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General principles corporate governance

The corporation is managed in accordance with its corporate acts and legislation. At the same time, it itself determines the structure of management, the costs of it. The owner manages the corporation independently or through special management bodies provided for by the charter.

Functions corporate governance. Management activities- one of the most difficult. It consists of a series of independent managerial functions:

Planning, i.e. development of the program, procedures for its implementation, implementation schedules, analysis of situations, determination of methods for achieving goals, etc.;

Organization, i.e. elaboration of the enterprise structure, coordination between structural divisions, etc.;

Motivation, i.e. stimulating the efforts of all employees to fulfill their tasks;

Coordination;

Control.

Complication modern production added two more features:

Innovative, associated with the development and implementation of the latest achievements in the field of engineering and technology, methods of organizing and managing people;

Marketing, expressed not only in the sale of manufactured goods, but also in research and development that affect the sale of goods, the purchase of raw materials, production, marketing, after-sales service.

Principles of corporate governance. The corporate governance system is based on a number of general principles. Among them, the following can be singled out as the most important.

1. The principle of centralization of control, i.e. concentration of strategic and most important decisions in one hand.

The advantages of centralization include: decision-making by those who have a good idea of ​​the work of the corporation as a whole, occupy high positions and have extensive knowledge and experience; elimination of duplication of work and the associated reduction in overall management costs; ensuring a unified scientific and technical, production, marketing, personnel policy etc.

The disadvantages of centralization are that decisions are sometimes made by persons with little knowledge of the specific circumstances; a lot of time is spent on the transmission of information, and it itself is lost; lower-level managers are virtually eliminated from making those decisions that are enforceable. Therefore, centralization should be moderate.

2. The principle of decentralization, i.e. delegation of authority, freedom of action, rights granted to a lower corporate body, structural unit, official - to make decisions or give orders on behalf of the entire company or unit within certain limits. The need for this is due to the growth in the scale of production and its complication, when not only one person, but also a whole group of people is not able to determine and control all decisions, and even more so to implement them.

Decentralization has many advantages, among the main ones: the possibility of quick decision-making, involving managers of middle and lower levels in this; no need for development detailed plans; weakening bureaucracy.

And at the same time, with decentralization, there is a lack of information, which inevitably affects the quality of decisions made; the scale of thinking is changing and the range of interests of managers is narrowing - in these conditions, feelings can take precedence over reason; the unification of rules and decision-making procedures becomes more difficult, which increases the time required for coordination and “shaking”.

A large corporation must be largely decentralized, because the number of decisions that have to be made in the center and the number of their approvals grows exponentially and, in the end, exceeds the technical capabilities of the management system, getting out of control.

The need for decentralization is also increasing in geographically dispersed firms, as well as in an unstable and rapidly changing environment, since there is often simply not enough time to coordinate with the center the necessary actions that must be taken immediately.

Finally, the degree of decentralization depends on the experience and qualifications of the managers and employees of the respective departments. The more experienced and qualified the people on the ground, the more rights they can be given, greater responsibility placed on them, and instructed to make difficult decisions on their own.

3. The principle of coordination of the activities of structural divisions and employees of the corporation. Depending on the circumstances, coordination is either entrusted to the units themselves, jointly developing the necessary measures, or may be entrusted to the head of one of them, who therefore becomes the first among equals; finally, most often coordination becomes the lot of a specially appointed leader, who has an apparatus of employees and consultants.

4. The principle of using human potential. It lies in the fact that

The majority of decisions are made not by the entrepreneur or the chief manager unilaterally, but by employees of those levels of management where decisions must be made:

The executors are primarily focused not on direct instructions from above, but on clearly limited areas of action, powers and responsibilities;

Higher authorities solve only those issues and problems that the lower ones are not able or do not have the right to take on.

