2009年-世界发展银行全球_Corporate_Governance_Country_Assessment___Azerbaijan_46页_1mb

Corporate Governance Country Assessment: Azerbaijan (September 2009)

Core Content Overview

This report provides an assessment of Azerbaijan's corporate governance framework, benchmarked against the OECD Principles of Corporate Governance. It updates the 2005 Corporate Governance ROSC and outlines key findings, challenges, and recommendations for improving corporate governance in the country.

Main Points and Key Information

Corporate Governance Definition

Corporate governance refers to the structures and processes that direct and control companies. It involves the relationships among management, the Board of Directors, controlling shareholders, minority shareholders, and other stakeholders. Good corporate governance promotes sustainable economic development by improving firm performance and access to capital.

Importance of Corporate Governance

• Enhances investor confidence and attracts foreign investment.
• Reduces financial vulnerability and systemic risk.
• Supports capital market development and economic growth.
• Is crucial for preserving retirement savings as pension funds increase equity investments.

ROSC Assessments Overview

• The ROSC program evaluates corporate governance frameworks against international standards.
• Assessments are voluntary and focus on publicly traded companies.
• They provide policy recommendations and track progress over time.
• As of June 2009, 66 assessments had been completed in 55 countries.

Azerbaijan's Corporate Governance Landscape

Market Profile

• Baku Stock Exchange (BSE): The only stock exchange in Azerbaijan. Only 234 JSCs with over 100 shareholders are required to list, but none meet the standards.
• Trading and Liquidity: Limited trading volume and liquidity. Most transactions involve government fixed-income securities.
• JSCs and Privatization: Most JSCs were created through privatization, leading to increased ownership concentration. Institutional investors are emerging, but not yet widespread.
• State Ownership: Remains extensive, with SOEs contributing between 15% and 25% of GDP. Major SOEs like SOCAR and Azerbaijan Airlines are state-owned.

Legal Framework

• Azerbaijan is a civil law country without a dedicated corporate law.
• Corporate governance provisions are integrated into the 2000 Civil Code.
• Key laws include:
  • 2004 Law on Accounting (introduced IFRS for large and financial companies)
  • 1994 Law on Auditor Services
  • 2004 Law on Banks and CBA Regulation on Corporate Governance
  • 2007 Law on Internal Audit
  • 2008 Civil Code amendments introducing fiduciary duties for directors
  • 2008 SCS Regulation on Related Party Transactions (RPTs)

Key Findings

• Investor Protection: Basic shareholder rights exist, but compliance is low. Shareholders lack explicit rights to ask questions during general meetings (GMSs) and have limited ability to challenge decisions.
• Disclosure: Legal requirements exist, but many companies do not produce or disclose audited financial statements. Audit quality is mixed, and independent auditors are not widely used.
• Board Structure and Oversight: A two-tier board system exists (supervisory and management boards), but the division of responsibilities is unclear. Supervisory boards often do not perform their oversight functions effectively.
• Enforcement: The State Commission for Securities (SCS) has broad powers but limited resources and penalties. Enforcement efforts are improving, but fines are minimal and lack deterrent effect.

Challenges

• Limited liquidity and poor market infrastructure hinder shareholder rights.
• Lack of a corporate governance code for JSCs.
• Few independent board members, especially in non-insurance sectors.
• Confusion in roles of supervisory boards, audit committees, and revision commissions.
• SOEs remain largely opaque and not fully corporatized, with unclear legal forms and financial arrangements.

Recent Improvements

• Azerbaijan's Doing Business Investor Protection rank improved from 110 to 18 in 2008.
• The SCS has begun to enforce regulations more actively, including investigating over 200 investor complaints in 2008.
• Banks and some companies now use IFRS for financial reporting, with ongoing efforts to align NAS with IFRS.
• A corporate governance code is under development by the Ministry of Economic Development.

Recommendations

Summary of Key Recommendations

• Continue the reform process: Strengthen the legal and institutional framework for corporate governance and capital markets.
• Strengthen the SCS: Increase legal authority and resources, including the ability to initiate criminal cases and conduct on-site inspections. Expand fines to deter non-compliance.
• Focus enforcement on public interest entities: Prioritize larger JSCs and companies with foreign investment for compliance checks.
• Develop a corporate governance code: Finalize and implement a code to guide board responsibilities and practices.
• Improve transparency and disclosure: Ensure companies regularly publish financial statements and disclose ownership and related party transactions.
• Enhance board independence and oversight: Encourage independent board members and clarify the roles of supervisory and management boards.
• Revive capital markets infrastructure: Improve liquidity, update market norms, and enhance information accessibility for investors.

Next Steps

• Finalize and implement the corporate governance code by mid- to late-2009.
• Strengthen the SCS through increased funding, training, and independence.
• Promote awareness among board members and investors through targeted programs.
• Improve the legal framework for JSCs and enhance the role of the Chamber of Auditors.

Conclusion

Azerbaijan has made progress in recent years in developing its corporate governance framework, particularly in the banking sector. However, significant challenges remain, including limited enforcement, poor compliance, and an underdeveloped capital market. Continued reforms are essential to ensure sustainable economic growth and attract outside investment. The development of a comprehensive corporate governance code and strengthening the SCS are critical steps forward.