Научная статья на тему 'Features of the national model of corporate governance'

Features of the national model of corporate governance Текст научной статьи по специальности «Экономика и бизнес»

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Аннотация научной статьи по экономике и бизнесу, автор научной работы — Begmatova Dilorom

In this article, the author gives a precise definition of corporate governance. Made a thorough analysis of the influence exerted corporate governance as to increase the flow and reduce the cost of capital, which is a necessary and indispensable component for the implementation of their investment and financial activities. In addition to study and analyze the impact of various factors on the formation of corporate governance structures. The author gave a detailed description of the model of corporate relations in the Republic of Uzbekistan. In the reflected and have been shown in detail all stages of development of the legislation regulating corporate governance in the republic.

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Текст научной работы на тему «Features of the national model of corporate governance»

Features of the national model of corporate governance

Konstruktionen des Modells und vermuten sehr enge Verbindung zwischen den Elementen, die Erreichung der Ganzheit und der Gleichartigkeit auf dem Gebiet der Entwicklung der Innovationen. Das Systemherangehen in der Vervollkommnung

der innovativen Tätigkeit ist auf die Beilegung der Einseitigkeit im Laufe der Unternehmensführung, der Erreichung der geforderten Übereinstimmung und der deutlichen Ausgeglichenheit in der Entscheidung gezielt.


1. Konzeption der Innovationsentwicklung der Republik Kasachstan bis zu 2030. Astana, 2012. www. kazenergy.com/images/stories/Pravovaia.. ./konception.doc

2. Gesetz der Republik Kasachstan vom 9. Januar 2012 № 534-IV «Über die staatliche Unterstützung der industriellen und innovativen Tätigkeit». www.nomad.su

3. Programm der Entwicklung der Innovationen und der Mitwirkung der technologischen Modernisierung in Republik Kasachstan in 2010-2014. Ist von der Verordnung der Regierung der Republik Kasachstan vom 14. April 2010 behauptet. № 302.//http: online.prg.kz

4. Jegorowa A. A. Innovationspotential wie ein Faktor der Entwicklung der Region/A. A. Jegorowa //Wirtschaftliche und juristische Aspekte der Entwicklung der Regionen. - 2009. - № 2 - S. 24-28.

Begmatova Dilorom, Republic of Uzbekistan, Tashkent Competitor of Tashkent State University of Economics.

E-mail: ya-dilow2013@ya.ru

Features of the national model of corporate governance

Abstract: In this article, the author gives a precise definition of corporate governance. Made a thorough analysis of the influence exerted corporate governance as to increase the flow and reduce the cost of capital, which is a necessary and indispensable component for the implementation of their investment and financial activities. In addition to study and analyze the impact of various factors on the formation of corporate governance structures. The author gave a detailed description of the model of corporate relations in the Republic of Uzbekistan. In the reflected and have been shown in detail all stages of development of the legislation regulating corporate governance in the republic.

Keywords: joint-stock company, corporate governance, model of corporate governance, corporate law.

In Uzbekistan, the result of gradual reforms implemented in the years of independence created a mixed economy dominated by private property. In the country today operates more than 1,200 public companies, 219, 2 thous. of private enterprises’ businesses, 67,3thous.of private farms and other. Issued by joint stock companies’ shares at par value amount to more than 6,8trln.UZS, than 1,1 trln. More than in 2011. The state’s share in the equity capital increased to a minimum level. In the country’s economy in 2012 attracted 22, 1 trln. UZS investments, of which 4776, 2 billion sums (or 21, 6%) were foreign investments, of which 79, 4% is foreign direct investment.

However, the government continues to support major social and productive projects involving foreign countries, creating favorable conditions for them and guarantees for successful investment activity in Uzbekistan.

Corporate sector is one of the most important components of the institutional structure of the economy of the republic, without the effective functioning of which is impossible to imagine the further economic development of Uzbekistan. Corporate governance plays a special role for national economic development, which provides increased flows and reducing the cost of


Section 1. Management

capital needed for their companies investing and financing activities.