5. Principle effective use, but by no means neglecting the services of business satellites.

Business includes a whole range of related activities within its sphere of influence. The specialists who perform them are called business satellites, i.e. his accomplices, companions, assistants. They contribute to the relations of corporations with the outside world: contractors, the state represented by its numerous bodies and institutions. These include: financiers and accountants; lawyers; economists-analysts, statisticians, compilers of economic and other surveys; marketing specialists; public relations specialists.

These principles are the basis for corporate rulemaking.

Objects of corporate management.

A. Shareholders. These are the main investors of the corporation.

B. Creditors. The financing of the corporation is carried out both at the expense of equity capital and at the expense of borrowed capital, and hence the difference in the interests of shareholders and creditors.

B. Employees (employees, staff). They are also called non-financial investors, since they invest in the form of providing corporations with specific skills and abilities that could be successfully used not only within this corporation, but also outside it.

D. Suppliers are also classified as "non-financial" investors.

D. Buyers. Ultimately, the profitability of the corporation depends on them, but it, in turn, can shape the taste and preferences of buyers.

E. local authorities management can invest in the corporation's operations by developing infrastructure or creating favorable tax conditions for the corporation in order to attract new companies and increase their competitiveness.

As you can see, the number of "interested persons" in the corporation is quite significant. The interests of which group of corporation participants and to what extent should be represented in management? This is a task for managers to solve.

At the level of the authorized management of the corporation, there are two bodies - the board of directors and the audit body.

For example, the Japanese principle of five Cs is interesting for reflection. These are not the four Cs that are often discussed in Russian literature today - independence, self-sufficiency, self-financing, self-government. These are not the seven Cs that ensure the effectiveness of corporate management, which are widely included in the management lexicon around the world.

If I, as a shareholder, spend a lot of energy and money on obtaining information about the management of a corporation, then such information could well be useful to other investors. But it is not yet clear how I would be able to recoup my costs. In essence, obtaining this kind of information is associated with economies of scale, and it is not clear how such information can be sold. These circumstances turn information into a public good, which we will discuss in detail in the next chapter. Here we can also see that since there is no reason to expect a competitive information market to emerge, managers can pursue their goals other than profit maximization without risking losing their jobs.

There are, however, some important factors that limit the ability of managers to deviate from the goals of the owners. First, shareholders can complain if they feel that managers are behaving inappropriately, and in exceptional cases they can change the current management (perhaps with the help of the corporate board of directors, whose duty it is to monitor the behavior of managers). Secondly, strong market principles can develop in the management of a corporation. If, with poor management of the firm, it becomes a real transfer of control into the hands of the owners, then managers have a serious incentive to maximize profits. Third, there may be a well-developed market for managers. If those who maximize profits are in demand, they will receive high salaries, which in turn will make other managers want to stick to the same goal.

At the same time, this product marketing program and the corporation's development strategy will not work properly if the organizational structure for building and managing the corporation does not correspond to them, since it should already contain a system for coordinating the activities of business structures, as well as a system for distributing powers between various management levels.

The councils under the president of the company are advisory bodies. They develop a collective opinion of specialists in various fields on the issues of strategic management of the corporation.

The most significant consequence of the corporate restructuring of the 1980s was the formation of a new approach to corporate management, in which the main goal of business is to increase the value of the company. In addition, the inefficiency of conglomerates was demonstrated; corporations abandoned the concept of financial self-sufficiency (the tendency of companies to create their own internal capital market for new investments and growth financing), there was an awareness of the need to renew corporations and search for sustainable competitive advantages.

The class "corporate systems" (automation and management systems for a corporation, company, financial group, etc.) includes much more functions than, say, just enterprise management. A corporation can unite various management, production, financial and other structures, legal entities, have several territorially remote branches, enterprises, trading firms engaged in a wide variety of activities (manufacturing, construction, mining, banking, insurance, etc.). Here, the problems of proper organization of information support of hierarchy levels, aggregation of information, its efficiency and reliability, consolidation of data and reports in the central office, organization of access to data and their protection, and technology for consistent updating of unified shared information come to the fore. As components of the system, there is a functionally complete accounting subsystem with the ability to use various international standards for the subsystem of operational, production accounting, personnel accounting, various subsystems for management, office work and planning, analysis and decision support, etc. As you can see, the accounting component in such a system does not is dominant, such developments are focused more on company executives and managers at different levels. In such a system, the interconnection and consistency of all constituent parts, the consistency of their data, as well as the effectiveness of the system for managing the company as a whole.

