Corporate Governance Country Assessment : Slovenia

This report provides an assessment of the corporate governance policy framework, and enforcement and compliance practices in Slovenia. The country has already upgraded its legislation to meet European Union (EU) Directives, and, its legal and regulatory framework dealing with corporate governance issues is now comparable to that of many EU member states. Strengths and weaknesses are highlighted, and policy recommendations are made where appropriate. The major issues are driven by the continuing transformation of Slovenian companies. Ownership of smaller companies and some blue chips will likely continue to consolidate, as strategic investors, and holding companies acquire control and 100 percent ownership; investor protection in these companies will require the diligent enforcement of takeover rules. For the remaining listed companies and others that will continue to have relatively dispersed ownership, related party transaction protection, and improved periodic disclosure are important. The report recommends that policymakers: 1) require a formal approval and disclosure process for related party transactions; 2) consider methods to increase minority representation on boards; 3) require the disclosure of shareholder agreements; 4) require that the SMA review the content of public company disclosure; 5) require an audit committee of the supervisory board for listed companies; and, 6) continue to support supervisory board training activities. The report also proposes that institutional investors (including State-owned funds) develop public voting, and board representation policies that require board members to act in the best interest of the company (and thus all shareholders and stakeholders).