Bucharest Stock Exchange (BVB) launched on September 22, 2015 a new Corporate Governance Code (CGC) applicable to companies whose shares are admitted to trading on the Main Market. The new Code was designed with the support of the European Bank for Reconstruction and Development (EBRD), as part of a new corporate governance framework which will enter into force on 4 January 2016, and aims at promoting higher standards of governance and transparency of listed companies.
“We deploy new measures in order to lay down the most solid base for the capital market in Romania. The new code of Corporate Governance is a modernized set of rules and practices, which will increase the attractiveness and valuation of Romanian companies, for the greatest benefit of investors. We are introducing this code, with a new system of compliance and enforcement, because Romania did not want to remain anymore in that matter, as a frontier market on the map of European markets. We are satisfied with the final outcome of the modernisation of the approach to corporate governance and culture, which we accomplished together with the EBRD, and we will be watchful now as to those aspects of the implementation, which relate to investors' and companies' education”, stated Ludwik Sobolewski, BVB CEO.
Gian Piero Cigna, Senior Counsel at the EBRD, said: “The new code is much more focused and precise in what is required from listed companies. For instance, it provides a clear list of functions that are expected from the audit committee, therefore complementing the law. I particularly welcome the emphasis on the value of establishing a continuous relation with investors and the quality of disclosure. The new code is yet another step towards transforming Romanian capital market into an attractive investment destination.”
At the center of this Code are access to information for investors and protection of shareholders’ rights. The new Corporate Governance Code is comprised of 4 sections: Responsibilities, Risk management and internal control system, Fair rewards and motivation, and Building value through investors’ relations. Each section has an outline of “general principles”, followed by “provisions to comply with”.
The enforcement of the new rules will be based on the “comply or explain” principle which is expected to give the market clear, accurate and actual information about listed companies’ compliance with corporate governance rules. Companies shall include a corporate governance statement in their annual report, as a specific section of the annual report, which shall contain a self-assessment of how the “provisions to comply with” are observed and shall include the measures taken in order to comply with provisions that are not fully met.
In addition to that, companies not complying with certain mandatory provisions of the Code will be supposed, accordingly to the BVB Rulebook, to pass current reports to the market.
Introduction of the new Corporate Governance Code has also been one of the goals that Bucharest Stock Exchange has undertaken when joining UN Sustainable Stock Exchanges Initiative in March 2015. BVB was the 19th member to join the initiative globally and the 4th European exchange alongside Deutsche Borse, London Stock Exchange and Warsaw Stock Exchange. Apart from engaging in a number of actions and projects carried out by the UN SSE initiative throughout the rest of the year, BVB has also committed to introduce voluntary ESG Reporting Guidelines for listed companies.