The concept of net present value suggests the appropriate separation of the functions of ownership and management of a corporation. A manager who invests only in assets with a positive net present value in the best way acts in the interests of each of the owners of the company - despite differences in their wealth and tastes. This is possible due to the existence of the capital market, which allows each shareholder to create their own investment portfolio in accordance with their needs. For example, there is no need for a firm to adjust its investment policy so that subsequent cash flows are in line with shareholders' preferred timing patterns of consumption. Shareholders can move funds forward or backward in time as they wish, as long as they have free access to the capital markets. In fact, their consumption pattern is determined only by two things: their personal wealth (or lack thereof) and the rate of interest at which they can borrow or lend. The financial manager is not able to influence the interest rate, but it is in his power to increase the wealth of shareholders. This can be done by investing in assets with a positive net present value.

The changes in the organizational structure under consideration allow accelerating the process from development to the release of a specific product on the market three times faster on average than before. The transition process from one organizational chart to the other should not be carried out radically. If the corporate governance structure is organized by function, it is necessary to include employees in teams that unite individual departments and functions. Even if there is still some form of formal functional structure in the corporation for a few years, people will probably be ready enough to work outside their former functions most of the time.

The management personnel of a spin-off from a large corporation were well trained to write business plans. Perhaps these plans are more rigorous than those discussed in business schools and at special seminars. Under conditions determined by the interests of work and their own careers, corporate managers must evaluate the business plans of divisions and departments of the corporation that are competing for money from the same fund. Therefore, business planners should consider the management of the corporation itself in the same role as external investors. From within this business, the managing corporations are in an excellent position, p. which can be judged on the reliability of the content of business plans. This significantly limits the ability of developers to lie or tell half-truths.

The insufficient development of external prerequisites for the formation of joint-stock companies makes internal management tools especially important. The effectiveness of corporate governance in a transitional economy directly depends on the successful development of various aspects of shareholder relations. Corporate management systems should prioritize the creation of internal management structures, as well as internal infrastructure, that would allow them to successfully develop.

There are other options for the distribution of responsibility within the unified corporate management structure. At the same time, a number of common points can be identified in the management of diversified firms abroad. Usually in such firms there are three levels of management

Part 5 is dedicated to corporate management issues that analytics need to know valuable papers.  

Here we are not interested in the legal and political aspects of corporate governance, although they are important. Here we will talk only about the role of the securities analyst, who must respond to events and management practices that affect the valuation of corporations, and hence the results of investing. Undoubtedly, it is the value of ordinary shares that is especially sensitive to the peculiarities of ownership of shares, which are the basis for investors to participate in the economic life of the United States.

Chapter 36

Chapter 36

Chapter 36

Chapter 36

Norman B. Kayder, President of Atlas, considers Mr. Hoffman's chances of moving into the upper echelons of management to be reasonable: a one in three chance of becoming an Atlas executive, a one in five chance of becoming a top manager at another Tyler subsidiary, and a one in ten chance of moving to headquarters of the Tyler Corporation.

The divisional structure can be viewed as a combination of organizational units serving a specific market and managed centrally. With such a structure, departments can also be specialized in sales markets. Withdrawal from using strictly functional diagrams management of corporations in favor of a divisional structure is quite clearly traced with an increase in the level of diversification of production. circuit diagram divisional management structure is shown in fig. 7.4. The production divisions of the company receive a certain independence. At the same time, the development strategy, research and development, financial and investment policy are within the competence of the top management. The main role in such structures is played by managers who head production departments (divisions). The formation of divisions, as a rule, is carried out according to one of the criteria for manufactured products (products or services) - product specialization, for targeting certain consumer groups - consumer specialization, for served territories - regional specialization.

