About corporate governance

“Corporate governance is the system by which business corporations are directed and controlled. The corporate governance structure specifies the distribution of rights and responsibilities among different participants in the corporation, such as, the board, managers, shareholders and other stakeholders, and spells out the rules and procedures for making decisions on corporate affairs. By doing this, it also provides the structure through which the company objectives are set, and the means of attaining those objectives and monitoring performance” - OECD, 1999.

Corporate governance is a new concept in Southeast Europe. Still, it affects millions of new shareholders and thousands of privatized companies across the region. You can think of corporate governance as “shareholders democracy”, it promotes fairness, transparency and accountability.

Corporate governance deals with the ways in which suppliers of finance to corporations assure themselves of getting a return on their investment. Simply, good corporate governance is a precondition for growth and investments.

Joint Stock Companies in Southeast Europe
Country	Number of JSCs
Albania	450
Bosnia and Herzegovina	1,430
Macedonia, FYR	581
Serbia and Montenegro	1,675
Total:	4,136

Corporate governance facts:

· Investors pay for good corporate governance
· Good corporate governance improves company’s performance
· Good corporate governance improves company’s ability to access cheaper debt

Elements of good corporate governance:

· Well-defined shareholder rights
· An accountable business environment
· High levels of transparency and disclosure
· Empowered board members

Good corporate governance achieves the following:

· Management, board of directors, shareholders and other stakeholders are aware of their roles and responsibilities
· Creates a structure thorough which the objectives of the company are set, and the means of attaining those objectives and monitoring performance are determined
· Accounting and financial best practices are followed
· Minority shareholders are protected against abuse from management and controlling shareholders

To learn more about corporate governance please visit the IFC’s Investor and Corporate Practice webpage, OECD Principles of Corporate Governance webpage and Global Corporate Governance Forum Knowledge Center.

Corporate Governance System

Relating publication: Irresistible case of Corporate Governance (PDF)

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