2008年-世界发展银行全球_Corporate_Governance_Country_Assessment___Bulgaria_86页_1mb

Corporate Governance Country Assessment: Bulgaria (June 2008)

Core Content Overview

This report provides an assessment of Bulgaria's corporate governance policy framework for publicly traded companies, updating the 2002 Corporate Governance ROSC (CG ROSC). It outlines key achievements, remaining challenges, and policy recommendations aimed at strengthening corporate governance in the country.

Main Points

Corporate Governance Definition

Corporate governance refers to the structures and processes for the direction and control of companies, involving relationships among management, the Board of Directors, controlling shareholders, minority shareholders, and other stakeholders. Good corporate governance supports sustainable economic development by improving company performance and access to capital.

Importance of Corporate Governance

For emerging markets, improving corporate governance helps reduce financial vulnerability, reinforce property rights, lower transaction costs, and promote capital market development. It is also essential for preserving pension fund investments and has been increasingly emphasized by academic research.

ROSC Assessments

The World Bank conducts ROSC assessments based on the OECD Principles of Corporate Governance. These assessments evaluate legal and regulatory frameworks and corporate practices, offering policy recommendations. Bulgaria's assessment is part of this global initiative and highlights progress and areas for improvement.

Key Findings

Protecting the Rights of Investors

• Shareholder rights are generally protected, including the right to participate and vote in general shareholder meetings (GSM).
• Shareholders can exercise rights via proxy, though the process is cumbersome.
• The law includes provisions for qualified and super-majority voting on key issues, such as restricting preemptive rights or preferred shareholder rights.
• Shadow directors are recognized, which is relevant to Bulgaria's concentrated ownership structure, though this rule has not been effectively used by minority shareholders.
• There are no major obstacles to cross-border voting.
• The legal framework allows shareholders to determine board and executive remuneration, which may conflict with good governance practices.

Strengthening Information Disclosure and Transparency

• Financial disclosure has improved since 2002, with companies required to provide annual and quarterly audited financial statements under IFRS.
• However, non-financial information disclosure remains haphazard and underdeveloped.
• Companies are not required to disclose their commercial and non-commercial objectives, ownership structures, or remuneration policies.
• The NCGC requires disclosure of corporate governance policies and improvement plans, but not all companies comply.
• Auditor independence is a concern, with some smaller audit firms not adhering to IFAC’s ISA and Code of Ethics.
• The legal framework does not specifically reference the NCGC, which is a new corporate governance standard for Bulgaria.

Key Obstacles

• Ownership Concentration: Majority owners dominate board and governance processes, limiting minority shareholder influence.
• Weak Implementation: Despite legal improvements, corporate governance practices lag behind the law.
• Lack of Practical Guidance: The NCGC sets out good practices but could be revised to provide more actionable guidance.
• Insufficient Disclosure: Beneficial ownership, related party transactions, and remuneration policies are not consistently disclosed.
• Limited Institutional Engagement: Institutional investors are relatively new to Bulgaria and tend to be passive in exercising their voting rights.

Key Opportunities

• Legal Reforms: Improvements in the legal and regulatory framework have laid the foundation for better corporate governance.
• National Code of Corporate Governance (NCGC): The launch of the NCGC has raised awareness of good governance practices.
• Ownership Dispersion: A growing trend of ownership dispersion and the rise of institutional investors are helping to reduce the dominance of majority owners.
• Market Awareness: The market is increasingly recognizing the importance of corporate governance, especially in light of the 2002 CG ROSC recommendations.

Recommendations

1. Enforce the NCGC: The Financial Supervision Commission (FSC) should ensure that all listed companies, especially the top 10 issuers and those on the Unofficial Market, comply with or explain their adherence to the NCGC.
2. Revise the NCGC: The task force should review the NCGC to provide more practical guidance for implementation.
3. Improve Legal Framework: Minor amendments to the legal and regulatory framework may be needed to address remaining gaps.
4. Strengthen Board Practices: Training and development of qualified, professional directors should be prioritized to ensure that governance principles are implemented effectively.
5. Enhance Disclosure: Companies should be encouraged to disclose more comprehensive information, including ownership structures, remuneration policies, and related party transactions.
6. Promote Institutional Engagement: Institutional investors should be encouraged to actively engage in corporate governance through voting and dialogue with management.

Status of 2002 CG ROSC Recommendations

• Many of the 2002 CG ROSC recommendations have been implemented, including the launch of the NCGC.
• Some areas, such as the protection of minority shareholder rights and the disclosure of governance policies, still require further attention.

Summary of Observance of OECD Principles

• Section I: The basis for an effective corporate governance framework is partially in place, with legal reforms and the NCGC.
• Section II: Shareholder rights are generally respected, but minority rights are still at risk due to ownership concentration.
• Section III: Equitable treatment of shareholders is not fully realized, with issues in the enforcement of minority rights.
• Section IV: Stakeholders, particularly employees, are not adequately protected in terms of whistleblowing mechanisms and basic information rights.
• Section V: Disclosure and transparency have improved, but non-financial information remains underdeveloped.
• Section VI: The responsibilities of the Board are not fully met, with boards failing to guide and oversee management effectively.

Corporate Governance Landscape

• The privatization process since 1992 has significantly reduced state ownership, with the private sector now driving economic growth.
• The BSE has seen a reduction in listed companies, with only one-third of the original 1,000 firms still listed.
• Ownership concentration remains a key challenge, with private investor groups and the state holding significant shares.
• Institutional investors are growing in number and could play a more active role in corporate governance.

Conclusion

Bulgaria has made significant progress in corporate governance since 2002, particularly in legal reforms and the introduction of the NCGC. However, challenges remain in the implementation of these standards, especially regarding board effectiveness, minority shareholder protection, and transparency. The next phase of reform should focus on strengthening the governance framework, improving disclosure, and encouraging active engagement by all stakeholders.