Improvement of Organizational and Economic Mechanism of Corporate Governance in the Joint-Stock Enterprises

PhD dissertation abstract. Distributed on 9 September 2019. Defended on 15 October 2019. Tashkent State University of Economics.

26 Pages Posted: 25 Jun 2020

See all articles by Dr. Zufar Ashurov

Dr. Zufar Ashurov

Center for Research of Problems in Privatization and State Assets Management (formerly: Center for Research of Problems in Privatization, Development of Competition and Corporate Governance); Tashkent State University of Economics

Date Written: September 9, 2019

Abstract

The aim of the research work is to develop the theoretical and methodological foundations of corporate governance, to elaborate the proposals and recommendations for improving the organizational and economic mechanism of corporate governance in the joint-stock enterprises on the basis of modern international standards.

As the object of the research work there selected the joint-stock enterprises of the chemical industry incorporated in JSC “Uzkimyosanoat”, and its corporate governance system.

Scientific novelty of the research work is that there:

- improved the normative-legal base of corporate governance system on the basis of international standard «G20/OECD Corporate Governance Principles», in terms of establishing maximum nominal value of shares in five thousand soums, increasing transparency of dividends by publishing data about them on corporate website, ensuring right for minority shareholders to participate in governance of joint-stock company through holding an extraordinary general meeting of shareholders at the written request of shareholders owning at least five percent of the shares;

- improved the Corporate Governance Code in terms of applying long-term strategic planning in the activity of joint-stock companies, introducing independent member to the structure of supervisory board, determining remuneration for the members of supervisory board linking it with the performance of joint-stock company, and creating committees of supervisory board;

- proposed a modern method to effectively adhere to the international principle of corporate governance «comply or explain» in joint-stock companies, to the approaches of elaborating the long-term development strategy, to the mechanisms of internal control and to the rules for protection of shareholders’ rights;
- improved the organizational and economic mechanism of corporate governance in the joint-stock enterprises of chemical industry by means of selling state blocks of shares to potential foreign investors, and by developing acceptable dividend policy ensuring the capital payback.

Implementation of the research results. On the basis of scientific results obtained on improving the organizational and economic mechanism of corporate governance in the joint-stock enterprises:

- the proposals on improvement of normative-legal base of corporate governance system, worked out on the basis of international standard «G20/OECD Corporate Governance Principles», in terms of establishing maximum nominal value of shares in five thousand soums, increasing transparency of dividends by publishing data about them on corporate website, ensuring right for minority shareholders to participate in governance of joint-stock company through holding an extraordinary general meeting of shareholders at the written request of shareholders owning at least five percent of the shares, were included in articles 12, 23, 62, 75, 83 of the Law of the Republic of Uzbekistan «On Joint-Stock Companies and Protection of Shareholders’ Rights» adopted on 6 May 2014 in the new edition (a reference No.04/1-06-2-107 as of 10 September 2014 given by the Committee for Budget and Economic Reforms of the Legislative Chamber of the Oliy Majlis of the Republic of Uzbekistan). Implementation of these proposals in the norms of the law has contributed to the improvement of national corporate governance system based on requirements of the international standard;

- the proposals on improvement of the Corporate Governance Code, in terms of applying long-term strategic planning in the activity of joint-stock companies, introducing independent member to the structure of supervisory board, determining remuneration for the members of supervisory board linking it with the performance of joint-stock company, and creating committees of supervisory board, were included in chapter 5, clauses 18, 19, 25 of the Corporate Governance Code adopted on 31 December 2015 (a reference as of 28 July 2016 given by the State Competition Committee of the Republic of Uzbekistan). Implementation of these proposals in the Corporate Governance Code has enabled to apply in the joint-stock companies the long-term strategic planning, to include independent members to the structure of supervisory board, to determine remuneration for the members of supervisory board linking it to the performance of joint-stock company, to create committees of supervisory board;

- a modern method to effectively adhere to the international principle of corporate governance «comply or explain» in joint-stock companies, to the approaches of elaborating the long-term development strategy, to the mechanisms of internal control and to the rules for protection of shareholders’ rights was introduced by the State Competition Committee of the Republic of Uzbekistan into the managerial activity of the joint-stock companies (a reference No.2355/02-33 as of 11 October 2018 given by the State Competition Committee of the Republic of Uzbekistan). This method has been used as a practical tool in more than 400 joint-stock companies that introduced the Corporate Governance Code;

- the proposals and recommendations on improvement of organizational and economic mechanism of corporate governance in the joint-stock enterprises of chemical industry, by means of selling state blocks of shares to potential foreign investors, and by developing acceptable dividend policy ensuring the capital payback, were introduced into the managerial activity of «Uzkimyosanoat» JSC and «Navoiyazot» JSC (a reference as of 25 January 2019 given by «Uzkimyosanoat» JSC, a reference No.01 as of 13 August 2018 given by «Navoiyazot» JSC). Implementation of these proposals and recommendations into practice has enabled to make decision of the government on selling the state blocks of shares to potential foreign investors, to develop the effective dividend policy, to enhance the effectiveness of corporate governance system of the enterprises. As a result, at the end of 2017, the effectiveness of corporate governance system in «Navoiyazot» JSC was evaluated as satisfactory, in «Uzkimyosanoat» JSC – as high; finally, the income from financial activities in «Navoiyazot» JSC increased by 34.8 bln. soums, and in «Uzkimyosanoat» JSC – by 5075.0 bln. soums.

Keywords: Corporate Governance, Joint-Stock Company, Organizational and Economic Mechanism, Uzbekistan

JEL Classification: G30

Suggested Citation

Ashurov, Zufar, Improvement of Organizational and Economic Mechanism of Corporate Governance in the Joint-Stock Enterprises (September 9, 2019). PhD dissertation abstract. Distributed on 9 September 2019. Defended on 15 October 2019. Tashkent State University of Economics., Available at SSRN: https://ssrn.com/abstract=3614939

Zufar Ashurov (Contact Author)

Center for Research of Problems in Privatization and State Assets Management (formerly: Center for Research of Problems in Privatization, Development of Competition and Corporate Governance) ( email )

6, Amir Temur Str.
Tashkent, 100000
Uzbekistan

HOME PAGE: http://www.research-center.uz

Tashkent State University of Economics ( email )

49, Islam Karimov Str.
Tashkent, 100003
Uzbekistan

HOME PAGE: http://www.tsue.uz

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