2008年-世界发展银行全球_Corporate_Governance_Country_Assessment___Croatia_50页_840kb

Corporate Governance Country Assessment: Croatia (March 2008)

Core Content

This report evaluates Croatia's corporate governance policy framework for publicly traded companies, highlighting progress made since the 2001 Corporate Governance ROSC and identifying key challenges and recommendations for further improvement.

Main Points

Overview of Corporate Governance

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

Importance of Corporate Governance

• Corporate governance is crucial for emerging markets to reduce financial crisis vulnerability, reinforce property rights, and lower transaction and capital costs.
• Weak governance frameworks can deter investment and harm pension fund savings.
• Academic research has increasingly emphasized the role of good governance in boosting economic value added and productivity.

ROSC Assessments

• The ROSC program, led by the World Bank, assesses corporate governance against the OECD Principles.
• Assessments are voluntary and focus on listed companies, with the option to include specific sectors.
• The program provides standardized, systematic evaluations and policy recommendations to guide reforms.

Key Issues and Challenges

Investor Protection

• Basic shareholder rights are in place, including secure and dematerialized registration via the Central Depository Agency (SDA).
• Shareholders can demand information, participate in general meetings, and nominate, vote for, and remove board members.
• However, legal loopholes and company practices limit these rights, such as the requirement for a 3/4 majority to remove board members, which can be waived by company articles.
• Shareholders cannot participate in general meetings via mail or electronically, and companies may use treasury shares to increase the voting power of large shareholders.

Disclosure

• Public companies in Croatia are required to disclose summary financial statements online, but full statements and non-financial information are difficult to access.
• IFRS was introduced in 2000 but remains largely unimplemented due to translation delays, lack of professional capability, and inconsistent disclosure requirements.
• Related party transactions and ultimate ownership are not sufficiently disclosed, increasing shareholder vulnerability.
• Information on direct shareholders is available, but ultimate owners of legal entities are not, and disclosure of indirect control is minimal.

Company Oversight and the Board

• Croatian companies have a two-tier board structure: supervisory and management boards.
• Supervisory boards are supposed to oversee the management board, but in practice, they have limited power and responsibility.
• Management boards hold most of the decision-making authority, with major shareholders often serving as their heads.
• There is no binding duty of loyalty for supervisory board members, and they are not required to disclose conflicts of interest.
• Independence of supervisory board members is limited due to their roles as shareholders, employees, or customers.

Key Recommendations

• Close legal gaps related to conflicts of interest and protect small shareholders during delisting.
• Strengthen HANFA to ensure effective enforcement of disclosure requirements and compliance with IFRS.
• Ensure public availability of annual reports and other relevant documents.
• Encourage investment funds to promote good governance practices.
• Provide donor support to enhance the capacity of HANFA and other regulatory bodies.

Summary of Observance of OECD Principles

• Croatia has made significant legal and regulatory changes since 2001, aligning with OECD Principles.
• The legal framework is rooted in civil law traditions and has been adapting to EU norms.
• The new Code of Corporate Governance addresses some issues but is voluntary and lacks detailed provisions on conflicts of interest and related party transactions.
• Compliance with EU directives on market abuse and transparency remains incomplete.

Corporate Governance Landscape

Capital Markets

• The two stock exchanges merged in 2007, forming the Zagreb Stock Exchange (ZSE).
• ZSE has 454 securities worth 343 billion HRK (~65.17 billion USD).
• The market experienced a bull run in 2007, with a 78% increase in market capitalization and 63% rise in the CROBEX index.
• However, equity market development measures such as turnover remain relatively low.

Ownership Framework

• Over 500,000 shareholders exist in Croatia, but control is concentrated.
• The state holds significant stakes in over 200 companies, including some of the largest.
• Foreign-controlled companies dominate the banking sector, holding over 90% of banking assets.
• Investment funds are growing rapidly, with over 80 open and closed-end funds, but they face less regulation than mandatory pension funds.

Legal and Regulatory Framework

• The Companies Act (CA) and Securities Market Act (SMA) have been amended multiple times to align with EU standards.
• New acts on Accounting and Audit have been introduced, but enforcement remains weak.
• HANFA, the combined financial regulator, oversees non-bank financial institutions, but its capacity to enforce compliance is limited.

Conclusion

Croatia has made notable progress in corporate governance since the 2001 assessment, particularly in legal reforms and the introduction of a corporate governance code. However, critical gaps remain in areas such as conflict of interest management, disclosure of related party transactions and beneficial ownership, and the effectiveness of supervisory boards. Continued reform, especially in aligning with EU directives and strengthening regulatory enforcement, is essential for Croatia to enhance investor confidence and promote sustainable economic development.