Corporate governance in Russia :: Independent directors

PROMOTION OF REPRESENTATIVES OF INVESTORS TO BOARDS OF DIRECTORS OF ISSUERS (INDEPENDENT DIRECTORS)

As the world increasingly turns to the market and away from regulation and control, the governance of the corporation and the role of the Board of Directors in governance takes on heightened importance. The Board of Directors is the focal point of voluntary efforts by firms to improve corporate governance, given the Board's key role in ensuring that an effective team of managers is in place and efficiently and competitively uses corporation's assets. One of the principle characteristics of efficient corporate governance is the ability of directors to independently approving the corporation's strategy and major decisions, independently hiring managers and monitoring their performance.

The situation in the Russian corporate governance remains one of the key issues in development of a civilized and efficient business environment. The lack of truly independent directors on Boards of many Russian enterprises represents a significant obstacle to the investment attractiveness of Russian issuers and creates room for violations of rights and infringement legitimate interests of investors and shareholders.

In an effort to improve the quality of corporate governance of Russian enterprises investors carry out the project on promotion of independent directors to boards of Russian issuers. The project has been cariied out for three years. In the year 1999 one independent director was elected to boards of directors of Russian issuers, , in 2000 - 25, in 2001 - 39, in 2002 - 55 and in the year 2003 - 37.

The efficient Board functioning is one of the most important factors increasing the companies' investment attractiveness, which is a necessary precondition for steady economic growth in Russia.

Each of the Directors signed the Declaration of Independence. Besides, within the framework of their activities, Independent Directors exchange information with investors, informing them about material facts of the Issuer where such Directors were elected. Investors are therefore able to obtain information necessary for market analysis directly from the first hands.

"Independent Director" Definition

Independent Director inquiry form

Representatives of minority shareholders (MSR)

Director – representative of minority shareholders inquiry form

The support is provided within this Project to interested parties in the following areas:

To shareholders and investors - consolidation of efforts to promote candidates to Boards of Directors and Audit Commissions of Russian issuers;
To issuers - selection of Independent Directors to the Board of Directors, consulting assistance;

Results of campaigns aimed at promoting representatives of investors and minority shareholders to Boards of Directors of Russian issuers carried out by the IPA: