In most state-owned companies, the necessary professional knowledge and competences for board members are not clearly defined, their earnings do not depend on whether the company is doing well or poorly, the individual performance of board members is not evaluated in terms of business success, and there is no clear policy of relations with small shareholders. ..
This can be seen from the answers of the managements of companies - joint stock companies to the annual questionnaire on the code of corporate governance, which had to be sent to the Montenegro Stock Exchange by all joint stock companies listed on it, and which have been published on its website so far.
This is an obligation that was introduced for the first time this year in order to raise the corporate culture and transparent work of companies, and the Montenegro Stock Exchange will eventually analyze all responses and make a report, and the ratings will affect the future listing of those companies. These questionnaires should also help potential investors with decisions about buying shares and investing in some companies. The questionnaire was answered by all companies, regardless of the form of ownership, and the answers of state-owned companies are the most interesting to the public.
On paper, all professional and independent
From the answers of most companies, it is clear that those who filled out the questionnaire were not very honest. For example, to the question - whether the company's articles of association set the criteria for defining the necessary professional knowledge and competences of board members, most companies answered only with "yes", however, when you go into their articles of association, it is only stated that it is necessary to have a high vocational education. The essence of this part of the question from the questionnaire was whether the board members have "expert knowledge and competence" for the company's activities, i.e. whether they contribute to the company's progress with their knowledge.
Also, the majority of state-owned companies responded with "yes" to the question - does the board of directors have independent members, several companies did not write their names when asked to name independent members, and others gave two or three names even though they too appointed the representative of the state at the Shareholders' Assembly.
Also, most companies stated that they do not publish the biographies of the members of the board of directors on their website.
The questionnaire had 70 questions, and the company's authorized representative had to answer them with "yes", "no" or "partially" with the possibility of additional explanation.
"For questions to which the company answered 'no' or 'partially' in the 'explanation' column, it should be explained why it is so, that is: explain in which part it does not comply with the provisions of the Code and for what reason, describe the measures it has taken instead of complying with the provision of the Code in order to fulfill the objectives set out in the relevant principle of the Code, and if the company intends to comply with the provision of the Code in the future, indicate when it will start to do so", stated in the instructions for filling out the questionnaire.
However, most companies, even when they answered "no" to the questions, did not explain such an answer.
Questionnaires - experiences from international stock exchanges
Director of Montenegro Stock Exchange, Milena Vučinić she told "Vijesti" that the obligation to submit the annual questionnaire along with the Code of Corporate Governance was introduced at the end of last year and that they are now to be submitted for 2022.
"By creating and introducing questionnaires modeled on other stock exchanges, the goal was to adopt and apply the best market practices, and promote the importance of non-financial reporting of listed companies. When it comes to reporting, until now the focus has been on financial reporting, however, the respect and application of the principles of corporate governance of companies can only be seen, analyzed and monitored through the answers received to the questions from the Annual Questionnaire with the Code of Corporate Governance", said Vučinić.
She stated that such questionnaires also exist on other regional and European stock exchanges, as well as that theirs was created based on the model of questionnaires used on regional stock exchanges, two of which are European, and certain parts of the questionnaire of the Istanbul Stock Exchange were taken over.
Answers will be analyzed
"Answers will be analyzed, that is the meaning and purpose of the questionnaire, because the obligation of non-financial reporting is introduced with the aim of obtaining more data and information about business transparency, management bodies, treatment of small shareholders, external audit and internal controls, commitment to the principles of corporate governance and social responsibilities of companies. The questionnaire is available on the website of the Montenegro Stock Exchange and is linked to the market symbol of the issuer and represents a significant contribution to the growth of the transparency of listed companies. Investors and the investment public are enabled to obtain and have more information about the application of corporate governance standards in our companies. In this way, the Montenegro Stock Exchange has created a starting point, created a cross-section of the situation, which enables it to analyze and monitor the answers received in the Annual Questionnaire along with the Code of Corporate Governance from year to year," said Vučinić.
She stated that the largest number of listed companies from the regulated market of the stock exchange submitted the Annual Questionnaire with the Corporate Governance Code, with the financial report or after the financial reports for 2022.
"Immediately after receiving the questionnaire, the Stock Exchange publishes it on the website, so that by searching for the market symbol, on the issuer's page, in addition to financial reports, auditors' reports and management reports, notices of shareholders' meetings can be found, i.e. the Annual Questionnaire is available along with the Code of Corporate Governance" , stated Vučinić.
"Plantations" are honest, so they have the most answers with "no"
"Plantaže" had the most "no" answers, but with additional explanations that they will consider or fulfill it in the following period.
For example, most companies answered "yes" to the question of whether the Board of Directors evaluated their work, although such cases are not known to the public. From "Plantaž", among the few, they honestly answered "no" to this question with the explanation that they will consider the preparation of such a document.
Also, the majority of companies answered with "yes" to the questions of whether the Board of Directors has ensured a strategy that risks do not threaten the long-term interests of the company and that there is effective risk management, as well as whether the company encourages and enables constant training and education of the members of the Board of Directors with the aim renewing and improving their knowledge and abilities. "Plantaž" honestly answered "no" to both questions, with the explanation that the plan is to develop a strategy for risk management.
The undersigned replies that everything is true
When asked if there are cases where some companies did not answer the questions in the required way or were not signed by authorized persons, Vučinić stated that an integral part of the answer to the questionnaire is the statement of the management body (executive director) confirming that they are familiar with the answers. all members of the management, executive director, members of the supervisory board and board of directors of the company. With this statement, they confirm that all answers are true and that they agree that they can be publicly published on the website of the Montenegro Stock Exchange.
"So, the management bodies of the companies assess whether they will answer all or part of the questions, they choose the way in which they answer. They were given the option to answer with 'partially' in addition to affirmative and negative answers, with the possibility of writing an explanation or comment next to each answer", said Vučinić.
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