The Russian Institute of Directors and the Managers' Association, with help from the Federal Securities Commission, carried out a study to find out to what degree Russian companies are following the recommendations in the Russian Code of Corporate Behavior.

How ready are Russian companies to use the corporate behavior code?

The study looked at what managers and members of boards of directors think about how much following the corporate behavior code can contribute to the successful development of their companies. All respondents thought the code could make a positive contribution, which shows that the Russian business community sees corporate management as one of the main resources for a company's successful development. Only 20 percent of respondents saw corporate management as having only a limited impact on increasing a company's efficiency. The majority (80 percent) see high standards of corporate management as a significant factor (see graph 1).

More than 20 percent of respondent companies already have their own corporate codes or are in the process of approving them. Almost 30 percent have begun work on corporate codes for their companies, and more than 35 percent are considering introducing their own codes in the future.

But none of the respondents said their company's corporate code or similar documents fully conformed to the Russian corporate code, and almost 10 percent said their codes conformed to the Russian code only a little.

The study's results show that the Russian business community has generally accepted the Russian corporate behavior code, and that the code's provisions fully reflect the key points of effective corporate management.

The survey's respondents were asked to rate the importance of different recommendations made by the code concerning the work of boards of directors, and holding annual general meetings for increasing the investment attractiveness of companies.

The points to be rated were: The need for specific demands regarding the skills and professional experience of the members of boards of directors; procedures for measuring the performance of members of boards of directors and top managers; linking the pay of members of boards of directors to their real contribution to the company's work.

Dividends and corporate conflict resolution

The corporate behavior code recommends that companies establish "procedures for deciding the amount of dividends and their payment that are transparent and clear for shareholders."

More than 70 percent of respondents agreed with this idea. There were also three questions on corporate conflict resolution, and they raised more debate among the business community. On average, 47.2 percent of respondents in their answers to these three questions ranked them as being only "of some importance."

In accordance with the corporate behavior code, "the company will be able to carry out its work, successively carry out its mission and meet the objectives set when it was founded if it has procedures in place to prevent and regulate corporate conflicts, be they conflicts between the company itself and its shareholders, or between the shareholders, if such a conflicts affect the interests of the company." (See graph 3.)

Three of the code's recommendations in this respect were rated highly important by the respondents, and only one recommendation aroused more doubt. This was the exclusion of the possibility provided for by legislation, for the buyer of 30 percent or more of the company's shares to be freed from the obligation of proposing to shareholders that they sell the ordinary shares they own.

Opinions on disclosure of information differed more widely. The two most important recommendations in the code, as respondents saw it, concern general confidentiality of information and information on affiliations of board of director members with shareholders and the company's counteragents. Respondents rated the code's other recommendations as being of medium importance for investment attractiveness. A large number of respondents (44 percent) rated these points as being "of some importance," which suggests that Russian companies are still reluctant to be open with their information.

Respondents were also asked to rate to what extent their own companies follow the recommendations in the corporate behavior code. More than 55 percent said that overall, their companies' corporate practice conforms to the code's guidelines, 30 percent said they follow most of the recommendations, and 15.2 percent said they did not follow many of the recommendations. No respondents said their companies completely conform to the code.