Russian businesses are aware of and, to some extent, familiar with the topic of corporate governance in Russia: the formation of boards of directors, and the role of independent directors in this work. Regulators, such as the Bank of Russia and the Ministry of Economic Development, understand that corporate governance and well-structured boards of directors are crucial to businesses success. Corporate governance best practices are being implemented in the banking sector, in leading corporations and government companies, and in many major companies whose owners focus on international standards and stock market demands.
In recent years, Russia has seen corporate governance professionals actively hone their skills and independent directors increase their training; it has witnessed the formation of associations and clubs composed of executives serving on boards of directors. However, the issue of choosing the right candidates still stands: after all, from a psychological standpoint, it is often easier to choose people who think like you do, who work in the same industry, and hail from the same generation. This kind of thinking alone goes against corporate governance best practices, which strive for as diverse a board of directors as possible. Due in part to the difficulties of adapting to such global practices, the number of small and medium-sized business owners ready to admit that their company needs a board of directors is growing more slowly than the number of people ready to work on such boards.
For example, I am a member of the IDA Professional Directors Association (previously known as the Independent Directors Association). Founded in 2002, IDA is the largest directors organization in Russia. It hosts training and certification programmes, stimulates dialogue and networking, and helps fulfil career potential as well as discover new business opportunities. Today, over 1,200 directors and executives from public, private, and government companies are IDA members. The association represents Russia in the Global Network of Director Institutes (GNDI), which unites over 150,000 directors from around the world. Together with the UKs Institute of Directors (IoD), the association organizes the IoD Chartered Director training programme in Russia. It is also responsible for several other programmes targeted at developing independent directors skillsets.
In the following articles, we will discuss certain problems related to corporate governance, familiarize ourselves with best practices, and hear from current professionals in this area.
Material prepared by:
Managing Director, Head of Special Situations and Russia & CIS, Castille Capital Management