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IFC and Corporate Governance Center present a joint package of
recommendations on improvement of corporate management in Shen Holding
ARMINFO
Saturday, February 16, 14:33
The International Finance Corporation (IFC) and the Corporate
Governance Center have presented a joint package of recommendations on
improvement of corporate management and enhancement of information
disclosure in Shen Holding CJSC. "Having chosen the path of
development and armed ourselves with fixed determination to achieve
our goals, we are willingly starting to use in practice the
recommendations aimed at improving the management of our enterprise",
Samvel Beglaryan, President of Shen Holding, says in his interview
with ArmInfo.
The recommendations to Shen Holding referring to key components of
corporate governance, in case followed completely and strictly, will
lay the basis for up-to-date management and unlock the investment
potential of the enterprise.
According to one of the priority recommendations Shen Holding should
reorganize the Board of Directors of the Company; it should
particularly revise the powers of the Board of Directors' members, as
well as the structure and quantitative representation of the Board.
"After discussing the given issue with Shen Holding, it was decided
that the Board of Directors will consist of five members, three of
them being "non-executive directors", i.e. they will not be involved
in the corporate management process. In the meantime, Narine Melikyan,
an expert at the Corporate Governance Center, explained that the
"independence" of one of them will be defined in line with
international standards, according to which, for instance, an
"independent" member of the Board must not be an official or employee
of the company, or a related person. He/she must have a good business
reputation, must be committed to high ethic standards and have the
required leadership skills and entrepreneurial experience.
In accordance with the recommendations to Shen Holding, all the
members of the Board of Directors must compulsorily undergo
professional retraining (short-term training courses). At least twice
a month the Board must convene a session; moreover, one of the
sessions should be dedicated to discussion of the company's strategic
goals.
The expert thinks that creation of a really "strong" Board of
Directors will become the key factor of successful introduction of the
best corporate management practice in the Holding. Melikyan stressed
that the Holding should introduce an assessment mechanism to estimate
the work of the Board of Directors, and it should also set up a
professional team consisting of three key officials: director
general, chief financial officer and chief operations officer.
"One of the priority recommendations is to create an efficient
institute of a corporate secretary", Melikyan said. She added that the
corporate secretary is one of the pivotal figures in the company and
plays an important role in administration of the key spheres of
corporate management. This official will work out the action plan on
improvement of the corporate management practice, coordinate and
ontrol all the processes related to introduction of the best corporate
management practice in the company.
The expert pointed out that the Holding is offered to revise its
Regulations and to bring them in compliance with international
standards of corporate management. According to the recommendations,
the Holding is to adopt a Code of Conduct and a Corporate Governance
Code. In addition, Shen Holding should work at introduction of a
compliance function. Melikyan specifies that the compliance officer
will control the compliance of the company's activity with the
legislation in force: "his/her role will be to reveal any deviations
not only from laws and legislative instruments, but also from the
Corporate Governance Code, Code of Conduct and other internal
documents of the company".
The other recommendations refer to internal control system and
envisage introduction of an internal audit institute, including
introduction of risk management system, which will allow the company
to assess, warn and reveal the risks the company may face.
As regards information disclosure, the expert draws the company's
attention to the fact that the company's website is focused first of
all on the potential customers, and in this connection, "Shen Holding
is offered to shift the focus towards the potential investors". The
Holding is also offered to work out an information disclosure policy:
"though the company regularly publishes its financial statements,
nevertheless, there are certain cases when the company must promptly
inform its partners of the essential changes in the company's
activity". The specified policy fixes the cases and situations when
the company should promptly respond and inform its partners.
Melikyan pointed out that the last provision of the package of
recommendations is also for the potential investors and defines the
order of compilation and the rules of publication of the company's
annual reports. It is recommended that the Holding should regularly
present information on the company's activity assessment, analysis of
its internal and external capacities, its achievements, existing
problems and plans for the future.
To note, the package of recommendations has been worked out on the
basis of surveys conducted in the Holding and assessment of the
corporate governance practice in line with the IFC's methodology. The
project on introduction of the leading standards of corporate
management in the Holding will last for about 6 months.
To remind, Shen Concern was founded in 1995. Having merged with
Huntsman Building Products, Shen Concern was reorganized into Shen
Holding, which currently includes Shen Concern CJSC, Huntsman Building
Products and Shen Group CJSC.
