Listed firms, mostly of small capitalization, are in a race against time to meet the November 17 six-month deadline for the application of the rules of corporate governance. More than 300 of them have scheduled extraordinary general meetings (EGM) until that date to approve changes that will bring them in line with requirements. Sources say those failing to do so will be subject to fines, as it is unlikely that any extension of the deadline will be granted. Overall, firms seem to be split into two «speeds.» Large-capitalization companies, mainly those comprising the FTSE/ASE-20 index, have already carried out the required changes and, indeed, some have gone beyond what the law stipulates. Most, however, still have much to do, particularly as regards the entry of non-executive, independent members onto the board of directors and the introduction of mechanisms for coordination and internal control. Most scheduled EGMs concern election of new boards. «The provisions of the law are no different to those in other countries,» says economist Lucas Spanos, of Athens University, who stresses that the chief weakness of most Greek listed firms lies in the organization and functioning of their boards of directors, due to the predominance of family members and the lack of internal control. «The issue is timely not just because of the new special law, but mainly because it directly concerns the modernization of Greek enterprises and economy,» says Haris Meidasis, principal consultant at Hay Group. The main issues which corporate governance is seen as addressing in Greek firms are business planning procedures, a more active role for the board of directors, the development of organizational and administrative structures, performance measurement, coordination and internal control mechanisms, personnel selection systems, appropriate remuneration policy and the promotion of business culture. Analyses have shown that listed firms that apply practices of corporate governance enjoy lower capital raising costs and higher valuations, due to a «credibility premium» that may be as high as 25 percent. Some Athens bourse-listed firms complain that corporate governance entails higher operating costs in lean times. But Spanos is categorical: «It is an investment with a high return. The foreign markets want it, the Greek institutionals want it and firms give a better picture of themselves.» He adds that it is necessary for firms to make more changes, such as introduce web pages with information for investors in Greek as well as English, regularly publicize corporate events and apply the rules of corporate social responsibility beyond charities and sponsorship of social events. «Corporate governance practices are proven to do away with many obstacles to business, but it is imperative that firms are encouraged to apply them on a voluntary basis,» says Tassos Alexandridis, executive vice president of the Association of Industries of Northern Greece.