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.
| Security of property rights | ||
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Separation of functions of management and control bodies
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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.
This material has been prepared in the scope of the “Armenia: Promoting Anti-Corruption Conduct and Reforms” Project implemented by the “Center for International Private Enterprise”, the “Armenian Lawyers’ Association” NGO, the “Corporate Governance Center” NGO and the “Yerevan Chamber of Commerce and Industry” with financial support of the National Endowment for Democracy. The project is implemented as a co-financing to the “Commitment to Constructive Dialogue” action implemented with the financial support of the European Union by a Consortium comprising the “Armenian Lawyers’ Association” NGO, the “Armenian Center for Democratic Education-CIVITAS” NGO, the “International Center for Human Development” NGO, the “SME Cooperation Association” NGO, the Union of Communities of Armenia, as well as “Agora Central Europe” NGO (Czech Republic). The contents of this material are the sole responsibility of the “Armenian Lawyers’ Association” NGO and can in no way be taken to reflect the views of the National Endowment for Democracy and the European Union.
