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Changes to Corporate Governance Code introduced in December 2005

Based on the aforementioned characteristics of Slovenian corporate governance, the independent experts proposed in their report certain changes to the Code as well as to the company law. The changes focused on the independence of supervisory board members.

The amendment of the Code introduces two separate characteristics for supervisory board members: independence and the absence of any conflict of interest.

The majority of supervisory board members should be independent and elected individually. Additionally, the members of the management board should not be members of supervisory boards in more than three unrelated public joint stock companies.

In order for the supervisory board members to be independent, the Code stipulates that the supervisory board should hold a meeting at least once a year without the presence of the management board, especially when deciding on the appointment of the president of the management board, the remuneration of the management board, and when evaluating its own performance.

Due to the tendency to ensure the independence of supervisory board members and due to the fact that the workers' representatives can hardly be independent, the experts' report proposed defining the workers' representative as "dependent" supervisory board members. This is the only case in which the economic dependency of a supervisory board member is allowed. In all other cases, supervisory board members should be independent (economically, personally etc.).

According to the Code, it is recommended that those supervisory board members who take out liability insurance be obliged to cover such insurance themselves.

Companies should encourage institutional investors to disclose to the public their investment policy in relation to the company, eg their voting policy, degree of corporate governance activity, its method.

Providing advance notification of the shareholders' attendance at the general meeting has been made easier by allowing the shareholders to announce their attendance by mail or through technological means. After the general meeting, the management board is obliged to issue a report regarding the attendance of the shareholders at the general meeting and the percentage of the votes for and against the adoption of a specific proposal.


An extensive review of the Companies Act is being conducted by Parliament and the draft for the third hearing will be prepared by the government according to a decision made by Parliament on March 1 2006. At the time of the publication of this article, the new Companies Act has already been published in the Official Gazette (Official Gazette RS, No 42/2006, April 19 2006). The new Companies Act will enter into force on May 4 2006. One of the most important proposed amendments is the introduction of an option to have either a one tier or two tier system of management for joint-stock companies.

Further changes to the Code, which is also available in English (, are not expected before the enforcement of the changes in the provisions of the Companies Act regarding companies' business operations.

Markus Bruckmüller and Urska Gliha

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