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Kazakhstan lays foundation for introduction of corporate governance

19 July 2019
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How to establish a corporate governance system in Kazakhstani companies? The experts considered the tools and approaches on the Atameken platform.

In developed economies, large companies have been successfully operating within the framework of Corporate Governance for a long time. This is a system of relations between shareholders, the Board of Directors and the Management Board, where each tier performs clearly defined duties. Such a system allows minimizing business risks, strengthening internal control, increasing the company's transparency and attractiveness to partners.

To implement the system in Kazakhstan, last year the National Council on Corporate Governance was established at the Presidium of the Atameken NCE RK, headed by the deputy of the Mazhilis of the Parliament of the Republic of Kazakhstan Yekaterina Nikitinskaya. At the next meeting, the participants of the Council considered the Concept of formation of national standards and the Methodology of assessment and rating of the level of corporate governance of Kazakhstani companies.

"Owners of companies do not always manage directly. For example, the IPO system: people buy shares, give money and hope to get dividends. But professional managers, i.e. people who understand the sphere of business, do it. Therefore, they should build certain relationships with owners. The national standards we are considering today will allow us to build the right relationship. They will make management transparent, but at the same time the managers do not abuse their position," Yekaterina Nikitinskaya said.

The concept of formation of national standards is a kind of roadmap from the Atameken NCE RK, which will help to develop actual standards. At the same time, they will take into account the specifics of the quasi-public sector companies, financial and listing companies, and joint-stock companies. In turn, the Methodology of evaluation will have to determine the level and quality of corporate governance.

"We structured it in such a way as to avoid subjective judgments of specialists. The methodology also includes instructions, tools, scores and their implications for the rating. The methodology provides for different target groups," Aigul Tasbolat, a board member of the Aspandau Foundations, said.

In general, according to the participants, Kazakhstan has laid a good foundation for the introduction of corporate governance. There are business segments where it is implemented quite deeply and successfully. These are, first of all, public sector quasi-companies and companies that entered the stock exchange. However, the field for work is still wide.

"Such companies have a whole line of criteria that need to be met. The system of independent directors has been built, i.e. each board should have professional independent directors so that the interests of one do not prevail over the interests of the other. We now set ourselves the task. First of all, today the majority of our legal entities do not exist in the form of JSCs, but in the form of LLPs, that have not such a system of management quality standards. Respect for the interests of owners has not yet been established, and we want to involve this stratum in the corporate governance system," Yekaterina Nikitinskaya said.

The participants have no doubt that the adoption of systemic measures on corporate governance, taking into account the best international and national practices, will increase the transparency and quality of company management. It will give an opportunity to effectively manage risks and strengthen internal control. In combination, it will form the basis for good corporate governance in the country's companies and will lead to an increase in the investment attractiveness of the Kazakh market and the development of the economy.

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