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.
Are the Benefits of Corporate Governance?
- Positive company image
- Increased appeal to investors
- Attraction of additional capital and
- 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.
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.
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
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
5. Lastly, our experts will help you implement the new
systems and changes with minimum interruptions to the working processes and
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
- 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
- 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.
are the components of the corporate governance practices’ strengthening program?
- Protection of the corporate management’s fundamental
principals set forth by the Supervisory Board and the Board of Directors.
- Existence of basic corporate documents and
- Division of governing bodies’ duties and functions;
- Supervisory Board and Board of
Directors’ meeting effectiveness;
- Supervisory Board’s effectiveness in controlling and
- Succession planning for the key management staff
- Evaluation and compensation systems;
- Internal controls’ procedures;
- Internal audit’s operations’ improvement;
- Effectiveness of the company’s internal
- Risk management - identification and reduction;
- Reporting per International Financial Reporting
- Disclosure of information and procedures in the
- Shareholders’ agreements;
- Shareholders' general meeting’s regulations;
- Investor relations and communications together with
shareholders’ rights protection;
- Procedures for corporate actions (payments of
dividends, tender offers, etc);
- Procedures of share registration;
- Procedures for shareholders' claims and /or dispute
- 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.