I. INTRODUCTION

Good corporate governance is essential to attract and retain investment and is also an important contributor to the performance of enterprises. Though the importance of good corporate governance has long been recognised, it became a priority issue as a result of a number of regional crises in the financial markets. It is now recognised that better corporate governance can result only from a sustained effort to improve the regulatory/legislative framework, the institutional capacity for its implementation and, most importantly, private sector practices and perceptions.

The OECD and World Bank agreed in May 1999 to work closely in promoting improved corporate governance world-wide by establishing the Global Corporate Governance Forum. This co-operation agreement responds to the mandate from G-7 finance ministers and central bank governors, representatives of the G-22 countries and ministers of the 29 OECD member countries. It takes as a starting point the recently adopted OECD Principles of Corporate Governance. In the context of this co-operation, the OECD is taking the lead in establishing a set of Regional Corporate Governance Roundtables. These will constitute a continuous framework for policy dialogue and multilateral exchange of experience on corporate governance, between public and private sector experts from the regions as well as international experts and investors. The Secretariat for the Roundtables is based at the OECD in Paris.

Three Regional Roundtables have already been launched for Russia, Asia and Latin America. The kick-off for the Eurasian Roundtable is in October 2000. The launching of other roundtables (for Africa, Middle East/North Africa) is currently been considered with regional partners.

II. THE RUSSIAN CORPORATE GOVERNANCE ROUNDTABLE

The decision to establish the Roundtable in Russia was taken at a meeting in Moscow in June 1999, organised by the OECD and co-sponsored by the U.S. Agency for International Development and the World Bank. The meeting received broad support from the Russian government and private sector, notably from the Supreme Arbitrage Court, the Federal Commission for the Securities Market (FCSM) and the National Association of Securities Market Participants (NAUFOR). Participants included policy makers and senior government officials, representatives of business and social partners, independent experts and other international organisations. One of the main results of the June 1999 meeting was a consensus on the need for a continuous dialogue on improving corporate governance between the private sector, regulators and foreign investors using the OECD Principles as a starting point.

Hence, the overall goal of the Russian Corporate Governance Roundtable is to improve corporate governance in Russia by helping to raise and sustain a momentum in the reform process. This will be achieved through a continuous policy dialogue structure and the enhancement of appropriate institutions. The creation of the Roundtable responds to a demand for high quality advice from the public and private sector decision-makers involved in this effort, who seek to build confidence in the Russian markets and the rule of law.

A. Objectives

1. Promote better corporate governance in Russia. This will be done using the OECD Corporate Governance Principles as a conceptual framework.

2. Generate continuous dialogue on corporate governance reforms in Russia. International experience will be disseminated and progress in Russia will be made known to a key international audience.

3. . Enhance the capacity of the public and private sectors to assume responsibility for corporate governance reforms.

4. Monitor and evaluate corporate governance developments in Russia.

5. Facilitate the identification of future policy and technical assistance needs in the public and private sectors.

B. Main Outputs

1. Policy dialogue meetings. The Roundtable brings together on a regular basis - twice a year - a network of the main decision-makers from the public and private sectors (see Part C) to provide high quality policy advice and to facilitate an exchange of multilateral experience.

Rationale: The meetings provide the main vehicle for eliciting discussion on corporate governance conditions and setting priorities for reform efforts in Russia. (A) Meeting agendas reflect the main chapters of the OECD Principles. Empirical studies and other policy papers are prepared along the same lines, providing a basis for discussion between the public and private sectors. Policy recommendations are formulated. Russian partner institutions may use the conclusions and recommendations from the discussion and papers to implement reforms. However, it is not the intention of the Roundtable to neither perform a detailed review of legislation nor submit amendments to the DUMA. (B) The Roundtable is also a clearing-house for needs and supply of technical assistance, facilitating the co-ordination of coherent and continuous policy advice to Russia on corporate governance by various donors. (C) The Roundtable also helps channel international expertise, providing guidance and supporting local efforts to introduce mandatory and voluntary standards, driven by professional associations, large companies and investor groups. This complements efforts at the regulatory and enforcement level and can help the emergence of a culture of compliance and disclosure.

Timetable: The third meeting of the Roundtable was held on 15-17 November 2000 in Moscow. It focused on the issues of transparency and disclosure. It was decided that the next most important issues to address at the roundtable level are the responsibility of the board and the role of stakeholders, this will be the topic of the fourth meeting, which is planned for 20-21 June 2001.