The rapid development of financial markets in the early XX century. dramatically changed the nature of the activities of many American corporations. The ownership of companies became more fragmented, in many of them the share of large shareholders did not exceed 10%. By this time, the class professional managers and there was a transition to the management of corporations on a professional basis. Managers competed with each other for the right to manage corporations not on the basis of the size of the contribution to the capital of the corporation, but based on their experience, knowledge and abilities. On the basis of these transformations, one of the fundamental principles was finally formed

Gracheva Maria senior financial expert consulting company ECORYS Nederland, Karapetyan Davit - IFC Corporate governance in Russia
Magazine "Management of the company" No. 1 2004

Corporate governance: what is it?
Now in developed countries the foundations of the system of relations between the main actors of the corporate (shareholders, managers, directors, creditors, employees, suppliers, buyers, government officials, residents of local communities, members of the public organizations and movements). Such a system is created to solve three main tasks of the corporation: ensuring its maximum efficiency, attracting investments, and fulfilling legal and social obligations.
Corporate management and corporate governance are not the same thing. The first term refers to the activity professional specialists during business transactions. In other words, management is focused on the mechanics 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 (it unites 29 countries with developed market economy), the following definition of corporate governance was formulated: 1. The five main principles of good corporate governance were also detailed there:

1. The rights of shareholders (the corporate governance system should protect the rights of shareholders).
2. Equal treatment of shareholders (the corporate governance system should ensure equal treatment of all shareholders, including small and foreign shareholders).
3. 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 stability corporate sector).
4. Disclosure of information and transparency (the corporate governance system should ensure the timely disclosure of reliable information about all significant aspects of the functioning of the corporation, including information about financial position performance, ownership structure and management structure).
5. Responsibilities of the board of directors (the board of directors ensures strategic leadership business, effective control over the work of managers and an obligation to report to shareholders and the company as a whole).

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 capital owners and entrepreneurs in need of external financial resources.
Well-managed companies contribute more to 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. The stages of building an effective corporate governance system and its advantages are shown in fig. 3.

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. On fig. Figure 4 shows that the level of corporate governance plays a special role in countries with emerging markets, where there is no such a serious system of protecting the rights of shareholders as in countries with developed markets.
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 good corporate governance standards can achieve lower cost of outsourced financial resources used by them in their activities and, consequently, reducing the cost of capital in general. This pattern is especially typical 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 rights2. 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 (Fig. 5).
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 governance3 play a significant role. 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 better management, the accountability system becomes clearer, the oversight of the performance of managers is improved, and the link between the reward system of managers and the company's performance is 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. Conducted studies show that high-quality corporate governance streamlines all business processes occurring in the company, which contributes to the growth of turnover and profit while reducing the volume of required capital investments4.
The implementation of a clear accountability system reduces the risk of a divergence between the interests of managers and the interests of shareholders and minimizes the risk of fraud by company officials and their 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 settlement of corporate conflicts between minority and controlling shareholders, between managers and shareholders, as well as between shareholders and stakeholders is improving. Finally, executive officials get the opportunity to avoid severe 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 will be able to become worthy 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 a proper corporate governance system usually occurs much faster than in small and medium-sized ones, since the former have the necessary financial, material, human, and information resources for this.
However, the benefits of such a system far outweigh the costs. This becomes clear if, when calculating economic efficiency 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 emergency Systematic 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 big amount shareholders who do business in industries with high growth rates and are interested in mobilizing external financial resources in the capital market. However, its usefulness is also undeniable for open joint stock companies with a small number of shareholders, closed joint stock companies and limited liability companies, 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.

Research results
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), with the support of the Swiss State Secretariat for Economic Relations (SECO) and the Senter International Agency of the Ministry of Economy of the Netherlands5.
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 the 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. , 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.

