Hungary : Corporate Governance Country Assessment

Preprint, Unknown OPEN
World Bank (2003)
  • Publisher: Washington, DC
  • Subject: DUE DILIGENCE | GOVERNANCE GUIDELINES | LIMITED LIABILITY COMPANY | DISCLOSURE OF INFORMATION | CHARTER | LEGAL FRAMEWORK | INSIDER DEALING | INSTITUTIONAL INVESTORS | CORPORATE GOVERNANCE PRINCIPLE | TAX AUTHORITY | LEGAL PROVISION | PUBLIC COMPANY | STAKEHOLDER | AUTHORIZATION | BOARD RESOLUTIONS | CONTROLLING SHAREHOLDERS | CORPORATE PERFORMANCE | CORPORATE GOVERNANCE | SHARE RIGHTS | CONFLICTS OF INTEREST | CORPORATE GOVERNANCE PRINCIPLES | RISK MANAGEMENT | INSTITUTIONAL INVESTOR | BOARD MEMBERS | BANKS | DUTY OF LOYALTY | CORPORATE GOVERNANCE CODE | CORPORATION | SHAREHOLDER | FOREIGN INVESTORS | COURT | FOREIGN DIRECT INVESTMENT | PROXY | DECISION-MAKING | AUDITOR INDEPENDENCE | TRANSPARENCY | AUDIT COMMITTEES | CASH FLOW STATEMENTS | FIRMS | SHAREHOLDER ACTIVISM | MANAGERS | CAPITAL EXPENDITURES | PROFIT SHARING | FINANCIAL DISCLOSURE | DIVIDEND PAYMENTS | TAKEOVER | CIVIL LIABILITY | DISCLOSURE REQUIREMENTS | STAKEHOLDERS | SUBSCRIPTION | SHAREHOLDER RIGHTS | COMPANY LIMITED | LEGISLATIVE REFORM | SHAREHOLDER AGREEMENTS | SHARE OPTIONS | CHARTERS | FOREIGN SHAREHOLDERS | ACCESS TO INFORMATION | ACQUISITION | VETO | ACCOUNTABILITY | CORPORATE STRATEGY | LEGISLATION | PRIVATE PLACEMENT | INVESTMENT FUND | SHAREHOLDERS | PUBLIC COMPANIES | UNION | CAPITAL MARKETS | PREEMPTIVE RIGHTS | CONSENSUS | SINGLE SHAREHOLDER | CORPORATE GOVERNANCE REFORM | DIVIDENDS | DISCLOSURE OBLIGATIONS | REPRESENTATIVES | ACQUISITIONS | FINANCIAL INSTITUTIONS | OWNERSHIP STRUCTURE | LIMITED LIABILITY | SHARE OWNERSHIP | VOTING | INSTITUTIONAL FRAMEWORK | DECISION-MAKING BODY | SHAREHOLDER VOTE | INSOLVENCY | BOOK VALUE | OWNERSHIP DISCLOSURE REQUIREMENTS | PORTFOLIO | LEGAL PROVISIONS | CORPORATE ASSETS | MINISTRY OF FINANCE | FINANCIAL REPORTS | FINANCIAL STATEMENTS | INDEPENDENT AUDIT | INVESTMENT SERVICES | INSIDER TRADING | STOCK OPTIONS | PRIVATE COMPANIES | LARGE COMPANIES | NATIONAL BANK | RIGHTS OF OWNERS | TRADE UNIONS | BENEFICIAL OWNERS | MERGERS | STATE-OWNED COMPANIES | CORPORATIONS | SHAREHOLDER MEETINGS | AUTHORITY | LARGE SHAREHOLDERS | STOCK EXCHANGE | COMPANIES ACT | TAKEOVERS | DUE CARE | CORPORATE CONTROL | FOREIGN CAPITAL | INSIDER INFORMATION | FINANCIAL SERVICES | TENDER OFFERS | LISTED COMPANIES | COMPANY | CIVIL LAW SYSTEM | DISCLOSURE RULES | INDEPENDENT DIRECTORS | Macroeconomics and Economic Growth - Investment and Investment Climate Law and Development - Corporate Law Finance and Financial Sector Development - Microfinance Governance - National Governance Small Scale Enterprise Industry | BOARD MEMBER | COMPANY LAW | LIMITED | SECURITIES LAW | INVESTOR PROTECTION | BENEFICIAL OWNER | FINANCIAL CONTROL | FINANCIAL MANAGEMENT | COMMON SHARES | RIGHTS OF SHAREHOLDERS | GOLDEN SHARES | REGULATORY FRAMEWORK

This report assesses the corporate governance policy framework and enforcement and compliance practices in Hungary. Hungary has already invested considerable resources in upgrading its legislation to meet European Union Directives, and the legislative and regulatory framework dealing with corporate governance issues is robust. The major issues identified by this review include: (1) the general weakness of the supervisory board, which causes some non-compliance with several OECD Principles; and (2) a conflict between law and practice in the area of share registration, particularly the problems related to the ability of all shareholders to attend meetings and exercise their voting and other rights. Strengths and weaknesses are highlighted, and the policy recommendations made may be grouped under three categories: legislative reform, institutional strengthening, and voluntary/private initiatives. The report recommends creating a "share registration working group" to synchronize law and practice in the area of shareholder record keeping and voting. It also makes recommendations to be implemented as part of a Company Law update. Finally, the report promotes private sector initiatives and capacity building to build on legislative progress on corporate governance reform. It recommends developing a Hungarian corporate governance code of best practice, which would address key issues to include supervisory board roles and institutional investor responsibilities. The report also proposes that an Institute of Directors be created train supervisory board members, disseminate best practice, and promote dialogue between the public and private sectors. Together, these measures give issuers the choice to implement best practice and investors a benchmark against which to measure corporate governance in Hungary.
Share - Bookmark