INTRODUCING EU CORPORATE GOVERNANCE STANDARDS

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INTRODUCING EU CORPORATE GOVERNANCE STANDARDS

• 9
• Lessons Learned from Bulgaria
• Prof. Bistra Boeva
• Co-Chair of the Task Force for Development of
  National Corporate Governance Code in Bulgaria

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Lesson 1 Coordinated Efforts

• The long distance run to introducing EU corporate
• Governance (CG) standards in Bulgaria
• from dispersed and parallel initiatives from the
  state and the CG activists (business, NGO, and
  academia) for introduction of EU standards on CG
• to a successful public-private partnership for
  the introduction of a legal framework and best
  practice standards for corporate governance

Lesson 1 Coordinated efforts have a greater
impact.
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Lesson 2 Rationale for Good CG

• Important milestones for bridging the gap and
• implementing better corporate governance in
  Bulgaria
• 1. Introduction of EU norms in various laws and
  gradual establishment of the present legal
  framework on LPPO Markets in financial
  instruments act Law on measures against Market
  abuse with financial instruments Act on special
  instruments purpose companies Ordinance on
  Disclosure (what about CG).

Lesson 2 While implementing technical
provisions, dont loose sight of the big picture
(rationale for good CG)
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Lesson 3 Gradual Implementation

• 2. Introduction of corporate governance code
  October 2007 (how to practice corporate
  governance)
• 3. Gradual implementation of CG principles by
  Bulgarian public companies or awareness of
  advantages of CG among the Bulgarian business and
  investment community

Lesson 3 Engaging the business community is key
for having companies adhere to good corporate
governance practices (beware of turning things
into a box ticking exercise)
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Lesson 4 Follow up

• 4. Implementation and enforcement of the code
  (listing rules securities provisions)
• 5. Monitoring progress and reviewing the code

Lesson 4 A good legal framework including a code
of best practice is only the beginning
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Lesson 5 Momentum Matters

• Important success factors
• 1. International Support and Guidance
• OECD CG Roundtable (introduction to international
  best practice)
• EU Directives (harmonization of national legal
  framework with EU directives- condition sine qua
  non for EU membership)
• World Bank CG ROSC assessments
• GCGF TA Support (sustainable work to introduce
  corporate governance norms and principles)
• 2. Public and Institutional Support
• Regulators (political will to make it happen /
  pressure of EU membership)
• NGO and Business and Professional Associations
  (working together for reform / pressure to stay
  part of the game )
• Business (ready to embrace change / pressure of
  competition)

Lesson 5 Get the help you can and engage all key
stakeholders (Momentum matters)
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Lesson 6 Enforce the Enforceable

• The Bulgarian Corporate Governance Code
• 1. A CG code is an excellent prerequisite for the
  implementation of legal norms it provides
  norms and guidelines on improving disclosure
  improving board practice and, protecting
  shareholders rights and considering stakeholders.

Lesson 6 But its not about having the best code
in the world(Stay modest and enforce the
enforceable)
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Lesson 7 Local Ownership

• 2. The Bulgarian Code follows the EU approach
  (Action Plan on enhancing commercial laws and CG
  codes) and fulfills a double function about
  its role and 2 functions
• a benchmark for companies (common standards)
• a communication and information tool for
  investors and other stakeholders
• 3. The Bulgarian Code complies with EU
  requirements, respects the national legal
  framework, and builds on international best
  practice while taking into account local
  realities.

Lesson 7 A good CG Code is a balancing act not a
window dressing exercise (Local ownership leads
to better enforcement)
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Lesson 8 Help, Dont Impose

• 4. The code is proactive it goes beyond national
  legal requirements (disclosure of non-financial
  information stakeholder engagement)
• 5. Beyond the EU agenda, the Code is a great
  awareness-raising tool
• 6. And last but not least the Code is helping
  bridge the gap between the legal norms and actual
  practice in the field of corporate governance.

Lesson 8 The best practice approach is a
flexible tool to help companies outperform their
competitors (Its about helping companies not
imposing new burdens).
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Lesson 9 Long way ahead

• Next Steps
• New CG ROSC assessment
• 2. Better understanding existing best practices
• 3. Participating in hot debate topics
• 4. Improving board practice/Director training
• 5. Revision of Securities law
• 6. Coordinating and monitoring progress
• 7. Getting the message out to SOEs and
  municipally-owned companies

Lesson 9 Establishing/ Institutionalizing a
national CG commission is key (dont loose
momentum)