New Corporate governance code

The Government of the RF has adopted a new Corporate governance code, the previous code of the year 2001 is played-out, that was noticed in the expert community long ago.

A lot of attention is paid in new rules to compensation policy of top-management. It is necessary to set a limit on so called «golden parachutes» to reasonable, especially in companies, where the main shareholder is the state. As an example - financial compensation in the sum of 230 mln RUB, which was got by the former Head of «Rostelekom» Alexander Provotorov by the dismissal, who had been working as General director only for three years, what became a record in the domestic practice of such payments. The Code introduces fixed severance payments, but not higher than two annual earnings; besides that, annual compensations themselves should be fixed depending on the extent of duties or complexity of work in progress.

The Code’s recommendations will be necessary to be taken into account by enterprises, whose securities are listed on the Exchange. A number of requirements is introduced for organizations, which have pretentions to a high level of listing of their securities, including to the amount of independent board directors - there should be not less than two in the company management. Public companies should become an example for all entrepreneurship of the country.

The document in whole was accepted positively in «high street», however, it has a substantial defect – it is of recommended character and cannot be perceived as call to action. Taking it into account, the Government of the RF has suggested the beginning of the introduction of corporate rules with state-owned companies, and all others, in theory, should follow them. But in all certainty it is arguable that the introduction of this Code will require a long time and positive practice in real market conditions.