MACEDONIAN STOCK EXCHANGE Evgeni Zografski CEO MACEDONIAN STOCK EXCHANGE AND CORPORATE GOVERNANCE SOUTH-EASTERN EUROPE CORPORATE GOVERNANCE ROUNDTABLE OHRID,JUNE 2004

LEGISLATION HIGH LEVEL OF COMPLIANCE WITH IOSCO PRINCIPLES HIGH LEVEL OF COMPLIANCE WITH IOSCO PRINCIPLES REGULATION CLOSER TO EU INVESTMENT DIRECTIVES REGULATION CLOSER TO EU INVESTMENT DIRECTIVES ESTABLISHED LEGAL FRAMEWORK ESTABLISHED LEGAL FRAMEWORK INDEPENDENT REGULATOR (SEC) INDEPENDENT REGULATOR (SEC) TWO SRO’S (MSE JSC DEMUTUALIZED;CSD MEMBER OWNED JSC) TWO SRO’S (MSE JSC DEMUTUALIZED;CSD MEMBER OWNED JSC) MODERN ELECTRONIC TRADING SYSTEM (BEST) MODERN ELECTRONIC TRADING SYSTEM (BEST) FULL SECURITIES DEMATERIALIZATION FULL SECURITIES DEMATERIALIZATION EFFICIENT SYSTEM OF CLEARING AND SETTLEMENT EFFICIENT SYSTEM OF CLEARING AND SETTLEMENT

LEGISLATION NEW INSTITUTIONAL FRAMEWORK NEW INSTITUTIONAL FRAMEWORK IN 2004 DEFINING PUBLICLY HELD CO. (188 JSC) DEFINING PUBLICLY HELD CO. (188 JSC) MANDATORY DISCLOSURE MANDATORY DISCLOSURE NEW LISTING REQUIREMENTS ON MSE NEW LISTING REQUIREMENTS ON MSE

CHARACTERISTICS OF THE MACEDONIAN CAPITAL MARKET PRIMARY MARKET UNDERDEVELOPED UNDERDEVELOPED NO IPO ON MSE SO FAR NO IPO ON MSE SO FAR SECONDARY MARKET SECONDARY PRIVATIZATION THROUGH MSE SECONDARY PRIVATIZATION THROUGH MSE CONCENTRATION OF OWNERSHIP THROUGH MSE CONCENTRATION OF OWNERSHIP THROUGH MSE STILL IN INITIAL STAGE OF DEVELOPMENT STILL IN INITIAL STAGE OF DEVELOPMENT MANDATORY LISTING FOR CO.THAT FULFILL MSE LISTING REQUREMENTS BY THE END OF 2004 MANDATORY LISTING FOR CO.THAT FULFILL MSE LISTING REQUREMENTS BY THE END OF 2004 MARKET OF COMPANIES DOMINATES OVER MARKET OF SHARES MARKET OF COMPANIES DOMINATES OVER MARKET OF SHARES

CHARACTERISTICS OF THE MARKET OFFICIAL MARKET (MANDATORY LISTING FOR CO.BY THE END OF 2004) (MANDATORY LISTING FOR CO.BY THE END OF 2004) 58 LISTED COMPANIES (MARKET CAPITALIZATION 300 MILL. €; 7% OF GDP) 58 LISTED COMPANIES (MARKET CAPITALIZATION 300 MILL. €; 7% OF GDP) THE MARKET VALUE OF LISTED COMPANIES INCREASED 35% (AROUND 1/3 OF THE NOMINAL VALUE) THE MARKET VALUE OF LISTED COMPANIES INCREASED 35% (AROUND 1/3 OF THE NOMINAL VALUE) 4 GOVERNEMENT BONDS AND 1 CERTIFICATES (MARKET CAP.340 MILL. €) 4 GOVERNEMENT BONDS AND 1 CERTIFICATES (MARKET CAP.340 MILL. €) UNOFFICIAL MARKET MANDATORY TRADING OF ALL SECURITIES TROUGH MSE BY THE END OF 2004 MANDATORY TRADING OF ALL SECURITIES TROUGH MSE BY THE END OF PUBLICLY TRADED COMPANIES 110 PUBLICLY TRADED COMPANIES PRIVATIZATION OF GOVERNMENT RESIDUAL SHARES (70 RESIDUAL SHARES TO BE OFFERED BY THE END OF 2004) PRIVATIZATION OF GOVERNMENT RESIDUAL SHARES (70 RESIDUAL SHARES TO BE OFFERED BY THE END OF 2004)

