We’ve all heard about it, but what precisely is it? Why is everyone talking about it? And how is it going in Greece? In this Q&A, Vassilis Monogios, founder and managing partner at AMiD and member of AmChamGR’s Corporate Governance Committee, talks about the meaning and potential of corporate governance and the importance of always making informed decisions.
The American-Hellenic Chamber of Commerce recently held its very successful 9th Corporate Governance Conference. What do you think is behind this increased interest?
The conference topic itself, “How Corporate Governance Creates Value for Companies,” certainly attracted a lot of interest, but I believe the event’s success is also due to the methodical efforts of the Chamber’s Corporate Governance Committee, which is charged with organizing the conference. The Committee’s members are all experienced professionals who bring to the table deep knowledge of the field, and I am truly honored to be part of this outstanding team.
Why is corporate governance in the spotlight?
Corporate governance is in the spotlight for a combination of reasons. The need for better defined and better organized corporate governance arose as a result of, firstly, increasingly complex business models (internationalization of operations, institutional investors, increased customer-supplier-financier demands); secondly, numerous high profile scandals that were attributed, to a considerable extent, to inadequate and ineffective governance within organizations; and, thirdly, due to increasingly heavier requirements from the supervisory authority.
Sound decisions require complete, correct and timely information and effective communication channels
Does Greece follow international developments in the field?
It is normal for developments in matters of corporate governance to first appear in mature markets—such as the United States, the United Kingdom and Western Europe—and usually starting with companies in the broader financial sector as well as listed companies. The European Union plays a key role in the development of corporate governance regulations, directives and other texts, and of course, Greece incorporates what is required in its national legislation. In some cases, for example, the recent requirements for corporate governance in listed companies (under Law 4706/2020), we have exceeded the relevant requirements set by other European countries.
So how exactly is corporate governance defined?
According to the OECD Principles of Corporate Governance, which serve as an international benchmark and an important source of inspiration for the Greek Corporate Governance Code, corporate governance refers to the system of rules and practices that govern the relationship between a corporation’s managers, shareholders, employees and other stakeholders. Good corporate governance helps to build an environment of trust, transparency and accountability necessary for fostering longterm investment, financial stability and business integrity, thereby supporting stronger growth and more inclusive societies.
Personally, I prefer a simpler definition: Governance is the structures and processes by which companies are directed and controlled. It concerns the function and interaction of key components including a company’s general assembly, board of directors and committees, its executive management (CEO and senior management), the structures in the second and third line of an internal control system (e.g. risk management, compliance, internal control, internal audit, quality, and safety).
What is the connection between corporate governance and corporate sustainability?
Looking at the Greek dictionary definition of the term sustainable (βιώσιμος), we see that the term refers to “one who can survive, be maintained, last over time.” For a business and an organization to be viable, it must therefore last over time. In order to achieve this, however, it is not enough to merely have good performance and profits. The external environment must also be able to offer continuity conditions. Even a successful organization cannot last in an environment rife with problems (e.g. environmental, geopolitical, social, and financial). So it is in every company’s immediate interest to participate in maintaining an external environment in which it will be able to operate in the longterm.
The G in ESG criteria stands for governance, and this is included for the simple reason that an organization lacking strong corporate governance is unlikely to survive long—either because it will fail to generate profits in the longterm or because conditions will be created that will favor (and eventually give rise to) fraud. Interestingly, this is often countered by the question: “But aren’t there any successful companies with low performance in corporate governance indexes?” The answer is yes, there are; but can this last? And for how long? And more so, these companies did not succeed as a result of circumventing good governance principles and rules. If anything, implementing these rules and best practices would help drive their success even further, unless, of course, this success was actually the result of illegal activities (as was the case in many infamous corporate scandals).
How would you describe the level of corporate governance in Greece?
There is a different level of compliance, depending on the type of company. Listed companies, mainly due to the recent relevant legislation, have made significant progress, as have financial sector companies, again due to legislative provisions. Public agencies have also made important steps, particularly in areas such as internal auditing. However, I wouldn’t say we have achieved the desired level yet, as in some cases there is compliance only in form and not in substance. Notably, there is a dangerous gap when it comes to large unlisted companies, for which it seems that a different approach is needed given that there exists neither an adequate legislative framework for this category of companies (provisions stop mainly in Law 4548 /2018) nor appropriate supervision and control mechanisms for corporate governance issues.
When you founded your company, you chose the name AMiD. That’s an interesting acronym. How did it come about?
AMiD stands for “Always Make informed Decisions,” which is the mission and focus of our services: to support the decisionmaking process. Sound decisions require complete, correct and timely information and effective communication channels. Areas such as corporate governance, risk management, internal auditing and ESG reporting are at the heart of our services. But I won’t deny that the name also holds personal significance. We have all made wrong decisions at some point in our lives, and if we reflect on them and consider the main cause, I think we all find that the information we had was simply not sufficient.
