The 2009 Annual Report on Business

In 2008, the Bucharest Stock Exchange or BSE instituted a new BSE Corporate Governance Code, which is based on the OECD Principles of Corporate Governance, requiring that companies admitted to trading on the regulated market of the BSE wholly or partially adopt – on a voluntary basis – the new disclosure recommendations when making their annual disclosure to the BSE and investors.  This newly adopted code replaces the 2001 BSE Corporate Governance Code, and comes into force starting with the 2009 fiscal year.

Known as the Corporate Governance Compliance Statement, publically traded companies must now specify which of the recommendations of the new BSE Corporate Governance Code they have actually implemented and how in their 2009 fiscal year (as presented in their 2009 Annual Reports disclosed in 2010).

In a sweeping, two-month review of certain aspects of the new BSE Corporate Governance Code, the Canadian Business Association in conjunction with several corporate partners rated the boards and governance practices of all of the companies listed on the BSE senior exchange and a significant snapshot of the junior exchange, as of September 1, 2009.

The analysis team reviewed relevant disclosure and transparency on the part of issuers in light of some eighty highly specific and discreet questions such as: whether employee stock options are excessively dilutive for shareholders; are director elections annual or staggered; is there off-balance sheet disclosure; what is the nature of critical accounting estimates or policies disclosure; is the nature of corporate disclosure transparent and freely accessible; are there corporate governance charters and position descriptions for directors and officers, thus allowing for clear and objective benchmarks for annual reviews; and is there a formal system to evaluate board and director performance.

The Canadian Business Association developed a ranking system in all areas of corporate governance and economic analysis, based on similar studies and economic compilations used for ranking and analysing the Dow Jones Industrial Average (U.S.), FTSE 250 Index (U.K.), the S&P/TSX Composite Index (Canada), SDAX (Germany) and FTSE MIB (Italy).  Special interest was given to the BET-10 on the Bucharest Stock Exchange.  This ranking system was numerical in nature, thus allowing the analysis team to rank BSE companies vis-à-vis their competitors in order to ascertain which companies are the best and worst in terms of corporate governance and shareholder / investor protections, as well as stock price. 

Our 2009 Annual Report on Business – entitled “2009 Corporate Governance and Disclosure Practices on the Bucharest Stock Exchange” – is a compilation of some of the primary issues and results based on our empirical analysis.

Please download our 2009 Annual Report on Business in either English or Romanian.

Contributors

Steven M. Pepa

Mr. Pepa is the President of the Canadian Business Association.  He is a partner with POP PEPA, a law firm on the Romanian market.  He has extensive experience in emerging market M&A and capital markets.  Specific practice areas are energy and telecommunications.  He is a graduate of Harvard Law School and has worked in the United States and Canada, primarily in cross-border capital markets.  Thus, he is very knowledgeable in the revamping of corporate governance protocols and public disclosure for publically listed companies.  In the past, he has advised TSX listed, cross-listed NYSE and/or Nasdaq (under 40-F, 20-F or domestic registrant) public companies in accordance with disclosure requirements under Sarbanes-Oxley and associated SEC rules, as well as Canadian equivalents.  In 2004, he came to Romania to join the Bucharest office of the then only magic circle law firm on the market.

Laurian Lungu

Mr. Lungu is managing partner of the economics think-tank Macroanalitica.  He provides consulting economics services and does regular economic analyses on the Romanian economy. He holds postgraduate degrees from both Liverpool and Cardiff Business School Universities and has worked in the United Kingdom.  His areas of expertise are in the fields of macroeconomic forecasting and policy modelling.  Mr. Lungu is the author of several articles published in internationally renowned professional journals as well as in European Parliament discussion papers.  He has a regular presence in the Romanian media and is a member of several research groups such as the UK-based Liverpool Research Group in Macoeconomics and the Julian Hodge Institute of Applied Economics.

Bogdan Voinescu

Mr. Voinescu is the Managing Director of the Romanian office of LeitnerLeitner, an Austrian based regional accounting and tax advisory firm.  He is a tax advisor with more than 10 years of experience in taxation.  His previous experience includes two of the Big Four firms in Bucharest and a French advisory company in Paris and in Bucharest.  Mr. Voinescu holds a Masters in European Law obtained with Rennes University in France (1997), and is specialised in corporate and international taxation, mergers & acquisitions, privatisations, individual taxation and transfer pricing.

Claudiu Pop

Mr. Pop is a partner with POP PEPA, a law firm on the Romanian market, and is a board member of the Canadian Business Association.  He is a graduate of Bucharest law school and studied EU Law with Paris I Pantheon Sorbonne.  Mr. Pop has practiced according to Anglo-American standards with first-tier law firms in Bucharest.  Prior to founding POP PEPA, he co-chaired the energy and corporate M&A practice of the Bucharest office of a US based Global top-10 law firm.  In the course of his over 10 years of experience as a deal attorney, Mr. Pop has consistently advised publically listed companies in regards to a wide variety of matters from day-to-day corporate to regulatory, to complex capital markets and to sophisticated financial transactions.

Daniel Petre

Mr. Petre is currently a Tax Manager in the Bucharest office of LeitnerLeitner, an Austrian based regional accounting and tax advisory firm.  Prior work experience includes working for one of the Big Four Firms in Bucharest.  Before that he worked for two years as an accountant for one of the major accounting firms in Bucharest.