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South East European Roundtable: Overview of ROSC Corporate Governance Assessments

This document provides an overview of the ROSC Corporate Governance Assessments conducted at the South East European Roundtable in Bucharest in September 2001. It discusses the background, features of CG ROSC Assessments, the Croatia CG ROSC, key country features, and diagnostic and policy recommendations.

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South East European Roundtable: Overview of ROSC Corporate Governance Assessments

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  1. ROSC Corporate Governance Assessments South East European Roundtable: Bucharest September 20 – 21, 2001

  2. Overview • ROSC • Background • Features of CG ROSC Assessments • The Croatia CG ROSC • Key country features • Diagnostic/Policy Recommendations South East European Roundtable: Bucharest September 20 – 21, 2001

  3. ROSC background • G7 - Financial Stability Forum • Objective: crisis prevention • 12 standards – 3 categories • IMF and WB mandate to assess country compliance South East European Roundtable: Bucharest September 20 – 21, 2001

  4. Features of CG ROSC • Voluntary country participation • Template based on OECD Principles • Standard ROSC report • Publication/dissemination South East European Roundtable: Bucharest September 20 – 21, 2001

  5. Croatia CG ROSC –Key country features • Legacy of transition and conflict • 65 companies listed on ZSE, 480 companies listed on Varazdin OTC • Civil law framework • New and vulnerable institutions • Drivers of change: EU membership South East European Roundtable: Bucharest September 20 – 21, 2001

  6. Diagnostic & policy recommendations (1) • Share transfer • Diagnostic: “Vinkulacija” restricts transfer pending company approval • Recommendation: Amend company law to remove right to block share transfer for all joint stock companies South East European Roundtable: Bucharest September 20 – 21, 2001

  7. Diagnostic & policy recommendations (2) • Participation in decisions on fundamental corporate changes • Diagnostic: Decisions are taken at shareholder meetings with vote of those present and voting • Recommendation: Supermajority vote of all outstanding shares South East European Roundtable: Bucharest September 20 – 21, 2001

  8. Diagnostic & policy recommendations (3) • Disclosure of material information • Diagnostic: • Full adoption of IAS • Weak auditing practices • Material non-financial information • Recommendation: Incentives to graduate to higher tiers South East European Roundtable: Bucharest September 20 – 21, 2001

  9. Diagnostic & policy recommendations (4) • Board responsibilities • Diagnostic: Unclear roles and responsibilities for directors • Recommendation: • director training • code of best practice • business judgment rule South East European Roundtable: Bucharest September 20 – 21, 2001

  10. More information • About the ROSC program: http://www.worldbank.org/ifa/ • About corporate governance and other World Bank private sector advisory services: http://rru.worldbank.org/ • About the global corporate governance forum: www.gcgf.org South East European Roundtable: Bucharest September 20 – 21, 2001

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