After months of lengthy and difficult negotiations, 2 corporate parties, founder and investor, had entered into a shareholders’ agreement regarding a joint-venture company. The shareholders agreement provided for new rules for board meetings, management appointments and bank authorizations for all group companies (subsidiaries of the joint-venture company), as well as the creation of policies (expenses, anti-bribery) and an audit committee.
Our firm was instructed by the Chairman of the Board, on behalf of the joint-venture company, to assist with the swift implementation of these provisions.
The Chairman of the Board priority was to get started with new projects as outlined in the business plan agreed with the investor. Compliance with the corporate governance provisions in the shareholders agreement was considered necessary but not a priority.
We had to work out an approach which would make the most of existing informal procedures to make them formal and suitable for group companies in various countries as well as adding new procedures, all in a practical format which could be followed by local managers.
We focused on 3 sources for content:
- identify the best practices among the subsidiaries to be made systematic to all the group companies;
- digest the new rules and principles laid out in the shareholders ‘agreement, in straightforward and actionable tables with reference to principles and explanations from relevant authorities, such as The Hong Kong Institute of Directors Guidelines on Corporate governance for SMEs in Hong Kong [http://www.hkiod.com/] or ecoDA Corporate Governance Guidance and Principles for Unlisted Companies in Europe [https://ecoda.org/wp-content/uploads/2019/08/GUIDANCE_-_2010_CG_for_Unlisted_-_EU.pdf];
- use guidance from public agencies such as the French Anti-Bribery Agency (Agence Francaise Anti-Corruption)[ https://www.agence-francaise-anticorruption.gouv.fr/fr] to get started on the mapping of risks, as a first step to an effective anti-bribery policy.
We delivered the group’s corporate governance policies within the deadline assigned, i.e. prior to the first meeting of the board after completion of the joint-venture transaction. The format adopted was a 3 pages / 10 rules document including links to external sources and with tables in Appendix. The clarity of the format enabled the board, including the investor’s nominated directors, to apprehend the rules and decide on the measures for their implementation, such as new appointments at subsidiaries level.