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Creating Institute of Independent Directors in Emerging Market. Third South Eastern Europe Corporate Governance Roundtable 21-22 November 2002, Zagreb. Alexander V . Ikonnikov Chairman of the Board Independent Directors Association info@nand.ru.

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creating institute of independent directors in emerging market

Creating Institute of Independent Directors in Emerging Market

Third South Eastern Europe Corporate Governance Roundtable21-22 November 2002, Zagreb

AlexanderV. Ikonnikov

Chairman of the Board

Independent Directors Association

info@nand.ru

slide2

Main Obstacles to Good Corporate Governance in Emerging Markets

  • Lack of transparency in the management of companies
  • Lack of accountability on the part of company management to shareholders
  • Unfair treatment of minority shareholders
  • Weak coordination and advocacy among shareholders and stakeholders
  • Weak culture of corporate governance among companies
slide3

Why Boards of Directors Are Critical?

  • Setting the strategic goals of a company
  • Approving or disapproving all major transactions
  • Ensuring the integrity of accounting and financial reporting systems
  • Providing oversight over executive management and balancing the interests of all shareholders
slide4

How to Enhance the Efficiency of BoDs?

  • More careful selection of BoDs members
  • Improving the quality of directors serving on the boards
  • Implementing independent directors best practices
new requirements to business arise
New Requirements To Business Arise
  • Code of Corporate Conduct by FCSM of Russia has been approved. The Code requires the least of 3 independent members in BoDs.
  • Listing requirements of Russian stock-exchanges have been toughened regarding disclosure and following the FCSM Code
  • International stock-exchanges’ requirement to ADR-s toughened: the criteria of “independent director” definition have become more strict, independent directors must form a majority of BoDs
  • Investors lay new claims to companies attracting capital
  • Independent directors have become integral part of the international best business practices
what is independent director for
What Is Independent Director For?
  • Raising shareholders’ confidence
  • Improving relations with stakeholders
  • Making balanced strategic decisions
  • Creating efficient mechanisms of internal control
  • Resolving conflicts
  • Improving transparency
  • Increasing business value
independent director where to find
Independent Director - Where to Find?
  • Highly qualified
  • Proved management experience
  • Good business reputation
  • Knowledge of industry
  • Record of success
  • Life experience
  • Matching the independence criteria

Companies seek professionals . . .

slide8

Independent Directors Association

Mission

assisting Russian joint-stock companies in raising their efficiency through implementation of best independent director practices

Goal

development of independent directors professional community

slide9

Independent Directors Association

  • founded in February, 2002
  • self-regulated non-commercial professional organization of corporate directors by directors
  • authoritative institute in improving BoDs practices
  • over 100 members and clients
why joining
Why Joining …
  • raise director creditability as being genuinely independent
  • improve professional skills and knowledge
  • exchange practical experience with peers
  • use consulting and informational resources of the Association
  • Increase visibility to companies and investors via personal web page on the Association site
membership conditions
Membership Terms

Expert Status

Higher professional education

Experience in corporate governance

Director Status

25+ years old

3+years senior management experience and/or BoD membership

1+ years senior management experience and/or BoD membership +IDA Professional Training and Certification Course

To be approved by IDA Membership Committee

Membership Fees

Physical person

$200/year

Lecturer of higher education institution

$100/year

Board of Directors

Up to 8 persons - $1000/year

From 9 persons - $2000/year

Membership Conditions…
slide12

Association Structure

Executive Board

Executive Director

  • Association Executive office
    • Research center
    • Cooperation with members and clients
    • Information division
    • Training and Events division
  • Committees
    • Membership committee
    • Committee on ethics
committee on ethics
Committee On Ethics
  • Independent Director decides whether his/her activities correspond to ethical principles
  • The Association Committee on Ethics decides on violation of ethical principles in disputable cases
  • The Committee on Ethics may publicly reprimand or dismiss a member from the Association

violating ethical principles equals loosing reputation

basic principles of the association members
Basic Principles Of The Association Members
  • Adhere to high ethical and professional standards
  • Respect the truth, act with integrity and candor
  • Be guided by the spirit of independence in implying relevant experience and knowledge for company benefit
  • Adhere to equitable treatment of all shareholders
  • Promote transparency
  • Avoid and resolve potential conflict of interest
  • From the Charter of the Independent Directors Association
slide15

IDA Activities

  • Setting and maintenance of ethical and professional standards
  • Monitoring Association principles in action
  • Professional Training and Continued Professional Development
  • Research and Surveys
  • Publications (manuals, bulletins, articles, expert opinions)
  • Boards Consultancy
ida funding
IDA Funding…
  • Membership fees
  • Research
  • Consultancy
  • Events (conferences, seminars, etc.)
  • Grants
  • Corporate sponsorship
  • Educational programs
slide17

IDA Development Strategy

Advisory Council - advice and recommendation on development strategy of international senior managers and corporate governance experts:

  • IFC
  • Rating agencies
  • Personnel agencies
  • Consultancy companies
  • State Governing bodies
  • Investment community
  • Leading business associations
  • Institutes of corporate governance
independent directors association ida russia
Independent Directors AssociationIDA Russia

www.nand.ru

or

www.independentdirector.ru

E-mail:

info@nand.ru

Tel:

+ 7 (095) 938-6651