What is Corporate Governance Assessment?

Review of the existing situation in the Company with regard to corporate governance, based on IFC’s Corporate Governance Methodology. This Methodology is considered to be among the best globally developed models for analysis of companies’ corporate governance practices, and which IFC applies throughout the world.  This review would include an analysis of relevant key documentation at the level

 

The application of the IFC CG Methodology (the process of analysis with the application of specialized tool) envisages:

  • Deciding on the level of corporate governance analysis depending on the risks involved, size of the investment transaction and complexity of the client company’s corporate governance framework,
  • Collecting the relevant information and analyzing corporate governance risks and opportunities,
  • Defining the relevant risk mitigating measures or improvement recommendations and
  • Helping the client with their implementation.

 

The  approach to CG begins with an evaluation of whether it poses a special risk to an investment or the company’s operations or whether it involves an opportunity to add value. Using the IFC CG Methodology helps us evaluate the:

  • possibility of a client’s poor CG contributing to  a corporate failure, or mistreatment of IFC and other investors.
  • adequacy of the role and functioning of the client’s board of directors.
  • the ability of a family business to formulize structures and survive generational change.
  • commitment of the part of the client to make improvements in their governance.

 

More specifically, seeks to analyze if any of the five key CG risks exist in the client company and recommend relevant mitigating factors. The key CG risks are:

Risk 1:  The Company and its shareholders have not demonstrated a commitment to implementing high quality CG policies and practices.

Risk 2: The Board of Directors is not up to the task of overseeing the strategy, management and performance of the company.

Risk 3:   The Company’s risk management and controls are insufficient to ensure sound stewardship of the company’s assets and compliance with relevant regulations.

Risk 4:  The Company’s financial disclosures are not relevant, faithful, and timely representation of its economic transactions and resources.

Risk 5: The Company’s minority shareholders’ rights are inadequate or abused.