Question

Q2)

A listed company has been recently trying to adhere to corporate governance provisions who are a requirement of the Stock Exchange.

The company’s CEO holds 60% of the company’s share capital with the remaining holding being widely disbursed. The CEO also took up the role of the Chairman in an attempt to minimize costs as he has stated, however analysts have been claiming that he took up this role to avoid questioning of his decisions.  

Required:

Taking into account the necessity of good corporate governance principles within the company, critically evaluate the issues arising from the case.

Answer 1

Corporate governance is carried out in accordance with the Company’s Corporate Governance Code and is based on the following principles:

• Accountability. The Code provides for accountability of the Company's Board of Directors to all shareholders in accordance with applicable law and provides guidance to the Board of Directors in making decisions and monitoring the activities of the executive bodies.
• Fairness. The Company undertakes to protect shareholders' rights and ensure equal treatment of shareholders. The Board of Directors shall give all shareholders the opportunity to obtain effective redress for violations of their rights.
• Transparency. The Company shall provide timely, accurate disclosure of information about all material facts relating to its activities, including its financial situation, social and environmental indicators, performance, ownership structure and governance of the Company, as well as free access to such information for all stakeholders.
• Responsibility.The Company recognizes the rights of all interested parties permitted by applicable law, and seeks to cooperate with such persons or companies for their own development and financial stability.

In its corporate governance practice, Inter RAO seeks to follow the general principles laid down in the Code of Corporate Conduct recommended by the Federal Service on Financial Markets.