As part of a public consultation, EICE submitted several proposals to the drafter of the new Corporate Governance Code, the Association of Slovenian Supervisors, regarding the regulation of the business compliance function in the general corporate governance framework, internal control system and supervisory board and management responsibilities.

We addressed the key reasons for amending the existing Code, namely the development of international standards and practices on corporate governance, in particular the new OECD principles of corporate governance from 2015, based on the findings of the financial crisis affecting financial markets and the real sector. poor management practices and generally poor business practices.

The goal of corporate governance is to maximize the value of companies in the long run, so the new principles of OECD corporate governance, as well as recent governance guidelines of the Basel Committee on Banking Supervision and several other international institutions in regulating the financial sector, address corporate governance weaknesses. drawing on the lessons of the financial crisis. Great emphasis is placed on the company's internal management system, in particular risk management, a high standard of business ethics and the strengthening of the internal control system, including internal control functions, as well as the compliance function.

As we at EICE believe that the regulation of this newer area in the internal management system (compliance and business ethics) would significantly contribute to the improvement of corporate governance practices and culture, as well as the culture of legal and ethical operations of public limited companies, we have prepared amendments. were also significantly included in the new Corporate Governance Code.

Related additions that in the context of managing public d.d. now explicitly include the area of compliance and business ethics, are found in the following points of the new Code:

Amendment to item 2.1 .: This item adds an amendment that specifies the role of the Supervisory Board in the assessment of internal control systems so that these systems are explicitly mentioned, including compliance with operations. The text of part of point 2.1 is quoted below.

»2.1. The Management Board cooperates with the Supervisory Board in formulating the company's management policy. … The Supervisory Board formulates a plan of its own activities for each financial year and defines contents such as…. the role of the supervisory board in the assessment of internal control systems (in particular the risk management system, internal audit, financial and operational controls and the system of compliance with legislation and relevant standards)… «

Full point 19. 1. : This point, based on the principles of corporate governance of the OECD, explicitly stipulates that the governing body of the company establishes a standard of legal and ethical conduct and the commitment of all involved to this standard (* OECD Principles of Corporate Governance, 2015, Chapter IV.The Responsibilities of the Board, C. Standards of Conduct). In addition, with the same amendment, this area is clearly placed within the framework of the company's internal management system.

»19.1. By its own example, the Management Board promotes and, within its tasks, ensures a corporate culture that promotes ethical conduct and a commitment to compliance with the company's operations, compliance and conduct of employees and other persons who perform work or provide services for the company; for this purpose, it adopts a code of conduct or a code of ethics and establishes and directs a system for ensuring compliance and business ethics within the company's internal management. "

Full point 19.2 .: Building on the previous amendment, this point in the Corporate Governance Code now provides a comprehensive and systematic framework for the internal management system, otherwise known as the 'management system', of which it is a part. also an internal control system (which also includes a compliance function). A very important part of this amendment is the attitude of employee remuneration policy towards deterring breaches of compliance and ethics and, in general, excessive risk-taking.

»19.2. The Management Board shall define and establish an effective and transparent management system within which it shall ensure:

• a clear and transparent organization, including clear and specific powers, responsibilities and reporting lines,

• an effective risk management system in accordance with the recommendations of this Code,

• an effective system of internal controls in accordance with the recommendations of this Code,  

• employee remuneration policy based on the company's ability to take sustainable risks, promote legal and ethical conduct and deter breaches of compliance and ethics, and excessive risk-taking,

• regular evaluation of the effectiveness of the management system, ongoing identification of weaknesses and continuous improvement of this system.

Amendment to point 19.4. ; The amendment is written as a concretization, for example of the listed matters on which the Management Board regularly reports to the Supervisory Board of the company, which also explicitly includes reporting on violations in the field of compliance and business ethics.

»19.4. The Management Board regularly, timely and comprehensively informs the Supervisory Board of all significant matters relating to the company's operations, strategy, risk management (including any deviation from the ability to assume risks, any violation of related limits or violations compliance and business ethics) and the measures taken , etc.…. "

The new Corporate Governance Code was published on 7 November through the Ljubljana Stock Exchange's information system, at this link .

At EICE, we will continue to monitor changes in important legal bases and autonomous regulations, and engage in public debates and public consultations with a view to incorporating amendments that will uniformly and in accordance with international standards and established practices provide the basis and strengthen validity in the field of compliance and business compliance functions. Namely, we believe that Slovenian companies, public law organizations and other institutions can maintain and strengthen the trust of their stakeholders, upgrade their professionalism and efficiency, and strengthen competitiveness by strengthening this area of their business. We therefore invite all interested members of the professional community to participate in this field. Contact us with suggestions and ideas at: </●info@eisep.si.</:0

Andrijana Bergant, univ. dipl. prav, EMBA, CCEP I