Экономические науки. Маркетинг и менеджмент.

Muster degree student Yesbolganova G.

Schientific supervisor k.e.s Jumambaev S.K

Al-Farabi Kazakh National University

Development of corporate governance in Kazakhstan

The relevance of studying the problems of corporate governance in the Republic of Kazakhstan caused by the need for integration of corporations to the global economic community, also by the creation of an effective mechanism of corporation property control and balance of interests of all stockholders. . [1]

Development of corporate governance in the country began after the privatized period. Thus, about 2000 enterprises were transformed into joint stock companies in 1993-1995 years. [2] One of the key moments in the development of corporate governance was adoption of the law "On Joint Stock Companies" in 1998 year.

Peculiarity of corporate governance in Kazakhstan is in the high concentration of ownership where the main block of shares could be in the hands of the directors or in the hands of the CEO. It is seen that in corporate governance external mechanisms of control plays a week role because the Securities Market is not well developed in Kazakhstan. According to statistics, capitalization of sector "Shares" on KASE at the beginning of 2014 amounted to 4.3 trillion tenge compared with 5.4 trillion tenge at the beginning of 2013. A total volume of transactions on KASE with non-government securities on the secondary treatment according to statistics for 2013 decreased by 23.7% to 308.7 billion tenge [3]. Therefore high liquidity of many companies is unsure. Effective control from market over activities of managers are numerous mergers, acquisitions and buyouts of companies.

Corporate governance in Kazakhstan closer to the German model, because the concentration of ownership in Kazakhstan is quite high: in 19 out of 22 public companies (86.4%) at least one owner has a blocking stake larger than 25%. There is a majority shareholder in 11 companies. [4] In many corporations of Kazakhstan the main share of capitalization is in the hands of the state or in the hands of national funds. For example a major shareholder of many joint-stock companies is JSC "National Welfare Fund" Samruk-Kazyna ". This fund is a major shareholder of such JSC as "KazMunaiGas", "Kazakhstan Temir Joly", "Kazatomprom", "Kazakhtelecom», «KEGOC», «Air Astana", etc. More than half of Kazakhstan JSC have less than ten shareholders. About a quarter of the companies can be characterized by varying degrees of affiliation of persons belonging to the boards of directors. Moreover, there are situations when relatives of shareholders are members of the board of directors or executive bodies of the company. [5] The high concentration of ownership and active participation of major shareholders in the management forms a system in which the majority owners have the ability to exercise a dominant influence on the formulation of strategy and operational management of the company with little influence on the part of minority shareholders.

A key role as an institutional catalyst for change in the development of the corporate governance practices of the Republic of Kazakhstan plays the State itself. [6]

The Republic of Kazakhstan adopted law on JSC in 2003, but already in the first edition this low contained a number of requirements, taking into account international standards of corporate governance. [6] In particular, requirements for the board of directors were established. According to them not less than 30% from all should be independent directors. The structure of board included formation of committees and it was also obligatory to create the internal audit service, accountable to the Board of Directors. [7]

The company defines its own criteria for independent directors, based on the basic provisions of the law. A characteristic feature of an independent director is their independence from the controlling shareholder, the company's management and the state. For example, according to the Code of Corporate Governance of National Holding "KazAgro" number of members of the Board of Directors shall not be less than five, and the independent directors not less than one third of Board of Directors. The main shareholder of Kazagro is a Committee of State Property and Privatization of the Ministry of Finance of the Republic of Kazakhstan. The board of directors of Kazagro includes 5 people and one independent director. Chairman of the Board of Directors is the First Deputy Prime Minister of the Republic of Kazakhstan, members of the boards of directors are the Minister of Agriculture, Chairman of the Board of JSC "Kazakhstan Development Bank" , First Deputy Minister of National Economy and Deputy Minister of Finance of the Republic of Kazakhstan. This shows that the requirements to structure of the Board of Directors were not been fully implemented.

General transparency requirements of information in Kazakhstan established in the Law "On Joint Stock Companies" and in the Law "On the Securities Market". Studies identifing the level of transparency revealed that the level of transparency of 22 major public Kazakhstan companies is about 44%. This is - relatively low compared with other countries. According to available statistics on developing countries, the level of information transparency of 90 largest Russian companies in 2008 was 56%, the 300 largest Chinese companies - 46%. Developed countries show a higher level of disclosure: indicators transparency survey in 2003 for the United Kingdom, France, Germany, the US and Japan were, respectively, 71%, 68%, 56%, 70% and 61%. Among the 22 public Kazakhstani companies the most transparent in 2009 was KMG EP (67%). [8] The results indicate that the higher the market capitalization associated with higher scores of transparency of companies. Most companies disclose information about major shareholders, however, when it comes to more detailed disclosure (eg, each shareholder who owns more than 10% of the shares), only six of the 22 companies demonstrate a satisfactory level of disclosure. Terms of disclosure of relevant information is also poor, since only seven out of 22 companies have updated this information after the balance sheet date in 2009. The most opaque area is the dividend policy. Some companies on their websites publish information about dividend payments and indicate the proportion of net profit allocated to dividends, although documented dividend policy with a description of the procedural issues and dividend payout threshold exists in rare cases: a policy publishes only one company - JSC "Kazakhtelecom". Another feature of the Kazakh model of corporate governance is that the source of external financing, the majority of AO chose to involve in the form of loans from the Kazakh legal entities. The share of companies planning to attract such loans, the whole country is 51 percent. To direct domestic equity investments accounted for 19 per cent of respondents, 17 percent plan to increase investment by issuing bonds in the domestic market. [9]

Literature:

1. Vestnik Omskogo universiteta. Seriya «Ekonomika». 2011. No 3. S. 46–51. «Korporatsiya», «korporativnoye upravleniye»: podkhody k traktovke sushchnosti kategoriy N.V. Bakunova

2. Zhanturiyev B., Issyk T., Kopytin A., Kosolapov G., Kokbasarova G., Marusich I., Samatdin A., Filin S., Shalgimbayeva G. Korporativnoye upravleniye: kazakhstanskiy kontekst. – Almaty, 2009.

3. http://www.kursiv.kz/news/details/issledovaniya/Rynok-tcennyh-bumag-RK---chto-nam-gotovit-etot-god/]

4. Transparency and Disclosure by of Kazakhstan Companies 2009: Low start - high potential Governance Services Standard & Poor's

5. Corporate Governance Practices in Kazakhstan. IFC, 2010, p. 6.

6. National Report on Corporate Governance Issue VI Moscow, 2013 page 291

7. The law of the Republic of Kazakhstan on joint stock companies from May 13, 2003 No415-II. p. 48.

8. Transparency and Disclosure by of Kazakhstan Companies 2009: Low start - high potential Governance Services Standard & Poor's

9. Corporate Governance Practices in Kazakhstan. IFC, 2008