#16
Russia offers investors corporate governance code
By Olga Popova
MOSCOW, Sept 18 (Reuters) - Russia's Federal Securities Commission, the
market's main watchdog, presented to investors on Tuesday the draft of a
much-awaited corporate governance code, aiming to bring local business up to
global standards.
The unprecedented code, which has been in the pipeline for a year, was
welcomed by analysts who said the document, albeit not legally binding, would
be instrumental in improving Russia's business climate, which lacks a clear
set of general rules.
Commission head Igor Kostikov said he expected investors to follow the
guidelines of the code, which the FSC drafted with the government and market
participants.
"Our target is...to make this document the unified standard for the
securities market," Kostikov told a news briefing after an official
presentation of the code.
The code describes in detail the principles of corporate conduct, sets rules
for general shareholders meetings and defines the functions of a company
board and executive bodies.
It also describes procedures for corporate information disclosure, paying
dividends and settling corporate conflicts.
The commission plans to submit the draft code for the government's approval
by the end of November and publish it by the end of this year or early 2002.
Kostikov said the FSC planned to monitor violations of the code and publicise
them.
"The code will set guidelines (of corporate conduct), but we expect this
initiative to get general support," he said.
BUSINESS ENVIRONMENT
Analysts said the introduction of the code would be a major step towards
improving Russia's business environment, scarred in the 1990s by numerous
violations of investors' rights.
Kostikov said the code would not be legally binding, but a source in the FSC
said the document conveyed ideas, especially concerning the disclosure of
information requirements, that the government would try to put into law in
the near future.
United Financial Group praised the content of the code, saying it was based
on a range of best international practices.
"This is a period of major regulatory advances in corporate governance
in
Russia, which is a crucial value driver for Russian equities," UFG wrote in
a
market note.
"Even where companies have an interest anyway in better governance,
improved
legal sanctions and quasi-legal (such as the code) incentives will stimulate
and systemise the process."
Brunswick UBS Warburg said in a market research note it would be useful if
the code envisaged fees and sanctions against any violators, but said that
even in its current form the code would help remove obstacles to future
investment.
