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Topical Opinions

Obviously, the consistent introduction of modern models of corporate governance is one of the important conditions for improvement in the business and investment environment, and therefore, for further economic growth. I think that the accumulated domestic and international experience as well as practical recommendations produced in the course of the conference, will really make a significant contribution to the growing effectiveness of the Russian business.
If we want to cooperate with the business community effectively and demand that good corporate governance standards should be introduced appropriately, I think we should start with ourselves in the government.
Obviously, Russian companies will also have more listings in the international stock exchanges. Russian companies will continue to invest capital elsewhere. Given these circumstance, we are supposed to provide for the right level of embracement of best business practices here.
The Russian government is going to work in cooperation with the business community in order to improve the quality of corporate governance and promote regulatory arrangements. Today we are facilitating taxation policies. We are reducing the fiscal burden on companies, we are streamlining bureaucratic procedures. We are promoting the stock markets. And we are creating proper conditions for healthy competition.
Anyway, without a modern, robust and effective corporate governance framework it is hardly possible to establish long-term investor relations and further secure business from new crisis set-backs.
The proper governance of companies became as crucial to the Russian economy as the proper governing of Russia. Strong corporate governance produces good investment climate and social progress.
The most essential question of today is what shape takes post-crisis corporate governance. If Russia opts for the path elaborated by President Dmitry Medvedev in his article "Go Russia", then changes in domestic corporate governance framework will inevitably become a core element of post-crisis Russian economic reforms.
Limitation of minority shareholders' rights is inadmissible, since minority shareholders in many ways facilitate disclosure of serious breaches, which otherwise would go unpunished.
So far foreign shareholders do not consider Russian law as an effective tool to protect their rights.
Despite the crisis, fundamental incentives for further improvement of corporate governance framework remain intact. Fortunately the worst prognoses have not come true: overall quality of corporate governance [in Russia] has not deteriorated that much in the recent time.
Corporate Governance of course is key. It is key for two reasons for Russia. The first one, which is obvious, is that it deals with how to raise money, how to get better value for the companies, and how to attract investors.
I would like to thank the National Council on Corporate Governance for the really excellent work that they are doing. The National Council is seeking to promote the investment attractiveness of the national economy, and hence, the reputation and the image of the domestic business community through developing improved corporate governance.
I think, overall, that we in the United States have found investment in corporate governance well worth the effort. There have been many complaints. However a lot of CEOs and CFOs have told me that they sleep much better at night these days knowing that their internal control and their corporate governance systems are firmly in place.
As for situation in Russia, corporate governance here is developing impressively; the country is fully within international trends in this respect. Currently the principle Explain or Comply is in place in Russia. It means your government does not directly indicate what business should do, what I think is a good thing.
For Russia, the need for good corporate governance is a strategic necessity.
The current crisis strengthened domination of the insider corporate governance model. Amplification of the insiders opaque control over business is followed by sharp decline of competiveness of Russian companies against the international benchmarks.
If you want to look at corporate governance, capital suppliers, lenders, shareholders have a right to know whats going on in the company because they wont send money in unless they do.
The crisis has revealed the most obvious shortcomings in corporate governance practices in banks and other major financial institutions. U.S. and U.K. financial institutions, which in the previous period traditionally considered decisive authority in the corporate governance domain worldwide, have found themselves under most hard pressure.
The Russian government is very much interested in effective embracing of the best corporate governance principles and practices by business community and public sector. Accountability and reporting relationships, disclosure - these are the principles that are understood by all.
Today we see an increasingly global nature of financial markets, which, in its turn, clearly promises benefits for investors, greater competition and significant wealth creation throughout the world. At the same time, however, this global trend poses significant challenges for market regulators, like SEC, which try to protect investors, ensure fair and orderly market and promote capital formation. And the global marketplace tests our ability to continue to be effective in achieving this mission.
Transparent business reporting and statements can add balance in the relations between corporations and government. There will be fewer reasons for government to interfere if business functioning is transparent.
I think that in the law there should not be any procedures specific for state owned companies that would run counter to the general corporate legislation and rules of behavior. Sometimes we try to create some special rules for the companies ruled by the government. But this may lead us to extreme inefficiency and creation of even deeper conflicts of interest.
Only if you respond to all those requirements, that the market presents, the investors will have adequate understanding of your company and its future development.

I would strongly advocate the case that Russian companies, which incorporate best practices also perform better and are more sustainable in both Russian and global markets.

An outcome of good governance should be to ensure maximum efficiency in the use of all resources by a business, in production and investment to the benefit to all of its stakeholders.
The good governance and transparency have a tendency to reduce the cost of capital. The company that has the lowest cost of capital probably takes the pole position in the race.
On the one hand, good corporate governance is the measure of common sense of organization. That allows the company to make good decisions, manage risk, and run their affairs in a way which represents the interests of their shareholders. And from that perspective the emphasis should perhaps be on the best practices rather than on regulation.
Findings of Survey held by National Council on Corporate Governance and Russo-British Chamber of Commerce Moscow, 2010
Joint Survey by NCCG and KPMG, June 2009
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