Firms near date for new rules of governance

The Finance Ministry is due to decide today on the extension of the six-month deadline requested by listed companies for the implementation of the principles of corporate governance which expires on November 17. To date, about 100 of the 350 companies listed on the Athens Stock Exchange have called extraordinary general meetings in order to elect new boards of directors which have to include independent and non-executive members. In a letter to the ministry and the Capital Market Commission, the chairman of the Association of Athens Stock Exchange Listed Companies (EEEXA), Panayiotis Drakos, has asked for an extension to the adaptation period until June 30, 2003. The basic study prepared by the University of Athens with the collaboration of listed companies sets out eight basic guidelines for conformity with corporate governance principles. First, firms have to set up a website as an effective channel of information and communication with shareholders. The site would contain notification of dates of general meetings, financial statements and other information regarding company activities. Second, the publication of the company’s annual report and any other informative material in English is considered necessary for any firm wishing to project its activities toward the international investment public. This appears increasingly necessary with the prospect of partnerships among European bourses. Third, firms have to brief investors at regular intervals and in any manner they choose of the latest activities and events. This is considered necessary to minimize the effect of any reports or speculation that may be inaccurate or misleading. Fourth, explanations given for failure to meet targets increases transparency and investor’s confidence. It also helps to attract institutional investors. Fifth, firms are urged to select personnel with the substantive qualifications for the positions hired. The board of directors must include members who combine knowledge and experience from a broad spectrum of the business and scientific community. Sixth, firms are urged to appoint independent members on the board of directors in order to ensure that executive management is subject to effective control. Seventh, enterprises need staff able to effectively employ instruments of financial analysis and policy for complex decisions, such as financial managers rather than accountants. Eighth, as an internal audit is a relatively new procedure for most Greek enterprises, this must be ensured to be a substantive and not merely formal adaptation. Further, substantial differences between the results of the efforts of internal and external auditors must be scrutinized.