Bulgaria recently adopted its first corporate governance code with help from IFC’s Global Corporate Governance Forum. As a newly acceded EU country, Bulgaria implemented the code to help its business community compete in the EU and global marketplaces, and is part of a larger IFC effort to help Southeast European (SEE) countries meet international best practices and assist candidate countries that wish to join the European Union.
Codes are effective tools for helping companies improve their governance practices. They provide clearer guidance for financial and non-financial disclosure, foster better engagement of minority shareholders, and clarify the respective roles of managers and directors.
Bulgaria’s code was quickly adopted by the Bulgarian Stock Exchange. The exchange’s listing rules now require companies to comply with the code or explain and disclose why they did not or could not meet certain provisions. Non-listed companies are encouraged to follow the code’s core recommendations as much as possible.
Other SEE countries are interested in launching corporate governance codes with the support of the Forum and PEP Southeast Europe (PEPSE) in order to meet best practice standards and as a step toward potential EU accession.
To help these countries learn more about corporate governance codes and standards, the Forum recently organized a high-level seminar in Brussels on the EU’s requirements and guidelines on corporate governance for candidate and potential candidate countries. Held at the EU Parliament in Brussels, representatives from many countries, including Albania, Bosnia & Herzegovina, Croatia, FYR Macedonia, Montenegro, Serbia, and Turkey attended.
Philip Armstrong, Head of the Global Corporate Governance Forum, said, “What is important is for these countries to recognize that these requirements are broadly in accordance with internationally acceptable standards of corporate governance. It is necessary, therefore, to really look at how the adoption of these standards and rules, regardless of any anticipated application for accession to the EU, will improve market integrity and economic performance.”
The Forum’s code development work extends beyond Europe to other regions. Countries in Africa, Asia, and the Middle East are now using the lessons learned and materials developed by the Forum as a benchmark for developing their own guidelines. The Algerian Corporate Governance Task Force, for example, will base some of its guidelines on the EU recommendations and the Forum’s publication, “The EU Approach to CG—Essentials and Recent Developments.”
Read more about the EU Approach to Corporate Governance here and view seminar papers and presentations here.
Contributed by Catherine Anne Hickey, Corporate Governance
