27.12.2018

Professional business literature notes that a number of expressions describe the quality of corporate governance in companies such as “effective corporate governance”, “quality corporate governance”, “proper corporate governance”, “good corporate governance” “balanced corporate governance” etc.

An effective corporate governance system can be described through the “Pentagon model”, the essence of which is the protection of shareholders’ rights, clear definition and separation of the functions of the management and controlling bodies in companies, the transparent business practices of the companies and the existence of a control system, and the practice of independent auditing, ability to communicate with beneficiaries and protect their rights as well as following the corporate governance principles.

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Security of property rights
Separation of functions of management and control bodies		Following the corporate governance principles
Transparency, independent internal and external audits		Favorable relations with beneficiaries

Source: Guide “Structure of Corporate Governance System”

It should be noted that the problem of corporate governance can be approached from the opposite point of view: identify the potential shortcomings and omissions of the corporate governance system, consider the characteristics that the corporate governance system describes as ineffective and the lack thereof in other equal conditions as a prerequisite for an effective corporate governance system.

Notably, the “Armenia: Promoting Anti-Corruption Conduct and Reforms” Project which is implemented by The “Center for International Private Enterprise” (CIPE), the “Armenian Lawyers’ Association” NGO (ALA), the “Corporate Governance Center” (CGC), and the “Yerevan Chamber of Commerce and Industry” (YerCCI), was launched in Armenia on 1 October, 2018.

The main objective of the project is to combat corruption in the business sector, to introduce the Anti-Corruption Compliance Standards within the Armenian business community, which will contribute to dissemination of corporate governance and ethical values in Armenia.