Kyrgyzstan is a developing country, which has been part of USSR in the past. Therefore large companies still has government as a major shareholder. There is a basis to use corporate governance principles in Kyrgyz companies and our company is one of them. Below I will describe how corporate governance principles are implemented in our company ElectrStanciyalar (Power Plants) joint stock corporation, the biggest company producing electrical and heat energy (hereinafter the ‘ES JSC’).
The Code of Corporate Governance of ES JSC (hereinafter the ‘CCG’) was approved during the Annual Shareholders Meeting in 2015. The CCG meets requirements and guidelines of the OECD principles of corporate governance.2 However, as it is well known, statements of the CCG have recommendatory character. However ES JSC take CCG as one of the main principles in its operating activities.
One of the main statements of CCG is that company officials shall act reasonably and in good faith for achieving company’s interests. Recently the Board of directors of ES JSC gave permission to commit a major transaction of coal procurement. Pursuant to the ES JSC’s Charter, if sum of a transaction is more than 10 and less than 20% of assets of the company, the competency to approve the deal goes to the Board. Whereas the subject of the transaction is within the usual operating activities of the company, the Executive Directorate as an executive body has the competency to approve the deal.
The Board granted the approval on the base of proposal of the Executive Directorate. The Board considered that Executive Directorate acts due to the recommendations of the Code of Corporate Governance reasonably and in good faith for achieving company interests.
Thus in the first time the best practices of corporate governance was used within the usual operating activities in our company.
2OECD Principles of Corporate Governance 2004, OECD Publications Service, France.