1. OECD South Eastern Europe Corporate Governance Roundtable
Dr. Gregory F. Maassen
USAID CG&CL Project

2. The Drafting Committee
Established in May 2003
4 EU Experts (directives)
5 USAID Experts
7 Macedonian Experts
3 Ministries (justice, finance, economy)
Canada, US, Netherlands, UK, Ireland, Germany, France and Macedonia
8 Nationalities: 8 Approaches

3. The Drafting Committee

4. The Drafting Committee

5. The Drafting Agenda 1996, 2002, Draft Company Laws
X EU Directives and Regulations
Winter Report
EU Action Plan
EU Recommendations
OECD 1999 – 2004 Principles
OECD Transitional Economies
OECD White Book
Country Studies on Legal Systems
Sarbanex-Oxley Act
2004 D2 D1
April 2004
2003 Law
May 2003

6. Open Process 27 Debates 109 81 2003 Law 2004 25 120 43 38 600 500 4532 43 46 38 19 49 45 55 81
109 27 56 25
120 20 30
500
600
27 Debates
2004 D2 D1
April 2004
2003 Law
May 2003

7. Open Process (27 Debates)
2004 D2 D1
April 2004
2003 Law
May 2003

8. Deliverables
2004 D2 D1
April 2004
2003 Law
May 2003

9. Legal Transplantation
Legislation
Anglo-Saxon Concepts
The Absence of Charter Capital
Cumulative Voting
One-Tier Boards of Directors
Business Judgment Rule
Self-Regulation

10. Cumulative Voting Multiply number of votes with number of candidates
Legislation
Multiply number of votes with number of candidates
Directors with most votes are elected

11. Cumulative Voting 9 members must be elected
Legislation
9 members must be elected
2,500 shareholders own 20 percent of the outstanding shares with voting rights
1shareholder owns 80 percent of outstanding shares with voting rights
Total outstanding shares:15,000
How Would This Work?

12. They need 27,009 votes to secure 2 candidates!
Cumulative Voting
n S
D + 1
+ 1 =
1 * 15,000
9+1
+ 1 = 1,501 shares
Where D = the number of directors to be elected, S = number of outstanding voting shares and n = the total number of directors the minority shareholders want to elect (n = 1 director).
The minority shareholders need 1,501 shares or 13,509 votes to elect 1 candidate to the Board of Directors. They have 27,000 votes (3,000 shares* 9 directors) - enough to secure 1 candidate.
They need 27,009 votes to secure 2 candidates!

13. Cumulative Voting

14. Cumulative Voting More Complex Than People Think
Legislation
More Complex Than People Think
Can They Mobilize Shareholders?
Do They Understand the System?
Do They Want Large Boards?
Is One-Share One-Vote Not Better?
How Effective Can One Director Representing Minority Shareholders Be?