2. Publications/communications. An electronic discussion group was set up to allow Roundtable participants to engage in a year-round discussion and exchange information on issues of immediate concern. The Russian Investor Protection Association developed a dedicated "Corporate Governance Website for Russia" (www.corp-gov.org) that was launched at the 3rd Roundtable meeting in November 2000. The Association is responsible for the design, development and maintenance of the site on a permanent basis, building its institutional capacity. These communications tools for information dissemination and exchange provide an electronic hub for information gathering and networking on corporate governance in Russia. Papers from all meetings are also available on the OECD website (www.oecd.org).

Background documentation for the Roundtable discussions is public and broadly disseminated. The launch meeting on corporate governance in Russia resulted in the gathering and dissemination of information on ownership structures, corporate governance practices and regulatory provisions in Russia. Documentation from the February 2000 meeting focused on: opportunities to seek legal redress, rules and procedures for the transfer of ownership, legal as well as judicial practice on shareholder rights enforcement, and case studies on abusive self-dealing. A paper comparing Russian shareholder rights and equitable treatment with those of the OECD Principles was also prepared. The third meeting's documentation is devoted to the information disclosure and its role in strengthening corporate accountability.

In parallel to the background documentation for meetings, analytical work is being developed at the specific request of some of the Russian partner institutions.

Rationale: The dedicated website has been created to provide investors, companies, government officials and civil society with a venue to share prominent research, working papers, studies and information on the latest regulatory and practical developments in the area. It allows Roundtable members to monitor and co-ordinate the reform effort, identify needs and survey progress through the literature. Information is displayed in both Russian and English on the following: corporate events monitoring; shareholder rights activism; corporate law and other legal updates; legal practices related to protection of investors' rights, including the publication of court decisions; analytical work/studies on corporate governance in Russia; expert opinions on the current corporate governance situation in Russia; a "Hot Line" operating in real-time mode; and materials from the OECD/World Bank Corporate Governance Roundtable.

3. A Russian White Paper on Corporate Governance. A corporate governance white paper for Russia is being developed by the Roundtable. This is a consensus-building exercise conducted within this senior but unofficial group of corporate governance experts, aimed at sustaining a homegrown voice for reform in Russia. It will help Russian policy makers, legislators and companies focus their effort to address corporate governance problems at different levels. The White Paper will also serve international financial institutions in their effort to review corporate governance developments and assist reform efforts in a systematic, focused way.

Rationale: The OECD Principles are general in nature. They give a broad, global vision of what constitutes good corporate governance. A reform agenda needs to take into account the specificity of the Russian legal and cultural traditions, specific transition-related problems with institutions and market conditions in which companies operate. The Roundtable will provide a forum in which the Principles can be used to address Russia's specific challenges, providing a template for reform. Like the OECD Principles, the White Paper would be non-binding. Its purpose would be to serve as a reference point. Russian policymakers could use it as they evaluate and improve the legal, institutional and regulatory framework for corporate governance; companies as they develop their own practices; international organisations and donors to identify priorities for technical assistance.

Timetable: A Draft of the first two chapters of the White Paper, on shareholders rights and equitable treatment, were discussed on 17 November 2000 at a special meeting back to back with the 3rd Roundtable discussion. This is a working document, which will benefit from the all Roundtable discussions. The final White Paper will be endorsed by the Roundtable at the end of 2001.

C. Participants and Partners of the Roundtable

The Roundtable consists of approximately 50 core participants.

Russian participation: A major ingredient for the success of this work includes, among others, ownership of the Programme by the shared responsibility of the Russian authorities and private institutions. The main Russian institutional counterparts to this project are: Federal Securities Commission, Supreme Arbitrage Court, the self-regulatory associations of market participants NAUFOR and registrars, transfer-agents and depositories, PARTAD, and shareholders Association for Investor Protection. Participants at the Federal and regional level include the leaders and experts from the stock exchanges, other securities markets institutions and the corporate sector, as well as stakeholders. To give this effort a broader scope, in-put is invited from the Ministry of State Property, State Property Fund, Anti-Monopoly Committee, Ministry of Finance, Duma and Federation Council representatives.

International partners: In addition to the World Bank Group, EBRD, Centre for International Private Enterprise, USAID, other multilateral and bilateral institutions are invited to contribute their expertise and financial resources to back the programme. The World Bank/OECD Private Sector Advisory Group will provide international leaders and experts from the private sector. Selected legal, financial accounting professionals and academics are also invited to participate.

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