What corporate governance requirements are typical or required of issuers conducting an initial public offering and obtaining a stock exchange listing in your jurisdiction?
Since January 2016, the Bucharest Stock Exchange (BVB) has introduced a new Corporate Governance Code (CGC), which is mandatory for all listed companies and defines the guidelines for them in the field of corporate governance.
Essentially, any listed company must report on its compliance with the CGC and explain each point where it has decided to deviate from the recommendations of the CGC. All of these will also be part of the company’s annual reports.
The main orientations of the CGC are as follows:
- listed companies have an obligation to respect the rights of shareholders and to ensure fair treatment;
- listed companies will make every effort to achieve effective and active communication with shareholders;
- listed companies will be administered by a board of directors, which will in turn meet at regular intervals and adopt decisions enabling it to exercise its responsibilities effectively and actively;
- the board of a listed company will be held responsible for the management of the company; it will act in the interest of the company and will protect the general interests of the shareholders by ensuring the sustainable growth of the company; it will operate as a collective body, based on correct and complete information;
- the structure of the board of directors of a listed company will ensure a balance between executive and non-executive members (and in particular independent non-executive members), so that no one person or small group of people can dominate the process decision-making of the board;
- a suitable number of members of the board of directors will be independent, in the sense that they do not currently or in the recent past maintain, directly or indirectly, any business relationship with the issuer or persons engaged with it , of such importance that it influences the objectivity of their opinions;
- the board of directors is made up of a number of members which guarantees its effective ability to control, analyze and assess the activity of the executive corporate officers, as well as the fair treatment of shareholders;
- the appointment of board members will be a formal, rigorous and transparent process; the procedure will establish objective criteria and ensure adequate periodic information on the personal and professional qualifications of candidates;
- the board of directors will assess, if possible, the appointment of an evaluation committee, composed of its members, mainly chosen from among the independent directors;
- listed companies will secure the services of competent directors and executive corporate officers, by means of an appropriate remuneration policy, compatible with the strategy and long-term interests of these companies;
- corporate governance structures, established in listed companies, must ensure periodic and adequate reporting on all significant events related to the company, including its financial situation, performance, shareholding and management;
- the board of directors will adopt strict rules, intended to protect the interests of the company, in the areas of financial information, internal control and risk management;
- the board of directors will adopt appropriate operational solutions to facilitate the identification and adequate solution of situations in which a director has a material interest for himself or on behalf of third parties;
- the board of directors will establish, after consultation with the internal control structures, the procedures for approving and implementing the transactions entered into by the issuer, or its subsidiaries, with the parties concerned;
- the members of the board of directors and the executive directors will maintain the confidentiality of the documents and information received during their term of office and will comply with the procedure adopted by the issuer concerning the internal circuit and the communication to third parties of the respective documents and information ;
- corporate governance structures should recognize the legal rights of stakeholders and encourage cooperation between business and stakeholders to create prosperity, jobs and the sustainability of financially sound businesses;
- corporate governance structures must recognize the legal rights of stakeholders; listed companies will adopt clear and transparent corporate governance structures which they will adequately disclose to the general public; and
- when a dual or unitary management and control system is adopted, the above provisions are applied accordingly, adapting the uniform provisions to the system adopted, in full compliance with the objectives of good corporate governance, transparency of information and protection of investors and the market, pursued by the Code.
In addition, BVB recommends implementing the corporate governance guidelines because this aspect of the life of a company is part of the ESG (Environmental Social Governance) standards, which are a key factor for an investor when analyzing of the decision to invest in a listed company.
Are there special allowances for certain types of new issuers?
No. Issuers applying for admission to BVB or AeRO must all comply with the same requirements. In some cases, the FSA may allow a free float of less than 25% (which is the minimum threshold for admission to trading on a regulated market).
What types of anti-takeover devices are typically implemented by IPO issuers in your jurisdiction? Are there any generally applicable rules relating to trade-ins that are relevant?
Anti-takeover devices are not the norm in the local market because offers are usually made for a sufficiently limited stake not to allow a true takeover. In this case, the FSA has the right to allow bids to continue for smaller stakes as long as it believes that market liquidity will not be affected.
Notwithstanding the foregoing, any person interested in acquiring control of an issuer may launch a public offer to purchase shares, to all shareholders. In addition, any party acquiring more than 33% of an issuer’s shares must initiate an offer to buy or sell shares to fall below the trigger thresholds.
Takeover bids are subject to the rules set out in Directive 2004/25/EC of the European Parliament and of the Council of April 21, 2004 relating to takeover bids (OPA directive) as implemented locally.