Corporate Governance: international trends and Ukrainian realities. Does Ukrainian practice keep pace with the world processes?
International trends and Ukrainian corporate governance practices were at the heart of the discussion of the participants at the IV International Corporate Secretaries Forum, which took place on June 16 in Kyiv. The Forum was organized for the fourth time by the Corporate Governance Professional Association (CGPA) and the International Finance Corporation (IFC), with the support of the National Securities and Stock Market Commission and ICSA: The Governance Institute.In Ukrainian companies, the post of the Corporate Secretary is already widely used. The work of the Corporate Secretary is still poorly regulated by the norms of the national legislation in Ukraine, and the requirements for it are formed of the best practices of corporate governance applied in Europe and North America, the presence of a Corporate Secretary in the company structure significantly increases the level of communications, makes the entire Corporate Governance system more effective. This year, the Forum gathered more than 140 participants, including heads of the boards, members of the management and supervisory boards, practicing lawyers in corporate law, corporate secretaries, specialists in consulting and audit firms working in the field of corporate governance.«Traditionally, the Corporate Secretaries Forum is one of the largest platforms for discussing normative innovations, best practices of Ukrainian and foreign colleagues in the field of corporate law and governance,» said Oleksandr Okuniev, the Head of the CGPA Management Board.Olena Voloshina, Head of IFC Operations in Ukraine , addressed the Forum participants with a welcoming speech, stressing the importance of introducing the latest international corporate governance practices in Ukraine to increase the investment attractiveness of Ukrainian companies on the international market. She noted that the popularity of the Forum is growing every year: «Now it has become fashionable to have “the right” corporate governance and a “right” corporate secretary.»The Head of the National Securities and Stock Market Commission of Ukraine Timur Khromayev, Deputy Chairman of the State Property Fund of Ukraine Yuriy Nikitin and Director of the
Department of State Property Management of the Ministry of Economic Development and Trade of Ukraine Elena Dyachenko characterized
the role of the State and its structures in the system of corporate governance. By their definition, the State in corporate relations acts as a regulator, shareholder, arbiter and “director for development.” Timur Khromayev stressed that first of all an appropriate infrastructure should be created, which will include the whole range of financial instruments, and only on this basis in Ukraine the capital and securities market will be able to develop at full speed and form a request for proper corporate governance. So, the work of the regulator in this sphere is more perspective-oriented. Elena Dyachenko noted that the State should not continue to own most of the enterprises. There are industries in which private property is more efficient, therefore, it was decided that with the majority of 1500 state-owned enterprises in operation, most will be privatized. Yuriy Nikitin shared his opinion that without proper corporate governance, it is difficult to prepare an enterprise for privatization.
A lively discussion was prompted by the issue of introducing and selecting independent directors to the supervisory boards of state-owned enterprises.«We are talking about giving full power to independent directors. It seems to be correct. But we do not have a model of liability insurance for directors, there is no system for their disqualification. Issues of liability of officials, such as solved through a system of “derivative lawsuit,” but in practice courts consider literally 2-3 cases, none of which is brought to a logical conclusion. The main problem is the lack of an institution that would apply these mechanisms, even if they existed. This situation raises some concerns,» said Oleksandr Okuniev, the CGPA Management Board Head.«As for the procedure for selecting directors for the supervisory boards, the CGPA project «National Registry of Corporate Directors» can help in this process», said Igor Mityukov, Chairman of the Supervisory Board of the NDU, who moderated the second session of the Forum. This session was devoted to innovations in the field of corporate governance, in particular, the GRC (Governance-Risk-Compliance) concept, which determines the development of corporate governance in the world. Simon Osborne, ICSA Chief Executive, noted that one dimension of the future of corporate governance is the provision of an opportunity for everyone. One regulatory and legal framework for corporate governance will never be sufficient to provide “options for all”. Its most obvious drawback is that it currently only applies to listed companies. The second disadvantage is that shareholders provide its role, and they are responsible only to their own stakeholders, and not to society as a whole. In addition, Mr. Osborne noted that the Ukrainian Corporate Governance Institute has become the official examination center of the ICSA: The Governance Institute in Ukraine. Oliana Gordiyenko, EBRD, dwelt on the question for whom the corporate secretary works, because being a member of the jury of the competition «Corporate Secretary of the Year», she was confronted with the fact that the Corporate Secretaries themselves do not always correctly understand their function and main task. «The corporate secretary should work in the interests of the company, ensure the integrity and conduct a dialogue between all interested parties, and promote and monitor the implementation of jointly adopted decisions,» Mrs. Gordienko said. Representatives of Ukrainian business Oleksiy Povolotsky, Head of Corporate Governance Department DTEK, and Volodymyr Igonin, Counsel of Vasil Kisil & Partners, tried to draw parallels and answer the question, if Ukrainian practice is successful in world processes. Oleksiy Povolotsky answered the question of how compliance and corporate governance functions in the company can successfully complement each other.
Alison Dillon Kibiridge, IFC and ICSA Corporate Governance Expert, focused on the gender balance and its impact on company performance; she gave practical advice to women on overcoming gender problems in their work. The question of how a corporate secretary can help a company become better, and what new areas of responsibility for the corporate secretary are actualized and required by modern corporate governance practices were widely discussed. «Somebody, who has high integrity, is happy with detail, trustworthy and has the courage to speak up. I don’t think you want somebody who is comfortable to be in the background, but he or she should be happy to step up if they see something going wrong. I think to make the role more valued, it needs to be more visible», – Ken Rushton, the ICSA member, shared his opinion.
In conclusion of the discussions, the results of an annual joint research of the level of Corporate Governance of Ukrainian companies, conducted by CGPA and the IBI-Rating Agency, were announced. JSC Raiffeisen Bank Aval was recognized as the winner of the best practice of Corporate Governance in the banking sector in 2016, and Ukrtelecom PJSC became the best among the real sector companies. The culmination of the Forum was a ceremony of announcing the results and rewarding the winners of the competition «Corporate Secretary of 2016» for personal professional achievements in the field of corporate governance in Ukraine. The winner of the Competition was Alena Ageyenko, Head of the Corporate Governance Department of JSC «Shipping Company Ukrrichflot». Laureates of the Competition were Lyudmila Mikhailova, Corporate Secretary of JSC RETAIL GROUP, and Anastasia Andreeva, Manager of the Corporate Governance Department of DTEK. The nomination «Dedication to the Profession» was given to Irina Varetsa, Deputy Head of the Corporate Rights Department at Ukrtransgaz, and Roman Kuzyuk, Director of the Corporate Management Department at Nova Poshta LLC, received the nomination «Promotion of the Profession». The nomination «Aspiration for Self-Development» was presented to Oksana Sivashenko, Deputy Head of the Department – Head of the Corporate Relationships Department of the Property and Corporate Relations Department of Ukrtransgaz. For the second year in a row, the CGPA awards a special prize «For a significant contribution to the development of the profession». The winner – a company with outstanding achievements, breakthroughs in corporate governance – is determined by the Head of the CGPA Management Board. This year, the prize was awarded to the Group of Companies «Nova Poshta» for the success in establishing a Supervisory Board in a private company in Ukraine and the introduction of independent directors. The co-founder of the company Vyacheslav Klimov received the prize. PHOTO