It is proposed to define by the initiative with the Civil Code the notion of the Corporate Governance Code and the authorizing norm necessary for its adoption.
The bill on Making Addendum to the RA Civil Code was debated in the first reading at May 17 sitting of the Standing Committee on State and Legal Affairs. The Committee Chair Vladimir Vardanyan moderated it.
According to the RA Minister of Economy Gevorg Papoyan, it is fixed by the draft that the Corporate Governance Code is a legal act being approved by the Ministry of Economy in this case of the authorizing body crafting the policy of the Government in boosting the investments, and it contains principles and rules aimed at the rise of efficiency of the economic company’s governance, the protection of the participants’ rights, the transparency of the activity and the rise of accountability.
It was noted that joining the Corporate Governance Code will be voluntarily by the economic companies, if no other thing is stipulated by law. “The authority to make a decision on joining the Code will belong to the General Assembly of the participants of the economic companies, if by law or by statute other thing is not stipulated,” the rapporteur underlined.
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Regarding the question why the Government proposes this draft, Gevorg Papoyan noted: “From 2010 the Government has adopted policy of encouraging the application of principles of corporate governance among commercial legal entities and supporting the programmes being implemented in that direction. However, at that time the Government had no such right, there were decisions of the Government, but there were no relevant legislative powers defined.”
The principle of voluntariness of the implementation of the Corporate Governance Code, if other thing is not stipulated by law.
According to the Minister, the goal of the corporate governance is to support the building of necessary trust and accountability environment, the formation of stable growth and financial stability for involving the long-term investments. “From this viewpoint the publications and assignments of the international authoritative organizations, which underscore the importance of the Corporate governance rules, which should be laid on the basis of the corporate governance system, are many,” the rapporteur voiced. He informed that the in terms of the introduction of the Corporate governance system the principles of the Corporate governance published by the Organization for Economic Co-operation and Development (OECD).
The Committee Chair Vladimir Vardanyan was interested in the number of the companies which will follow the adoption of the Corporate Governance Code after the legislative amendment. In response, Gevorg Papoyan said: “I think that in this phase we have interest by some companies, which are engaged in different spheres. If we want a qualitatively new phase of business governance and to turn to a qualitatively new system of the engagement of investments, then I am sure that this is a good opportunity to continuously improve our business environment.”
Emphasizing the initiative, the co-rapporteur, the deputy Lilit Minasyan noted that by its adoption the companies with the corporate governance system will be able to have close cooperation on the international platform with the corporations with similar systems.
The Committee approved the initiative.
National Assembly of the Republic of Armenia
