Corporate rules key for survival
The introduction of principles of corporate governance and International Accounting Standards (IAS) will help bring Greek firms nearer to the arena of international business, says Costas Mitropoulos, chairman of Kantor consultants, in an interview with Kathimerini. He notes the need for Greek enterprises to adapt to the models projected by a Europe without borders. «Most firms see their reorganization principally on a legal level, but others are focusing their efforts on the organizational dimension itself. In both cases, time will be the judge of success; in any case, it will depend on meeting market requirements,» he says. He notes, however, that in the prevailing fluid business climate, there are no recipes for success. «Generally, the proposed terms aim to restrict the initiatives of the owner/chief shareholder, who often decides without taking into account the small stockholder. In my opinion, this is just the start and big firms must take more steps. It is a good beginning for the governance of firms to become more corporate, because in Greece it remains quite personal.» The application of such measures is bound to increase costs. «The requirements set by the draft bill (unveiled yesterday) are high-cost, and rather excessive for small firms aiming to be listed on the bourse. However, the application of the principles of corporate governance is primarily based on them, on the responsibilities of the board of governors. I do not expect that there will be any serious problems in the big firms. On the contrary, application of the principles will help rationalize things.» Mitropoulos is concerned about mid-sized firms. «The situation there is gray and it depends on the chief shareholder’s degree of control whether the transition will be a smooth one. If he is dominant, no board can observe the role required by law. This category of firms will be the testing ground of the success of this draft bill. On the other hand, it is certain that if the measures are adopted, mid-sized companies will be treated much better by credit institutions, both at home and abroad.» Banks «The repercussions will be significant for the overall picture of results and evaluations in the entire financial and insurance sector,» he notes. Although the banking sector is certainly in need of greater concentration, this is more likely to happen first among small banks before a second wave of large-scale consolidation.» «Greek banks are very small by European standards, therefore, if we wish to play the big game, our biggest three, National, Alpha and Eurobank, have to grow abroad, to merge with foreign banks in order to gain access to international environments and the momentum required in the European arena. My assessment is that we’ll have three big banks in the long-run and a few smaller ones specializing in specific market segments,» Mitropoulos says. The New Economy sector, an indispensable part of the global economy, presents a degree of uncertainty. «In Greece, e-business is non-existent, it is in an embryonic state, and the problem is in the mistaken way this new form of entrepreneurship was perceived. Besides, an ‘island’ on the periphery of Europe will be limited to a mere order-reception circuit, without adequate support from a back-office. Firms are not set up to operate in a fully electronic way. It may be possible in five, seven or 10 years’ time.» Mitropoulos is optimistic about the prospects of some Greek firms in the Balkans. «Those firms that entered these markets with a strategic, rather than speculative, perception of their presence certainly won. OTE telecom is a characteristic example: It is the most important telecommunications group in Southeastern Europe,» he notes. «I believe that Greece has to go beyond its borders. We must become very competitive in some sector where we have a comparative advantage and fully tap it. Much in the same way a nation does, an enterprise is squeezed if it is not able to transact with others abroad and recognized by others. The cycle is a permanent one; everyone has to plan from the beginning, always recognizing the risk of a better competitor.» Draft bill unveiled The boards of governors of listed firms will have to file reports to the Capital Market Commission detailing all transactions with affiliates, as well as report on the reasons for share capital increases and any divergence in the use of funds raised thereby, according to the draft bill on corporate governance tabled by the Finance Ministry yesterday. Other provisions require listed firms to maintain internal operating regulations and independent internal control procedures, and detail the rights and obligations of shareholders. Internal operation regulations will have to include departments dealing with internal control, shareholder services and company announcements; definition of the responsibilities of the executive and non-executive members of the board and procedures for hiring and assessing the performance of executives; procedures for monitoring transactions by the members of the board, executives and persons who, due to their relationship with the company, possess internal information on the company’s securities and those of its affiliates; procedures for announcing and publicizing important transactions by members of the board related to the company, its main clients or suppliers; rules governing transactions between affiliates and monitoring such transactions and making them known to the bodies and shareholders of the company.
