Why is Corporate Governance Important?

The practice of corporate governance gained momentum in the last two decades. Today, more than ever, the way companies run their businesses affects not only their particular market economy, but also that country’s population and their social well-being.

In view of the 2008 financial crisis, it has become clearly evident that a company not compliant with the internationally recognized standards corporate governance guidelines, not transparent and not growth-oriented, does not only set itself up for failure, but also puts at risk its employees, shareholders, and creditors, to name a few.

What Are the Benefits of Corporate Governance?

• Positive company image
• Increased appeal to investors
• Attraction of additional capital and financing
• Improved business performance
• Better control mechanism
• Greater trust and confidence in the company
• Balanced management
• Shareholder security

Corporate governance is especially important when it comes to resolving matters concerning management liability, company transparency, conflicts of interest, protection of shareholders’ rights, and dealings with regulatory bodies, among others.

Businesses in many other developing or already developed countries face the very same challenges, whether they are small ventures or large companies. At Eristavi Law Group, we believe that it is necessary to apply the internationally recognized management standards and systems in order not to repeat mistakes that brought down a number of corporate giants in the recent past.

Why Work With ELG?

Today, many leading international organizations, institutional investors and conferences are making an effort to improve corporate governance practices all over the world. In Georgia, corporate governance advisory services were offered by the International Finance Corporation (IFC) for a number of years, before the organization transferred their know-how and methodology to Eristavi Law Group in 2010. ELG now exclusively offers its clients the same expertise that IFC utilized to strengthen corporate governance practices worldwide. Through their work with IFC, companies adopted international best practices in management systems and as a result, were able to obtain external capital.

In addition to securing funding for your business, Eristavi Law Group’s corporate governance programs will help you protect your company against risk, structure your management systems according to internationally recognized standards and gain the competitive edge necessary to become the market leader in corporate governance and corporate culture.

Becoming a leader is your choice. The success of the program depends on the willingness of the shareholders and the management to make the necessary modifications associated with structural changes and implementation of new programs. Your will get results, but you must BELIEVE IN SUCCESS!

ELG’s corporate governance team has an extensive practical experience in the area, gained both in Georgia and abroad, and is headed by partner and lead counsel in the corporate law practice Kakha Kuchava. Our team’s international experience and fluency in the latest industry trends, gives your company a guarantee of success.

Corporate Governance Practices Strengthening Program at ELG

Our innovative Corporate Governance Practices Strengthening Program is carried out through a collaborative effort together with your company:

1. Our team will analyze all current corporate documents (excluding specific transactions or business documents) to identify any gaps and areas of improvement.

2. To check the validity of findings and to correct them, our specialists will make inquiries with company management and/or company staff.

3. After the analysis and investigation of the gathered information, our corporate governance team will prepare recommendations tailored to your company’s needs.

4. Next, our corporate governance team, together with your company’s management, will review the recommendations in-depth and plan for the subsequent implementation. Client will receive a comprehensive report about the current state of the company’s affairs, including any gaps and areas of improvements.

5. Lastly, our experts will help you implement the new systems and changes with minimum interruptions to the working processes and personnel crisis.

6. Eristavi Law Group will make sure that all the successfully executed and completed work is properly reported in the media.

The program will vary depending on the client’s industry:

• Corporate management systems for the banking institutions (taking into account requirements set forth by the regulatory bodies).
• Corporate management systems for companies registered on the stock exchange (with consideration to future public trading and in preparation for an IPO).
• Corporate management systems for insurance companies.
• Corporate management systems for family businesses; this is brand new and significant concept for Georgia.
• Corporate management systems for government enterprises. Here, special attention is paid to countries, such as Georgia, that converted from planned economies to market economies.
• Corporate management for any other form of enterprise – whether it is a limited liability, a partnership and so on. 

Our program will help eliminate the existing gaps and problems within your company and will implement the new, proper corporate governance practices. More often than once, these problems exist unnoticed within a company’s operations and are discovered too late to fix their damage. This is evident from the recent corporate scandals, such as the well known Lehman Brothers (that was followed by the 2008 recession in the US and worldwide), ENRON, WorldCom, Parmalat, HP, Xerox, Shell, among others.

Our lawyers’ methodology is in line with the internationally recognized standards and best practices. Our program will help your company strengthen its management systems; will ease dealings with the regulatory bodies, your shareholder as well as local and foreign investors; will make your company transparent; and above all, will help you attract additional financing for your business.

What are the components of the corporate governance practices’ strengthening program?

1. Protection of the corporate management’s fundamental principals set forth by the Supervisory Board and the Board of Directors.
2. Existence of basic corporate documents and procedures;
3. Division of governing bodies’ duties and functions;
4. Supervisory Board and Board of Directors’ meeting effectiveness;
5. Supervisory Board’s effectiveness in controlling and supervising
6. Succession planning for the key management staff
7. Evaluation and compensation systems;
8. Internal controls’ procedures;
9. Internal audit’s operations’ improvement;
10. Effectiveness of the company’s internal communications;
11. Risk management - identification and reduction;
12. Reporting per International Financial Reporting Standards (IFRS);
13. Disclosure of information and procedures in the annual report;
14. Shareholders’ agreements;
15. Shareholders' general meeting’s regulations;
16. Investor relations and communications together with shareholders’ rights protection;
17. Procedures for corporate actions (payments of dividends, tender offers, etc);
18. Procedures of share registration;
19. Procedures for shareholders' claims and /or dispute resolution;
20. Conflicts of interest and regulatory procedures dealing with parties involved.

We have developed a program that is fairly flexible and can be tailored to each client company. In addition, the program can be executed in its entirety or consist of a single or a few components, as per the client’s request.