TRANSPARENCY & DISCLOSURE TRANSPARENCY & DISCLOSURE  INFLUENCE FROM THE PAST  CLOSELY HELD CO.TO ACT AS PUBLICLY HELD CO.  ENSURING EFFECTIVE DISCLOSURE IS KEY TARGET/OBSTACLE  PUBLICLY HELD CO.TO BECOME AWARE THAT THEY COULD BENEFIT FROM THE PROPER DISCLOSURE

TRANSPARENCY & DISCLOSURE TRANSPARENCY & DISCLOSURE DISCLOSURE OF LISTED COMPANIES:  AUDITED ANNUAL REPORTS;  SEMIANNUAL UNAUDITED REPORTS;  QUARTERLY UNAUDITED REPORTS;

TRANSPARENCY & DISCLOSURE DISCLOSURE OF LISTED COMPANIES: DDDDISTRIBUTION OF THE NET-PROFIT DDDDIVIDEND CALENDAR CCCCHANGES IN THE MANAGEMENT CCCCHANGES IN THE CAPITAL STRUCTURE CCCCONTRACTS, LOANS, AWARDS, LICENSES, ISO CERTIFICATES DDDDECISIONS OF THE GENERAL ASSEMBLY DDDDECISIONS FOR BUY-BACK NNNNEW ISSUES OF SECURITIES

TRANSPARENCY & DISCLOSURE DISCLOSURE OF LISTED COMPANIES DISCLOSURE OF LISTED COMPANIES  Denials of price-sensitive information  Shareholders with more than 10% of outstanding shares and every further acquire of more than 5%  Yearly information about the percentage of shares owned by the management

TRANSPARENCY & DISCLOSURE DISCLOSURE OF PUBLICLY-HELD COMPANIES:  Quarterly information:  General data  Changes in equity  Legal status  Price sensitive information  Semiannual information:  Semiannual unaudited report  Annual information:  Audited annual report

TRANSPARENCY & DISCLOSURE EFFECTS OF MANDATORY LISTING:  Higher transparency:  Financial statements of 80 companies published  78 price sensitive information of 42 companies published  Greater protection of the minority shareholders  More efficient implementation of the principles of corporate governance

TRANSPARENCY & DISCLOSURE  22 delisted companies in 2004  Due to lack of transparency, 19 companies were delisted in 2004  Number of listed companies as of May 31,2004: 58

DISSEMINATION OF INFORMATION  All price sensitive information are available on the MSE web page (in 5 months of 2004 over 20,000 visits of the MSE web; 56,000 page views;7,000 unique visitors)  Brokerage houses are informed of all price sensitive information trough BERZA –NET  Vendors (Reuters;Bridge)

FUTURE PROSPECTS MSE CODE OF CORPORATE GOVERNANCE TO BE DRAFTED BY THE END OF 2004 TO BE DRAFTED BY THE END OF 2004 (WITH ASSISTANCE OF DUTCH GOVERNAMNET AND USAID CG&CL PROJECT) IMPLICATION ON LISTED CO. IMPLICATION ON LISTED CO. IMPACT ON THE PROCESS OF CG IMPACT ON THE PROCESS OF CG

MACEDONIAN STOCK EXCHANGE Inc. SKOPJE