1. commitment of companies to the principles of good corporate governance;
2. activities of the board of directors and executive bodies;
3. shareholder rights;
4. 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 in 10% of companies the state of CG practice can be assessed as, at the same time, 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, there is concern about the protection of the rights minority shareholders. 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 legal requirements for a 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 fairly regularly. On average, board meetings are organized 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. Yet 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 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.
All respondent firms comply with legal requirements regarding the information channels used to notify shareholders of a general meeting.
The majority of survey participants inform shareholders that the meeting is properly conducted. 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 documents on the disclosure policy.
The ownership structure is still a well-kept secret. 92% of companies do not disclose information about major shareholders. Nearly half of these firms have shareholders owning more than 20 percent authorized capital, and 46% has 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 is absent in 19% of companies with audit commissions. 5% of the study participants do not have an audit commission provided for by law.

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 characterizing the practice of corporate governance and divided into the four groups indicated above (Fig. 6).
Overall, performance across all four categories can be significantly improved, with the following indicators requiring particular attention:

• 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.

General concept of a corporate governance body

Definition 1

The corporation is a special form of business. In fact, this is an organizational and legal form of doing business that meets a number of characteristics, namely: having shared ownership (share capital) and based on the transfer of management into the hands of managers. IN Russian practice corporations are usually identified with joint-stock companies of an open (public) and closed (non-public) type.

The activity of corporations has many features, one of which is the presence of many interested parties, called stakeholders. They can be external to the corporation (state, society, suppliers, etc.) or internal (shareholders, managers, personnel).

The task of corporate governance is to balance the interests of stakeholders in corporate relations, as well as to protect owners (shareholders) from managers.

Corporate governance has a complex hierarchical structure. Each corporation is headed by the highest governing bodies (Figure 1).

Figure 1. Corporate governance bodies. Author24 - online exchange of student papers

A corporate governance body should be understood as a part of its structure endowed with certain functions and powers. In Russia, corporate governance has a three-tier structure that includes general meeting shareholders, board of directors and executive body. Their competencies are determined by the norms of the current legislation and are fixed in internal local legal acts (Usta, Provisions). Let's consider them in more detail.

General Meeting of Shareholders

The highest level of the hierarchy in the corporate governance system is occupied by the General Meeting of Shareholders (abbreviated as the GMS). It consists of all the owners of the company (shareholders). The list of issues within the jurisdiction of the OCA is shown in Figure 2.

General meetings of shareholders are conditionally divided into two types - annual (regular) and extraordinary.

The former are convened annually to resolve standard issues related to the approval of the annual financial statements and the annual report of the joint-stock company, approval of the issue of distribution of net profit and payment of dividends and election of the board of directors. You can visit them in person or in absentia.

The second (extraordinary) meetings are of an irregular nature and are convened by the executive body of the corporation or the board of directors to resolve certain issues within the competence of the GMS that require urgent resolution.

The board of directors (supervisory board) is commonly understood as a collegial management body of a joint-stock company that manages the corporation's activities in the intervals between annual general meetings of shareholders. Such management is carried out within the competence assigned to him by the current legislation and the Charter of the Company. The general mechanism of its work is determined by the relevant Regulations formed within corporate structures.

The activities of the Supervisory Board are headed by its Chairman, who is subject to election by the members of the Board of Directors by voting. As a rule, for the performance of additional functions of managing the activities of the board of directors, its chairman is paid a bonus remuneration.

The main functions of the Board of Directors should include resolving issues related to determining the strategy for the development of corporate education, ensuring the effective organization of the activities of the executive bodies of corporate governance, exercising control over lower management bodies and structures, as well as guaranteeing the realization of the rights and interests of the company's owners.

board of directors in without fail is elected in all corporations, its members are usually called members of the board of directors or simply directors. A special role among them is assigned to independent directors, who are actually independent outsiders and are not connected with the company in any way (that is, they are not affiliated with it). In practice, independent directors are most often formed from among foreign citizens with an appropriate level of education and work experience.

An important role under the Board of Directors is played by its committees. Their composition is determined by each corporation independently. Most often, within the framework of joint-stock companies, the following types of them are created:

• Remuneration Committee;
• Audit Committee;
• Strategy Committee;
• Nomination Committee.

