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As Russia’s Federal Securities Commission moves to improve the country’s investment climate with the introduction of accepted principles of corporate governance, it is depending on a consortium of advisors headed by lawyers from Coudert Brothers to do the heavy lifting. A team of Coudert attorneys led by New York partner Barry Metzger and Moscow partners Derek A. Bloom and Larisa A. Afanasyeva is helping to draft a corporate governance code that will adopt best-practices guidelines for companies’ treatment of their shareholders and creditors. Funded by the Japanese government, the project is sponsored by the European Bank for Reconstruction and Development (EBRD), which assists the transition to market economies in the nations of Eastern and Central Europe and is Russia’s largest foreign investor. The code is intended to bring some structure to a Russian system in which minority shareholders have frequently been mistreated. “The lack of sound corporate practices has damaged Russia’s investment climate and is a contributing factor to Russia’s inability to attract the investment necessary for sustainable economic development,” said EBRD chief legal counsel Emmanuel Maurice in announcing the effort. “Abuses of corporate power by managers, owners and controlling shareholders have hurt both domestic and foreign investors.” The work is familiar terrain for Metzger, who only recently returned to New York after stints in Coudert’s Hong Kong, Sydney and London offices over the last 25 years. During a sabbatical spent as general counsel of the Asian Development Bank from 1995 to 1999, Metzger was involved in the bank’s emergency assistance during the Asian financial crisis. And he advised the Republic of Korea on corporate governance issues after returning to Coudert two years ago. SHORT HISTORY Metzger said that the corporate governance difficulties in Russia have been made more pronounced by the country’s short history of private enterprise. The infancy of the system, he said, has so far allowed an almost lawless atmosphere to flourish in which majority shareholders — often ensconced in company management — have done essentially as they pleased. “The problems in Russia were exacerbated by the lack of even the most minor protections for minority shareholders, and, I think it’s fair to say, the looting of private companies by their majority shareholders in management,” Metzger said. The consortium drafting the code, which also includes a group of Russian attorneys and academics and the Washington, D.C.-based Ethics Resource Center, is relying in part on principles of corporate governance promulgated in 1998 by the Paris-based Organisation for Economic Co-Operation and Development (OECD). Those principles included, among other things, a statement of shareholders’ rights to information about and participation in company decisions; an insistence on equitable treatment of shareholders; and a recommendation of disclosure and transparency in company matters. The drafting process has also included a review and discussion of various national approaches to corporate governance, a meeting of the minds that Metzger described as exceptionally stimulating. “There’s nothing more intellectually challenging than working with a group of very smart people that come from different educational and legal backgrounds that are trying to put together a solution to a problem,” he said. DEADLINE NEARING Currently, the consortium is hustling to complete revisions on drafts of the code’s 11 chapters, aiming for a mid-September deadline. The document will then be presented at a series of forums in Russia and abroad before being finalized for presentation to the Russian government at the end of the year. The finished product will be non-binding, but it will likely contain reporting requirements designed to stir market pressure to encourage companies to adhere to the code. And Metzger said he has been heartened to see that the Russian government is committed, through the code and other initiatives, to reforming the country’s economic system. “One of the rewarding things about this work is seeing a young democracy figuring out how to do things,” he said.

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