What is corporate governance in the modern joint-stock company? Corporate governance in the narrow sense ofthe word — a system ofrelations between the shareholders (owners) and the managers of the company, aimed at protecting the interests of shareholders and decrease the possibility ofopportunistic behavior ofmanagement. Corporate governance in the broader sense — is the balance of interests ofall the shareholders of the company interested in buying the rights to control and part of the cash flows. Thus, the essence of corporate governance largely boils down to good management ofpublic organizations, whose work provides income to the owners in current period and at the same time corporation adequately responds to inquiries surrounding external environment to achieve sustainable development in the long term.

Despite the simplicity of this definition, the answers to the question of what a good management of the company and how to build it were the main problem at all times. Try to give a simple answer with regard to Uzbekistan and to identify the main features of corporate governance, based on knowledge of the characteristics of established corporate governance models in other countries.

Although the practice of corporate governance is evolutionary in nature, a certain conservatism is characteristic of any model of corporate governance, and the formation of its specific mechanisms caused by historical processes in a particular country. This means in particular that we should not expect rapid changes in corporate governance model followed by any radical legal changes. National models of corporate governance are formed by many decades and this process is influenced by many factors (see fig. 1.)

Fig. 1. Influence factors on the formation of a national model of corporate governance

From historical point of view, we can talk about a few existing well-known models of corporate governance, which are inherent to companies with operations in different countries, depending on the characteristics of the national history, ideology, political environment. Fundamental differences between these models are covered in a different level of protection of investors (shareholders and creditors) in the country, a high or low level of

ownership concentration in the different control systems. A brief analysis of the influence of these factors on the formation of governance structures are presented below.

1. Protection of investors’ rights. Legal protection of the rights of investors determines the climate of corporate relations in the country, if the protection of rights is weak corporate governance mechanisms (internal and external) should act as a compensator


Features of the national model of corporate governance

that is the higher level of legislative support of the rights of shareholders especially minority and the level of effectiveness of law enforcement systems the more potential investors will want to invest in stocks. As the main internal mechanism of corporate governance in the Company acts as a supervisory board (board of directors) which is designed to ensure the interests of all shareholders.

It is assumed that in countries where legal system is based on British law, the system of investor protection is governed by the weakest, in contrast to those states where civil law predominates rules. Scandinavian countries occupy an intermediate position this series [5].

1.Concentration of ownership and shareholder structure. Concentration of ownership reflects the specifics of an individual company. Here to talk about the two basic models of the corporation: a model W (widely held corporation) — company with a spray (the Anglo-Saxon model) and model B (block holder model) — company with concentrated ownership. Examples of countries belonging to the first model of corporate governance — the US, UK, Ireland, South Africa, India, the second model — Germany and Japan [4].

There is another division of all current models of corporate governance — on market-based and bank-oriented. In market capitalization of companies, the model is completely determined by the stock market, which in this case becomes a market for corporate control. Banking model most of the corporations controlled by banks, as the main form of financing is becoming a bank loan [1].

In a number of countries have developed intermediate model of corporate governance. For example, in Australia, Canada and New Zealand which generally refer to the Anglo-Saxon model, ownership is more concentrated than in the US and UK, and is the dominant owner is a family company.

Research has shown that no model has obvious advantages over the others and cannot be called universal. Conversely, the last decade has been characterized by convergence of difference corporate governance systems for virtually all the leading countries of the world.

Model of corporate relations in Uzbekistan is specific, and distinct from the Anglo- Saxon and from

Block holder model, although it has similar features with each of them. In recent years, the development of domestic corporate governance entails more expressions Model B that is manifested in a gradual decrease in the number of small shareholders, the layer that formed as a result of the first wave of privatization. The growing integration of financial markets, the removal of national borders and the globalization of commodity markets lead to convergence of the legal and institutional norms that determine differences in models of corporate governance. Thus, the national system of corporate governance, which has not yet had time to finally form, may be more mobile, particularly during rethink management processes of companies as a result of the impact of the financial and economic crisis.

Today’s globalized world economy require domestic corporations building corporate governance processes in accordance with recognized international standards. The formation of an effective system of corporate governance is an objective necessity, at least for 6500 organizations of the republic, having as the legal form of joint stock company.

