Corporate governance continues to be a subject of significant market interest in both transition and developed economies alike, including in Albania. The global importance of good corporate governance has been further brought under the spotlight due to some of the more dramatic financial events of recent years – it is widely considered that failures in corporate governance at various levels were among the key reasons both for the recent collapse of a number of leading financial institutions, but also for the financial and economic crises themselves. For this reason, the importance of corporate governance worldwide will only continue to grow, in the minds of not only governments and regulators, but, in particular, of investors and the wider business community.
But what is corporate governance? One of the most well-known (and simplest) definitions is that it is a system by which “companies are directed and controlled”. Good corporate governance not only significantly improves the sustainability and growth potential of a company but it has also been shown to notably assist companies in attracting investment and improving its operations, functions and performance. Corporate governance helps companies to meet some of the challenges of the modern business environment.
Corporate governance is about far more than simply compliance – it brings real benefits to companies while outlining clear structures, processes and frameworks for achieving corporate objectives. Good corporate governance practices, when properly integrated into a company’s objectives and strategy, thus allow companies to progress towards achievement of their goals.
In brief, good corporate governance practices help companies to:
- enhance performance, operations, competitiveness, profitability and long-term value
- establish clear roles, responsibilities and accountabilities
- improve decision-making processes and the quality of decisions
- define and implement corporate strategy and direction
- expand in a sustainable manner
- identify and manage risks
- enhance the substance and structures of internal control
- create appropriate incentives in line with business strategy
- attract capital, investment and business partners
- build reputation and trust, through strengthening of stakeholder relationships
- prepare for following generations
Corporate governance in Albania gained major momentum in 2011 when the first national Corporate Governance Code for Unlisted Companies was adopted by the Business Council of Albanian Government. This was an important development, as prior to this, there were no national best practice standards for Albanian companies to follow. There were also a number of otherinitiatives to promote corporate governance in Albania, including through the Albanian Corporate Governance Forum of the Albanian American Trade and Development Association, as well as various activities of the Albanian Financial Supervisory Authority.
Corporate Governance Institute – Albania, working together with International Finance Corporation (IFC), a member of the World Bank Group, offers services to companies, financial institutions and the wider market, through one-to-one consultations, training events, workshops and other activities in the area of corporate governance.
For further details on this work, please download our leaflet.
For more information on IFC’s Corporate Governance Program in the countries of Europe & Central Asia, please click here.