The law shall be amended to protect the rights of minority shareholders. With the amendments to the Law on Securities Market, initiated by the government, an audit committee will be created in the accountable enterprise, members of which committee will be the members of the supervisory board and an independent director. Adoption of the draft law is planned before the end of May.
Namely, it is an internationally recognized practice that the audit committee is composed of the members of supervisory board and it is led by an independent person. Also, deals consisting conflict of interests, the value of which deal makes 10% of the value of equity of the accountable enterprise (more than 10% or a lesser amount, indicated in the charter), shall be approved by external audit. The reason for adopting the draft law is also to allow any shareholder receive information on incomes of the directors.
According to the current version, shareholder or group of shareholders, holding 5% of the shares or more, are entitled to receive information on salaries and other incomes of the directors, or the members of the board of directors and the supervisory board of the accountable enterprise, gained from the enterprise. By the draft law, this information becomes accessible for any shareholder.
Giorgi Paresishvili, Chair of the supervisory board of Tbilisi Stock Exchange, explains that the purpose of the draft law is, on the one hand, to improve protection of minority shareholders’ rights and, on the other hand, to strengthen the corporate management standards in companies. “The law improves the current situation. Nothing is perfect and there is always something better. However, compared to what we have now, the new law will definitely be better”.
Apart from protection of minority shareholders’ rights and improvement of corporate management standards, one of the goals of the law is to promote Georgia in the Doing Business ratings. “Alongside with many other criteria, protection of minority shareholders’ rights is also evaluated in these ratings,” – notes Giorgi Paresishvili.