Each of them performs its functions, and as a rule, members of the board of directors are included in their composition.

Executive agency

The management of the current activities of the joint-stock company is the responsibility of its executive bodies, which are divided into two types (types):

• collegial executive body;
• sole executive body.

In the first case, we are talking about the directorate or the board, and in the second - about the general director. In practice, it is more common to manage the activities of corporate structures through a director, that is, a sole executive person.

The decision on the choice of the executive body is made by the general meeting of shareholders and/or the board of directors. Its main tasks are:

• operational and tactical management;
• current planning;
• representative functions;
• conclusion of agreements and transactions on behalf of the company;
• development and implementation of the current economic policy, etc.

The executive bodies are responsible for their activities to the general meeting of shareholders and the board of directors. They report to them on a regular basis.

Remark 1

Ideally, the top management of a corporation should make decisions in the interests of the company as a whole and its owners in particular, but in practice this is not always the case (which is why a board of directors is created as part of corporate governance to control the work of management). The most striking indicators of the effectiveness of the work of the executive bodies are the profits and dividends of the joint-stock company, as well as the development of the company itself.

Currently, there is no single definition of "corporate governance". In theoretical terms, corporate governance can be discussed in various aspects, so there are many definitions of this concept.

Corporate Governance- a set of economic and administrative mechanisms by which the rights of joint-stock property are exercised and the structure of corporate control is formed; a system of interactions between the company's management, its board of directors, shareholders and other stakeholders to implement their interests.

In the Soviet encyclopedic dictionary management is considered as "an element, a function of organized systems of various nature (biological, social, technical), ensuring the preservation of their specific structure, maintaining the mode of activity, the implementation of their programs and goals." Social management - the impact on society in order to streamline it, maintain quality specifics, improve and develop. Distinguish between spontaneous management, the impact of which on the system is the result of the interaction of various forces, a mass of random individual acts, and conscious management, carried out by public institutions and organizations (the state, etc.).

Corporate governance is a kind of social governance. A corporation is a certain organized system, an element of which is management. Its essence is the impact on the corporation as a system public relations(organized system) in order to streamline them, preserve their specificity.

Corporate management is a conscious management, which is carried out by bodies specially formed in the corporation. Moreover, the bodies of the corporation are formed in the manner prescribed by law, and the law determines the delimitation of competence between these bodies. Therefore, corporate management is, first of all, management carried out on the basis of the law and internal documents of the corporation adopted in accordance with the law.

Thus, in a narrow sense, corporate governance (corporation management) is an impact on a corporation as an organized system, carried out by specially formed bodies acting within their competence.

In accordance with Art. 53 of the Civil Code of the Russian Federation, a legal entity acquires civil rights and assumes duties through its bodies acting in accordance with the law and other legal acts, as well as founding documents. The bodies of a legal entity form and express its will, manage its activities.

Bodies of a legal entity - management bodies. So, the federal law dated December 26, 1995 N 208-FZ "On joint-stock companies" provides that the charter of the company must contain the structure and competence of the management bodies of the joint-stock company, the procedure for their decision-making.

In a broad sense, corporate governance is the relationship within the corporation and its relationship with the outside world, i.e. a system of relations between the governing bodies and the owners of the securities of the corporation (shareholders, owners of bonds and other securities), between the corporation and government bodies, as well as other interested parties, one way or another involved in the management of the issuer (company) as a legal entity.

The essence of corporate governance in a broad sense is the process of finding a balance between the interests of various participants in a corporation: shareholders and management, individual groups of persons and the corporation as a whole by implementing certain standards of conduct (ethical, procedural) adopted by the business community by the participants in the corporation.

The corporate governance model is a classic triangle: shareholders (general meeting) - board of directors (supervisory board) - sole (collegial) executive body of the company.

