Financial Regulation and Compliance,
Socratis Lazaridis raises the question of
whether Greece can have an effective
enforcement of Corporate Governance
principles and structures. According
to him, Greece is classified among
the Continental European corporate
governance pattern characterized by
concentrated ownership, a dominant role
for majority shareholders and a weak
market for corporate control. The law
3016/2002 was an unsuccessful attempt
to attract investments in Greece, and
it has brought no results in improving
the fundamental elements of the Greek
corporate environment. Lazaridis is
in favor of a flexible legal framework
that will be easy to apply and therefore
effective in terms of helping Greek
corporate environment open up to the
global competitive scene.
I personally agree with Lazaridis. I
believe that in order to positively affect
the performance of Greek companies,
we must sufficiently enforce the current
existing initiatives in the Greek legal
framework.
For example, executive remuneration
is not dependent on performance, power
and control structure, monitoring of
efficiency and incentive plans. Such
inefficiency is moreover a domestic
feature, since the law 3016/2002 failed
to establish an independent monitoring
mechanism or to enhance the efficiency
of the existing ones.
As a contradiction, Charilaos
Mertzanis in his article "The
effectiveness of corporate governance
policy in Greece" (2011) states that: "the
rules and conventions that a country
will have down the road will depend
on the type of corporate structures and
corporate rules that it began with."
While the role and gravity of legal
framework and regulation is important,
equally important are differences in
enforcement (law effectiveness) which
take into consideration other economic
and institutional factors. In other
government and its regulations, it is the
market in its effort to regain balance that
will regulate itself.
Greece has no distinct Corporate
Governance Code. Law 3016/2002
is a fragmented regulation for the
conduct and behavior of a board of
directors and its members, executive
or not, the auditing procedures and the
general inner control of the company.
Compared to foreign Codes of Corporate
Governance, the Greek law lacks in
depth analysis and sufficient coverage of
practical guidance. The writer's opinion
is that a new quasi-legal instrument
which will have a legally binding
force would not only be preferable but
mandatory.
A fresh legislative view on the
matter of related party transactions and
financial reporting is the UK Enterprise
and Regulatory Reform Act 2013 ("the
2013 Act") which amended Part 10 of
the Companies Act 2006 ("the 2006
Act"). Executive remuneration and
reporting is a hot potato that is crucial
for most investors. The ideas of:
single figure for a director,
like Greece too.
Before concluding, it is worth
mentioning that we expect the Ministry's
reaction on a recent commendable
amendment proposal from the Capital
Market Commission for the law
3016/2002, which will concern Greek
listed companies operating in Greece
or in the EU. The general idea behind
this amendment is the diversification in
details for disclosed RPTs depending on
their size compared to the value of the
company.
The Greek corporate environment is
in need of a new Reforming Act which
will be a result of a joint effort between
the Hellenic Capital Market Commission,
the Government and the Hellenic
Federation of Enterprises. We must avoid
the random and scattered approaches
which have been the norm up to today.
What we need is a coherent all around
approach of CG and RPTs in Greece. A
new regulation that will cover all aspects
of modern Corporate Governance and
will not concern for example only the
taxation like IAS-24 does, or the board
of directors as law 3016/2002. Any
solution cannot disregard social factors,
governance models and a cost/benefit
analysis.