FEDERATION OF BOSNIA AND HERZEGOVINA
/REPUBLIKA SRPSKA

Study Tour and Action Plan on Corporate Governance within the Forest Sector

Introduction
The forestry sector of Bosnia and Hercegovina is facing new challenges in moving to a free market economy

The sector must become more commercially focused while maintaining its traditional values of sustainable forest management
The companies have to introduce modern business strategies
The state as forest owner and company owner has to improve and implement new forestry policy
Decision makers must understand and introduce best practice regarding the governance of the state forestry sector and forest management companies
The Objective of the Study Tour
To provide sufficient information and examples of Good Corporate Governance to enable study tour participants and other key stakeholders to design an action plan to improve corporate governance frameworks and practices in BiH
Approach
Inform about best practice consistent with the 2005 OECD Guidelines on Corporate Governance of State Owned Enterprises

Illustrate options used in Ireland and Hungary with regard to roles and responsibilities of the different state organisations with specific reference to items such as board composition, exercise of government rights, procedures to avoid conflict  etc. etc.

Allow for discussion on options and on how these may be used to create a framework for BiH
What is corporate governance?  (OECD definition)
Corporate governance involves a set of relationships between a company’s management, its board, its shareholders and other stakeholders.

   It is a key element in improving economic efficiency and growth as well as enhancing investor confidence.
What is corporate governance?
Corporate governance also provides the structure through which the objectives of the company are set, and the means of attaining those objectives and monitoring performance are determined.

Good corporate governance should provide proper incentives for the board and management to pursue objectives that are in the interests of the company and its shareholders and should facilitate effective monitoring.
What are the relevant links to the board of the FMC?
Shareholders represented by the General Assembly or in some cases individually
General Director of the Company
Supervisory and guiding authorities, corporations
Other stakeholders (employees associations, trade union, chamber, business partners, supplyers of different products or services, etc.)

Who are the OECD ?
The OECD (Organisation for Economic Co-operation and Development of) is a unique forum where the governments of 30 democracies work together to address the economic, social and environmental challenges of globalisation.

The OECD defined the principles, elaborated and published the guidelines for Corporate Governance of state owned enterprises
OECD Principles on corporate governance of state-owned enterprises
Ensuring an Effective Legal and Regulatory  
        Framework for State-Owned Enterprises
II.    The State Acting as an Owner
III.   Equitable Treatment of Shareholders
IV.    Relations with Stakeholders
V.    Transparency and Disclosure
 The Responsibilities of the Boards of State- 
        Owned Enterprises
I.   Ensuring an Effective Legal and Regulatory
      Framework for State-Owned Enterprises
The corporate governance framework should promote transparent and efficient markets, be consistent with the rule of law  clearly articulate the division of responsibilities among different supervisory,  regulatory and enforcement authorities.
II.   The State Acting as an Owner
The corporate governance framework should protect and facilitate the exercise of shareholders’ rights.
III.   Equitable Treatment of Shareholders
The corporate governance framework should ensure the equitable treatment of all shareholders, including minority and foreign shareholders. All shareholders should have the opportunity to obtain effective redress for violation of their rights.
IV.   Relations with Stakeholders
The corporate governance framework should recognise the rights of stakeholders established by law or through mutual agreements and encourage active co-operation between corporations and stakeholders in creating wealth, jobs, and the sustainability of financially sound enterprises.
V.   Transparency and Disclosure
The corporate governance framework should ensure that timely and accurate disclosure is made on all material matters regarding the corporation, including the financial situation, performance, ownership, and governance of the company
VI.   The Responsibilities of the Boards of State-
        Owned Enterprises
The corporate governance framework should provide for  the strategic guidance of the company, the effective monitoring of management by the board, and the board’s accountability to the company and the shareholders