In the literature, the participants in the system of corporate relations are divided into two large groups: the joint-stock company itself and the shareholders of this company. These groups include:

• - management of the corporation (issuer);
• - large shareholders (majority);
• - minority shareholders (owning a small number of shares);
• - holders of other securities of the issuer;
• - creditors and partners who are not owners of the issuer's securities;
• - federal agencies executive power, executive authorities of the constituent entities of the Russian Federation, as well as local governments.

The interaction of these groups gives rise to the main conflicts in the field of corporate governance, which lead to the violation of the rights and interests of each of them. In addition, it must be taken into account that shareholders can be both individuals and legal entities, which complicates the system of corporate relations, makes it quite complex, with many different connections between the elements of this system.

Different members of the corporation have their own different interests. Differences in the interests of participants within the same economic society is not yet a conflict. But, as soon as the carriers of different interests take certain actions aimed at realizing their interests, at achieving goals that are different from the goals of other participants in corporate relations, a conflict arises, i.e. clash, disagreement, confrontation of the parties.

The conflict of interest in a corporation is primarily related to the separation of ownership from management. Managers in corporations are not always their owners. The interests of managers are to maintain the strength of their position, and their efforts are concentrated on the operational activities of the corporation. The discrepancy between the interests of managers and owners of shares, large and small shareholders, managers and state bodies is the main problem in corporate relations.

Corporate Governance is a set of measures carried out by both foreign and Russian companies to protect the interests of owners and, ultimately, to increase the value of the company and attract investment.

If in the West corporate conflicts are mainly expressed in the contradiction between the interests of managers and shareholders, then in Russia there is often an infringement of the rights of minority shareholders by majority shareholders.

In the management of corporate relations, a certain balance of interests of the majority and minority shareholders, the society itself and the state must be found. Such an impact on corporate relations, which ensures a balance of interests of various participants in these relations, minimizes conflicts of their interests, ensures the sustainable existence of corporate relations, and their progressive development is corporate governance. Therefore, in the broadest sense, corporate governance includes in general all relations that in one way or another affect the position of shareholders and the behavior of the joint-stock company itself. In such a broad sense, corporate governance is identical to corporate behavior, i.e. interaction of participants in corporate relations between themselves and the outside world - the business community, the local population, government agencies.

Let's pay attention to the principles of corporate governance. The principles of corporate governance are the initial principles underlying the formation, functioning and improvement of the company's corporate governance system.

The main principles of corporate governance were set out in the OECD Corporate Governance Principles, signed by ministers at the OECD Council Ministerial meeting on 26-27 May 1999.

The OECD Corporate Governance Principles are advisory in nature and can be used by governments as a starting point for assessing and improving existing legislation, as well as by corporations themselves to develop corporate governance systems and best practices.

In accordance with the Principles, the corporate governance structure of a company should ensure:

• - protecting the rights of shareholders;
• - equal treatment of shareholders;
• - recognition of the rights of interested parties provided for by law;
• - timely and accurate disclosure of information on all material issues relating to the corporation;
• - effective control of the administration by the board (supervisory board), as well as the accountability of the board to shareholders.

Economic factors are decisive in the formation of legislation, including legislation in the field of corporate governance.

It is known that "the legislature does not create the law - it only discovers and formulates it"; public relations emerge from the socio-economic relations that they fix and shape. Socio-economic relations are formed objectively, but as they are known ("discovered"), one can approach the conscious management of them. In other words, society (including the economy) can only be influenced indirectly, creating conditions for its development in the required direction. With regard to the economy, this is the creation of a competitive environment in which entrepreneurial activity is carried out, the establishment of uniform market "rules of the game", stable public requirements.

In order to improve corporate governance, the Ministry of Economic Development of Russia at the end of 2003 came up with an initiative to create an Expert Council on Corporate Governance. The most authoritative experts in the field of corporate governance, leading representatives of schools of corporate and financial law in Russia are included as members of the Council. The functions of the Chairman of the Council are assigned to the Deputy Minister. The tasks of the Council are to conduct an independent expert assessment of the Russian Federation normative legal acts and development of recommendations in the field of corporate governance.