/Daiga Auziņa-Melalksne, Chairman of the Management Board, NASDAQ OMX Riga, AS/
This autumn Top of Latvia’s Most Valuable Enterprises celebrates its 9th year. Within this top, every year evaluating Corporate Governance practice of more than 600 Latvian enterprises, the exchange Nasdaq Riga assesses publicly available information about enterprises’ management and transparency towards the community. The impact of Corporate Governance practice assessment on enterprises value TOP 101 is within 20%.
Nowadays, every enterprise’s value consists not only of today’s business value, but also sustainability of the business, which includes not only the past results and present situation, but mainly future prospects. The most difficult is to evaluate that and one of the ways this can be done is by evaluating management quality.
Quality of Corporate Governance practicet is characterized by how the company is managed and controlled. Corporate Governance quality is closely related to company’s administration quality. Reaching shareholders goals depends on how professional is company’s administration – both the board and the council. However, it is important not only to set the goals, but also regular reporting on the results achieved. Therefore, recommendations for Corporate Governance puts the accent on the way, how enterprises council is formed – what are the main professional criteria that company’s shareholders asks from candidates, what is their previous experience, knowledge and reputation. Because the council will monitor board’s performance and demand responsibility from it. In turn, the company’s management board will fulfil shareholders expectations and goals, as well as regularly report on progress. Company’s future value directly depends on the interaction of the council and the management board.
Nasdaq Riga, as one of the TOP 101 creators, holds an active position in promoting the public and business awareness of the importance of qualitative governance , as well as encourages companies to improve the quality of Corporate Governance and also strengthening overall business ethics in Latvia. It is well known that Latvia has set a goal to join the OECD, which is recognized as the club of the worlds’ richest countries. OECD draws extra attention to Corporate Governance matters and believes that management is one of the most important preconditions for competition between OECD member countries.
Every farsighted business owner understands that Corporate Governance becomes especially important when the company needs additional capital for faster development or its shareholders want to sell the company. Well governed companies are more competitive. They can attract capital on more favorable terms and investors are ready to pay premium The investors will always be open to the companies which are well managed, with administration that is motivated for a rapid growth and capable to implement ambitious plans while applying practice of good Corporate Governance, because enterprise’s business value and long-term competitiveness directly depends on that.