From: Emil Lazarian | Ararat NewsPress
recommendations on improvement of corporate management in Shen Holding
ARMINFO
Saturday, February 16, 14:33
The International Finance Corporation (IFC) and the Corporate
Governance Center have presented a joint package of recommendations on
improvement of corporate management and enhancement of information
disclosure in Shen Holding CJSC. "Having chosen the path of
development and armed ourselves with fixed determination to achieve
our goals, we are willingly starting to use in practice the
recommendations aimed at improving the management of our enterprise",
Samvel Beglaryan, President of Shen Holding, says in his interview
with ArmInfo.
The recommendations to Shen Holding referring to key components of
corporate governance, in case followed completely and strictly, will
lay the basis for up-to-date management and unlock the investment
potential of the enterprise.
According to one of the priority recommendations Shen Holding should
reorganize the Board of Directors of the Company; it should
particularly revise the powers of the Board of Directors' members, as
well as the structure and quantitative representation of the Board.
"After discussing the given issue with Shen Holding, it was decided
that the Board of Directors will consist of five members, three of
them being "non-executive directors", i.e. they will not be involved
in the corporate management process. In the meantime, Narine Melikyan,
an expert at the Corporate Governance Center, explained that the
"independence" of one of them will be defined in line with
international standards, according to which, for instance, an
"independent" member of the Board must not be an official or employee
of the company, or a related person. He/she must have a good business
reputation, must be committed to high ethic standards and have the
required leadership skills and entrepreneurial experience.
In accordance with the recommendations to Shen Holding, all the
members of the Board of Directors must compulsorily undergo
professional retraining (short-term training courses). At least twice
a month the Board must convene a session; moreover, one of the
sessions should be dedicated to discussion of the company's strategic
goals.
The expert thinks that creation of a really "strong" Board of
Directors will become the key factor of successful introduction of the
best corporate management practice in the Holding. Melikyan stressed
that the Holding should introduce an assessment mechanism to estimate
the work of the Board of Directors, and it should also set up a
professional team consisting of three key officials: director
general, chief financial officer and chief operations officer.
"One of the priority recommendations is to create an efficient
institute of a corporate secretary", Melikyan said. She added that the
corporate secretary is one of the pivotal figures in the company and
plays an important role in administration of the key spheres of
corporate management. This official will work out the action plan on
improvement of the corporate management practice, coordinate and
ontrol all the processes related to introduction of the best corporate
management practice in the company.
The expert pointed out that the Holding is offered to revise its
Regulations and to bring them in compliance with international
standards of corporate management. According to the recommendations,
the Holding is to adopt a Code of Conduct and a Corporate Governance
Code. In addition, Shen Holding should work at introduction of a
compliance function. Melikyan specifies that the compliance officer
will control the compliance of the company's activity with the
legislation in force: "his/her role will be to reveal any deviations
not only from laws and legislative instruments, but also from the
Corporate Governance Code, Code of Conduct and other internal
documents of the company".
The other recommendations refer to internal control system and
envisage introduction of an internal audit institute, including
introduction of risk management system, which will allow the company
to assess, warn and reveal the risks the company may face.
As regards information disclosure, the expert draws the company's
attention to the fact that the company's website is focused first of
all on the potential customers, and in this connection, "Shen Holding
is offered to shift the focus towards the potential investors". The
Holding is also offered to work out an information disclosure policy:
"though the company regularly publishes its financial statements,
nevertheless, there are certain cases when the company must promptly
inform its partners of the essential changes in the company's
activity". The specified policy fixes the cases and situations when
the company should promptly respond and inform its partners.
Melikyan pointed out that the last provision of the package of
recommendations is also for the potential investors and defines the
order of compilation and the rules of publication of the company's
annual reports. It is recommended that the Holding should regularly
present information on the company's activity assessment, analysis of
its internal and external capacities, its achievements, existing
problems and plans for the future.
To note, the package of recommendations has been worked out on the
basis of surveys conducted in the Holding and assessment of the
corporate governance practice in line with the IFC's methodology. The
project on introduction of the leading standards of corporate
management in the Holding will last for about 6 months.
To remind, Shen Concern was founded in 1995. Having merged with
Huntsman Building Products, Shen Concern was reorganized into Shen
Holding, which currently includes Shen Concern CJSC, Huntsman Building
Products and Shen Group CJSC.
From: Emil Lazarian | Ararat NewsPress