The draft law on defining the code of corporate governance for organizations and joining it on a voluntary basis was put into circulation in the RA National Assembly.
"Armenpress"According to the report, the Minister of Economy Gevorg Papoyan presented the bill on making additions to the Civil Code of the Republic of Armenia at the May 17 session of the Standing Committee on State-Legal Affairs of the RA National Assembly.
"Corporate management code is a legal act approved by the authorized body that develops government policy in the field of investment promotion, in this case the Ministry of Economy, which contains principles and rules aimed at increasing the efficiency of the management of an economic company, protecting the rights of participants, increasing the transparency of operations and increasing accountability," explained Papoyan. adding that adherence to the corporate governance code by economic companies will be voluntary, unless otherwise provided by law.
According to the bill, the authority to adopt a decision on joining the corporate governance code belongs to the general meeting of economic company participants, unless otherwise provided by law or statute.
The minister detailed that since 2010, the RA government has adopted a policy to encourage the application of corporate governance principles among commercial legal entities and to support the advancement of projects implemented in that direction.
"However, in reality, the government did not have such a right at that time. In other words, there were government decisions, but the corresponding legislative powers were not defined.
The first provision is about that, so that the government and the authorized body are given that opportunity," Papoyan said.
Accordingly, it is proposed to define the concept of corporate regulation and the necessary authorizing norm for its adoption by the civil code, to define also the principle of voluntariness of its application, if the law does not provide otherwise, and the scope of applying legal entities.
"The principle of voluntariness means that companies are not obliged to join this code, despite the fact that in leading countries, economically developed countries of the world, when organizations pass certain minimum indicators, there is even a principle of compulsion. In our case, we consider that volunteering should be the minimum for the beginning. The organization can accept the act exactly in the form that the Ministry of Economy will accept and can accept it with certain comments. But, naturally, in that case, the potential investors see that it was not adopted in the same form, but with a certain interpretation, because the corporate governance code is for the protection of the rights of potential investors, clarification of corporate governance rules," Papoyan said, adding that corporate governance aims has to support the building of the environment of trust and accountability necessary for the purpose of attracting long-term investments, the formation of sustainable growth and financial stability.
By providing legal norms on joining the Corporate Governance Code under the Civil Code, not only a solid legal basis is created for the application of the Corporate Governance Code, but also the importance and effectiveness of the implementation and application of this system for organizations is emphasized.
According to the keynote speaker, the mentioned model also takes into account the international best practice to encourage the voluntary adoption of the corporate governance code, as well as provides an opportunity to provide mandatory grounds for joining it by law. The proposed model will allow the legislator, at his discretion and taking into account international norms and experience, to define the areas where adherence to the Code should be mandatory. At the same time, such an approach gives legal entities sufficient discretion and freedom to decide on the application of the Code, taking into account their own problems and goals.
