Corporate Governance for Banks in Southeast Europe: Policy - IFC

E. Additional Information from EBRD SEE Bank Assessments
E1. Board structures in SEE
Albania
Joint stock companies in Albania have the option to choose either a one-tier or two-tier system. In the latter
case, management board members can be elected and dismissed by the general shareholders meeting or by
the supervisory board, as provided by the charter. The Law on Banks requires banks to be organized under
a two-tier system, where the general shareholders’ meeting appoints both a supervisory board (“steering
council”) and the members of the management board (“directorate”). The steering council is the bank’s
decision-making and supervisory body. At least one-third of its members must not be related to controlling
shareholders or to the bank’s management board members. Members of the directorate can also sit on the
steering council, but they should not be in the majority.
Bosnia and Herzegovina
Corporate governance and banking in Bosnia and Herzegovina is regulated at the entity level. In practice,
two distinct corporate governance regimes exist and each entity has its own framework of primary and
secondary legislation and a Banking Agency. In both the Federation of Bosnia and Herzegovina and in
the Republika Srpska, the Law on Banks requires financial institutions to have a supervisory board and a
management board. The latter is appointed by the general meeting of shareholders and is responsible for the
supervision of the business operations of a bank. The management board is appointed by the supervisory
board and is responsible for the direct business operations of the bank. The supervisory board must appoint
an audit committee consisting of five members for a term of four years. Members may be reappointed. Audit
committee members cannot be bank staff or members of the supervisory or management boards.
Bulgaria
Bulgarian joint stock companies, including public companies and banks, can opt for a one-tier system
or a two-tier system. In line with Article 41 of the 8th EU Company Law Directive, the Law on Financial
Independent Audit requires public interest companies (including banks) to establish an audit committee. In
listed companies and banks, one-third of board members must be independent.
Detailed rules on independent board members are included in the National Code of Corporate Governance.
Finally, the Law on Credit Institutions promulgated in July 2006 requires banks to regularly review their
organizational structure and the procedure for defining and delegating powers and responsibilities of board
members.
Croatia
In Croatia, the Companies Act allows joint stock companies to choose between one-tier or two-tier board
systems. According to the Credit Institutions Act, banks are required to establish a management board and a
supervisory board. The Act requires the supervisory board to have at least one independent member. There
are no specific requirements for board committees, although the Act expressly provides reporting duties by
internal audit to the audit committee. On the other hand, the Corporate Governance Code recommends that
boards in listed companies and banks establish nominations, remuneration, and audit committees with a
majority of independent board members.
FYR Macedonia
In FYR Macedonia, banks are governed under a two-tier system, where the general shareholders meeting
appoints the supervisory board, and the latter appoints and removes the members of the management
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Policy Brief
Corporate Governance for Banks in Southeast Europe