Corporate legislation of Uzbekistan develops in line with global trends, the most important of which are the following: tightening disclosure requirements, enhancing the role of control by owners of governments, strengthening judicial control over the activities of corporations, the development of legislation to protect the rights of minority shareholders and creditors of a corporation, tighter regulation of issue of shares, change in the share capital, increased attention to issues of reorganization.

President of the Republic of Uzbekistan May 6, 2014 signed the Law “On Joint-Stock Companies and Protection of the rights of shareholders” in the new edition. The law provides a clearer definition of the powers, rights and responsibilities of corporate governance bodies and importance ofthe supervisory boards, general meeting and the company’s audit committee with the practical application of the new realities and the development of market relations, increasing the transparency and the availability of information about the activities of the company


Section 1. Management

for all shareholders and potential investors [2]. Moreover, although the company law is the key to corporate governance, it is not enough. Other laws and regulations also have a significant influence on the formation of corporate behavior. To such an important law include the law “On Limited and Additional Liability” (2001) and the law “On the Security Market” (2008). Resolution of the Cabinet of Ministers of Republic of Uzbekistan dated August 22, 1998 “On measures to improve the management of joint-stock companies” an institution of state attorneys and managing trustees, it ordered the appointment mechanism and basic provisions of the management of their state stake in the authorized capital of the company. A number of model clauses approved the documents: the general meeting of shareholders, on the Supervisory Board, of the executive body of the company and other.

September 12, 2014 signed the Law of the Republic of Uzbekistan “On exchanges and exchange activity” in the new edition. A new edition of the Law, unlike the previous one, adopted in 1992 and updated in 2001, has a number of significant changes, including new requirements for Exchange, Exchange members and commodity prices, the introduction of completely new types of financial instruments and transactions, as well as giving the status of a “market” exchange price of securities [3].

Submitted by the Government of Uzbekistan a number of changes to the existing legislation will contribute to the further introduction of international standards and principles of corporate governance, disclosure, payment of dividends, attracting independent directors, and as a result — is to increase the investment attractiveness, both domestic and foreign stock markets as well as a successful IPO of several large and medium-sized joint-stock companies. So the market capitalization of the company shares belonging to official exchange listing, as of December 31, 2013 amounted to 6 364, 2 billion UZS (as of December 31, 2012-5 448, 9 billion UZS).Notable is the fact that the volume registered in 2013 on the issues of shares exceeds 208.8 billion UZS rate in 2012. January 1, 2014 in circulation there are (at face value) of shares to 10, 25 trln. UZS; corporate bonds at 374, 9 billion UZS; deposit (inset) certificates of banks to 592.0 billion

UZS. As of January 1, 2014 in the Unified State Register of Securities Issues made a record of 14, 8 thousand share issues with the volume issues 17, 34trillion UZS. [6].

Growing number of IPO of domestic companies shows focus of the company on the stock market, which soon may bring the republic to the models of the property with spray form of property. However, there are possibilities of financial markets only large joint-stock companies and banks, and many participants avoid new issues for fear of losing corporate control. As shown by many independent studies, a higher level of corporate governance practices observed in those joint-stock companies, which held IPO and/or are listed on the stock exchange.

Legislation of the Republic of Uzbekistan demarcated minimum charter capital for joint stock companies — an amount equivalent to 400 thousand USD. Secured a three-tier management structure of the company: the supervisory board, the executive body: the sole executive body and (or) collegial executive body, general meeting of shareholders. Body of internal control of financial and economic activity of the company is the audit committee.

The national model of corporate governance based on the principles of separation ofobservational and administrative functions (dualistic principle) as well as the principle of freedom of education of the executive body of the Company. Decision on the appointment of Director (Chairman of the Board) adopted by general meeting of shareholders. Contract of employment with the director is valid for 1 year from the adoption of the annual general meeting of shareholders, and in some cases, the Supervisory Board decision on the possibility of extending or terminating. Decision of the general meeting of shareholders of the powers of the executive body may be transferred by agreement of the management company. In joint stock companies, the authorized capital of the state share of more than 25%, the state appointed attorneys, and then the state share transferred to the management of a professionally managed company.

