|Launching the Corporate Governance Initiative (CGI)|
I. The Corporate Governance Initiative (CGI) – New Standards
Governance Initiative (CGI) was officially launched in April 1999. CGI
is a coalition of Bulgarian NGOs aimed facilitating the adoption of relevant
corporate governance standards and procedures that would ensure transparency
and accountability in the economy. The coalition was established by Association
of Industrial Capital, Association of Voluntary Pension Funds, Center
for Economic Development, Center for the Study of Democracy, Investors’
Union, Securities Holders Association. Activities of the CGI in the second
half of 1999 have been supported by CIPE and have been focused on the
development and the public endorsement of a Policy Recommendation Paper
on corporate governance.
after the official launch of the CGI a Task Force including about 10 experts
from state institutions and NGOs was formed to draft the Policy Recommendation
Paper. The main objective of this document is to outline a consistent
set of policy and legislative measures (action agenda) that would help
develop the institutional and market infrastructure of corporate governance.
The next step
in the CGI process was the Policy Workshop. It was conducted on July 13,
1999 at CSD and brought together approximately 50 participants at the
expert level (members of the CGI Steering Committee, the CGI Task Force,
Bulgarian and foreign experts, and representatives of state and international
institutions). The main function of the Policy Workshop was to solicit
expert comments and suggestions on the corporate governance development
agenda and also to bring forth the specific viewpoints of the major stakeholders.
The draft Policy Paper was presented by Professor Bistra Boeva, member
of the Securities and Stock Exchange Commission, Head of the CGI Task
Force. Workshop participants made a lot of suggestions focused on the
guaranteeing equal treatment of all shareholders, the responsibilities
and motivation of boards, corporate governance problems of the holdings
(former privatization funds), and on the management of the residual share
of state ownership.
The CGI Policy
Forum was conducted on November 30, 1999. More than 60 representatives
of public and private institutions, international organizations, businessmen,
academics, and journalists attended the Forum. At the Forum the final
version of the Policy Recommendation Paper on corporate governance was
presented and publicly adopted thus reflecting the consensus reached among
of the principal institutions and stakeholders.
On the Policy
Forum many participants noted that most of the recommendations in the
Policy Paper will be implemented in the Draft Law on Securities to be
adopted by the National Assembly. Representatives of the international
investment community showed considerable interest in the corporate governance
problems in Bulgaria. Foreign participants voiced their support for the
Corporate Governance Initiative, and made valuable suggestions,
concerning the forthcoming implementation of the Policy Paper.
At the First
Investment Forum for South-Eastern Europe, October 19-20, 1999, Sofia
CGI was invited to participate in the plenary session: “State and Corporate
Governance. Cooperation between Public and Private Sector.” CGI members
presented the paper “Corporate
Governance and Control in Joint-Stock Companies in Bulgaria” and
distributed it in 500 copies among the Investment Forum participants.
In order to
widely disseminate CGI findings and recommendations the Center for the
Study of Democracy has prepared the draft version of a Glossary of Terms
on Corporate Governance and Capital Markets. It contains approximately
300 entries and has been reviewed by leading Bulgarian experts in the
area of corporate governance. CGI members have prepared a set of training
materials, which will be used during lectures and specialized seminars
on corporate governance at the University of National and World Economy
(Sofia), the Economic Department of Sofia University, and the Economic
University (Varna). The main topics to be discussed at the seminars with
students include: Equal Treatment of Shareholders; Protection of Shareholders’
Rights; Disclosure of Information; Board Responsibilities; Capital Market
and Corporate Governance; Regulations on Residual State Ownership.
II. Social Consequences
of the Implementation of the Currency Board in Bulgaria
goal of this one-year project implemented jointly with the Sociological
Program of CSD (Vitosha Research) was to develop a system of indicators
to assess the impact of the Currency Board on the social protection of
the population. The specific research approach included several components:
1) identifying the specific implications of the Currency Board on the
social protection system by analysing the existing statistical and regulatory
information for in the past ten years. 2) to test the findings and working
hypotheses of the preliminary analysis by submitting them for discussion
at public events and workshops, dedicated to this topic, and 3) to explore
expert opinions using focus groups as an analytic tool; 4) to use a national
representative survey in order to quantitatively estimate the specific
impacts of the currency board.
of the project helped to identify the most vulnerable social groups, for
whom rigid financial discipline and government spending reduction have
meant declined personal incomes and lower living standards (long-term
unemployed, low-income pensioners, uncompleted and large families). Options
are being sought to improve the status of these groups and facilitate
their integration. Obviously, in the conditions of a currency board, the
ways for improvement of the social status of the population have to be
found only within the available limited financial resources. There is
a need for more effective distribution of the available funds, strict
adherence to the principles of social solidarity and balance between the
social security contributions and the benefits received. The introduction
of the Currency Board in Bulgaria has only speeded up the delayed reform
of the social sector and helped adjust it to the modern standards.
report prepared under the project was presented at the conference “Social
Consequences of the Currency Board” (June 24, 1999). The conference
initiated a broad public discussion focused on research finding and conclusions.
Conference participants recognised the practical value of the study for
the adjustment of social reforms to the new economic realities.
III. CSD Monitor
In 1999 two
issues of the CSD Monitor were published in English and Bulgarian. The
Monitor covers all major CSD activities and events: research and advocacy
in the field of corporate governance; establishment of the Legal Reform
Initiative; drafting legislation on e-commerce and digital signature;
accession to European Union issues; book donation, etc. The publication
has been widely distributed to Members of Parliament, government officials,
media, municipalities, and international donors.
IV. International Business Club Meetings
establishment in 1993 the International Business Club (IBC) has provided
opportunities for high-ranking public officials and policy makers to meet
senior foreign diplomats, trade envoys and representatives of the business
community. An extensive exchange of views and comments on topical political
and economic issues has taken place during the four meetings IBC organised
- March 16, 1999. Guest speakers were Mr. Stefan Sofianski,
Mayor of Sofia and Mr. Antonio Vigilante, UNDP Representative, on Priority
Investment Projects of Sofia Municipality.
- May 27, 1999. Guest speakers were Mr. Martin Zaimov,
Deputy Governor of the Bulgarian National Bank and Mr. Stoyan Alexandrov
, Chairman, Association of Commercial Banks, on the Denomination of
Bulgarian Lev and its Impact on the Economic Development of the Country.
- July 9, 1999. Guest speakers were Mr. Ventsislav Varbanov,
Minister of Agriculture, Forests and Land Reform and Mr. John Grant,
Mission Director USAID on the Main Priorities of Land Reform and Agricultural
Development in Bulgaria.
- November 30, 1999. Guest speakers were Mr. Mario Tagarinski,
Minister of Public Administration and Mr. Richard Stagg, Ambassador
of the UK, on the Reform in the Public Administration in Bulgaria.