Summary

According to the press release issued by the Financial Supervisory Authority and the Tallinn Stock Exchange on 22 September 2005, the Management Board of the Financial Supervisory Authority has adopted advisory guidelines titled Corporate Governance Recommendations, which are meant for companies listed on the stock exchange and which have been brought into effect through the rules and regulations of the Tallinn Stock Exchange. The press release states that the Recommendations will enter into force on 1 January 2006.

According to the introduction in the annotated publication of the Corporate Governance Recommendations, the norms are of an advisory nature and are primarily intended for those companies whose shares are traded on the regulated securities market in Estonia, but these also contain rules suitable for other entrepreneurs to follow.

The author of the article is of the opinion that the regulation of company law, and in particular the regulation of corporate governance, should to a large degree be based on an economic-theory analysis of the law on regulation. The optimal organisation of the management of a company, and the principles for the formation of management structures, are not merely technical or organisational issues, but also an issue of the protection of the interests of the company as a whole, and of effective economic functioning.

The article analyses the legal nature and objectives of good corporate governance and looks at which norms associated with the management of companies are contained in the Corporate Governance Recommendations, concentrating mainly on the requirement for independence for the members of the management body that carries out supervision. The article seeks an answer to the question as to what is the aim of such a requirement, and whether this aim could be achievable through the Corporate Governance Recommendations.