Supervisory Board, as mentioned above, is the main internal mechanism of corporate governance. Organization of work of the Supervisory Board in


Features of the national model of corporate governance

domestic joint-stock companies reveals many similarities with single-level councils British or American companies: the supervisory board is formed exclusively of individuals outsiders, prohibited from participating in its composition of persons employed in these joint-stock companies, as well as members of the collective or the individual executive body, but allows for the participation of non-shareholders of the joint-stock company.

It should be noted that legislating corporate governance model and the second is based on the real economic processes, including globalization. Fundamental problem from the point of view of the state — a review of corporate governance in the context of the protection and security of property rights (the rights of investors, shareholders’ rights) and balancing the interests (rights) of all participants of corporate relations. In modern conditions, the future of domestic corporations depends on the competitiveness of the national economy, as a source ofhigh competitiveness is to follow the standards of corporate governance.

Additional efforts are required for the active involvement of all stakeholders (especially investors and business representatives) in the process of all discussing regulatory initiatives to ensure that the domestic corporate law and corporate governance standards were developed taking into account the already existing conditions. However, during the development of the corporate governance system should refrain from simply copying the provisions of the various corporate governance codes and the adoption of non-documents “for show”. Paramount importance should be placed expediency: corporation should implement some elements of corporate governance, taking into account their business goals and objectives, stage of development of the organization, as well as the expectations of the public limited company will all stakeholders.

Special attention should be paid to the introduction of internal corporate codes. Code should be seen not as an external public document aimed at establishing the company’s image with good corporate governance, as well as a working tool to ensure the quality of management.

Economic and financial crisis, in our opinion, may contribute to self-determination of a national model of corporate governance, which should not be lowered from above through legislation and emerge from the experience of companies. In our opinion, after the crisis it is advisable to make a “revision” of corporate governance in the company: need to evaluate the strengths and weaknesses of the company’s business, to analyze the structure of control in terms of compliance system of controls to their functions, check availability and the effectiveness of feedback channels that allow to track place of the company in the market, see the external and internal threats and to take measures to leveling risks. In this context especially important to a broad introduction to the practice of rating the effectiveness of corporate governance in joint stock companies of the republic.

One of the important factors that determine the level of development and the effectiveness of corporate governance is the information transparency of the company. It is no coincidence that this factor is used in almost all expert ratings and research reports characterizing promotion companies on the way to the best standards in the field of corporate governance. Quality disclosure of company processes occurring in it, including materials of various reports, characterizes the degree of transparency, ready for multilateral dialogue with stakeholders. However, in many cases, open source is difficult to make an objective idea about the company, since the presence in it of a certain set attributes of corporate governance, which is often limited disclosure, is not yet a peremptory condition performance of all stated mechanisms.

In this connection, it is important to pay attention to the following points: it is necessary to improve the content of statements aimed at enhancing the quality of informing the various stakeholder groups about the company; companies should participate in a wide variety of projects with different stakeholder groups, including for the exchange of experience in implementing corporate projects and programs aimed at improving internal and external processes, identifying common problems that require consolidated promotion opinions of the business community to the authorities, the media, etc.


Section 1. Management

Thus, the effective corporate governance cannot exist without good governance, but the latter cannot take root if the private sector of the economy and its main participants-stock

companies do not become transparent and law-abiding corporate actors. Understanding of this interdependence should be a key aspect of any reform.


1. Buhvalov, A. B. (2005) Korporativnoe upravlenie kak obekt nauchnih issledovani/Rossiskiy jurnal menejmenta, № 4. (Corporate governance as an object of research, the Russian management journal, № 4)

2. Law of the Republic of Uzbekistan on amendments and additions to the law of the Republic of Uzbekistan “On joint-stock companies and protection of shareholders’ rights” № 370 on May 6, 2014. Collected Legislation republics.

3. Law of the Republic of Uzbekistan on amendments and additions to the law of the Republic of Uzbekistan “On exchange and exchange activities” № 375 on September 12, 2014. Collected Legislation republics.

4. Kapelushnikov, R. I. (2005) Concentration of ownership and corporate governance. (Preprint)

5. Expert-analytical report “Corporate Governance in Russia: the definition of the boundaries of the national model”. (2011) Moscow, Managers Association.

6. http://www.uzse.uz/new/analyt/bulletin/asp/


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