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ADB Conducts Regional Workshop in Almaty on Corporate Governance

(ALMATY, 15 April 2005) - The Asian Development Bank conducted a workshop at the Hotel Kazakhstan in Almaty on 15 and 16 April on corporate governance. Participants from four countries attended-Kazakhstan, Kyrgyzstan, Azerbaijan and Tajikistan. The workshop was part of a regional project for financial sector development, and focused on measures for strengthening corporate governance (governance of joint stock companies) in four areas-the legal framework, company practices, government regulation and promotion.

The consensus of the participants was that the legal framework for corporate governance-the law on joint stock companies in three countries-needed to be strengthened in important respects. This includes strengthening the role of the board of directors of a company and improving disclosure to shareholders of information concerning a companies' activities and financial performance. The project found that company practices are sometimes better than required by law, including in communications with shareholders at annual shareholders' meetings. However, in most companies corporate governance is generally not consistent with international best practices, partly because companies followed the deficient legal framework.

The regulatory framework for corporate governance varies among the countries ranging from virtually no regulation in one of the four countries, excessive intrusion into company affairs in another and moderate regulation in another. The focus of regulation should be sharpened given limited resources of regulatory agencies.

For promotion of good corporate governance, much needs to be done in the areas of education of shareholders concerning their rights and responsibilities and in training of company directors so companies can be governed in a more transparent and efficient manner.

The participants also discussed the possibility of developing a regional strategy in corporate governance, which would involve harmonization of laws and regulations pertaining to corporate governance, at least for joint stock companies which shares are broadly traded. Such a harmonization, which should be based on internationally established standards and best practices, could help to attract new investors, both domestic and foreign, and could stimulate development of a regional capital market, because investors in the countries of the region could have confidence in the high standard for governance of companies in other countries.

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