it was, some bigger
enterprises in Russia do not like to issue shares but they
prefer to issue a bond as an historic method to receive the
money, but not to receive the new shareholders.
MR. KLEINMAN: As part of this strategy, I wonder whether
you have given any thought, I'm sure you have looked around
the world through experiences both in emerging and in developed
markets, but you know in Brazil there is a very interesting
experiment right now to establish a separate track on the
stock exchange itself for certain companies who not only meet
these corporate governance standards but all sorts of other
shareholder rights, minimum requirements in terms of voting
privileges, etcetera. Is there any thought to reinforcing
this code by perhaps establishing the "Good Housekeeping
Seal" that's officially promulgated by the exchange,
by listing these companies on a separate roster?
MR. KOLESNIKOV: Yes, but I try again to explain, it is not
the first in agenda for Russia. Definitely it needs to be
done, but maybe as a next step or the second or the third
next step. And the community, the business society, they are
ready for such measures now, and it's very important, this
public education program to stimulate such activities.
MR. SULLIVAN: Brazilians have just passed a new corporate
governance law after considerable debate. And in addition
to this idea of creating a separate tier or registry for companies
that have best practice, which the Romanians are also doing
with their transparency tier, they have another interesting
innovation.
In their securities market regulator, the equivalent of your
Commission, they established a dispute resolution mechanism
whereby I believe the threshold is 10 percent of shareholders
can trigger an appeal to the dispute resolution over a dilution
of rights or a related party transaction or some other issue
that they may be disputing.
Have you given any thought to maybe in the near term setting
up some sort of mechanism? As you point out, Russia is not
the only country that has had these kinds of disputes over
shareholder rights and over minority shareholders. But that
is at least one approach that has potential of speeding up
the process, so it doesn't have to end up in the court system
and drag out for years.
MR. KOLESNIKOV: Yes, it should be done differently. It should
be done by the Commission and by business societies and the
different kinds of associations, and in fact it is now being
created, a discussion to have possibility to react quickly
and effectively.
MR. WORKMAN: I want to thank Mr. Kolesnikov for his time
and for responding to our questions, and we invite you back
anytime. Again, thank you all for coming. I hope this has
been instructive for all of you. This is part of a continuing
series of discussion roundtables that CIPE, and sometimes
the Chamber, put on. So if you have an interest in those topics,
just get in touch with any of the CIPE staff, and we'll look
forward to signing you up. So again, thank you all very much,
and thank you, Mr. Chairman.
MR. KOLESNIKOV: Thank you.
[Applause.] |
