The principles of corporate governance were established in May 1999 by OECD (Organization for Economic Co-operation and Development). It comprises:
- Protection of shareholder rights,
- Equivalency of rights of shareholders (major, small),
- The role and participation of interested entities in the company's management,
- Operation transparency and information disclosure,
- Management /executive body/liabilities,
After that in September 1999 on the basis of the above mentioned, the Basel committee adopted the document entitled "Enhancement of corporate governance in credit organizations". In the document the OECD approach is used, according to which the corporate governance is characterized as a "relationship cycle of company management, Board of Directors, Shareholders and other interested parties. Besides, the corporate governance includes the systems of establishment and attaining company's objectives, as well as the elaboration of control mechanisms. The due corporate governance must be a relevant impetus for the Board of Directors and management to reach the objectives in which the company and shareholders are interested. It must also support the implementation of effective control with efficient usage of company funds.
The elements of corporate governance have been implemented by "ARMECONOMBANK" OJSC since 1998, when the "corporate governance" term was most frequent in theoretical, scientific publications, as an efficient development guaranty for companies.
Starting from 1997, the reconstruction process of "ARMECONOMBANK" OJSC's activity began which was initiated by the new major shareholders of the Bank. It was aimed at the establishment of a banking structure according to international standards which required the localization and introduction of advanced world experience.
Realistically assessing the effective development models of banks, the new management of the Bank highlighted the significance and importance of corporate governance and its perspective, step-by-step rebuilding the Bank's current activities, and, building the governance based on corporate principles.
The following measures undertaken as initial activities for the implementation of the corporate governance principles at "ARMECONOMBANK" OJSC are commemorative:
- To enhance the role of internal control, the Monitoring Department of the Bank was re-subjected to the supervision of the Board (1998),
- The new methodological base for the development of the Bank started to formulate,
- The regulations and procedures of the Bank's activities and governing bodies were elaborated,
- The functions of the Board and the Executive Body were clearly distinguished,
- The procedure of holding general meetings was drafted and approved by the general assembly of shareholders where the shareholders' rights at the meetings were clearly stated, in compliance of which concerning their participation in the Bank's management,
- The procedure of dividend payment was drafted.
In the prospectus of the Bank's share issuance (since 1996 has conducted 11 issuance) the required information on the activities of the Bank, its shareholders, the bank's management bodies was disclosed in a much more detailed manner. In addition to this, due to the Bank's advertising policy, the Bank became more recognizable by the public.
The Bank's more regulated and transparent working style attracted more attention and interest of the international major institutional investors as of 2005. The most actively cooperating international organization with the Bank, EBRD, became a strategic shareholder of the Bank with 25% plus one share. We can state with pleasure that the regulation, budgeting, planning, strategy development, ratings of the branches, the applied risk management methodology were highly estimated by the consultants of the "Lloyds TSB" Bank showing technical assistance to "ARMECONOMBANK" OJSC upon the order of EBRD.
I would like to specifically refer to the issue of corporate ethics. It is not a secret that corporate governance implies not only the management of the Bank's legislation, transparency, regulated provisions for the protection of interests, but also the norms and principles of business ethics and the definition of norms and principles typical to customs and traditions which were historically formed in abroad, whereas for us it was just newly rooting and needed to be fixed in accordance with the Code of corporate conduct.
Such a document was firstly accepted by the Bank in 2001 and was later improved. The code of conduct of "ARMECONOMBANK" OJSC is being periodically reviewed according to the defined procedure.
Getting familiar with the code of conduct of "ARMECONOMBANK" OJSC, any potential shareholder, investor, or client will understand with which kind of establishment he/she will collaborate, what business ethics and values are rooted in it, what the principles are, and so on.
As an important element of corporate governance, "ARMECONOMBANK" OJSC has developed and implemented internal control, risk management, internal audit, bank security systems and operational mechanisms.
In conclusion we can state that in line with the development of RA legislation internal legal field of the Bank improves; the current normative acts become more aimed at the transparent working style of the Bank. And the most important guaranty for the performance of all the above mentioned processes is the Bank's successful highly qualified professional team.
Address: 0002, Yerevan, Amiryan str.23/1
ARMECONOMBANK OJSC Board