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In the securities marketplace of the Czech Republic corporate brass acting a crucial office in ingraining capitalist confidence and ensuring an streamlined marketplace. Post the spatter of Communism, the system was transitioned from realm owned to free enterprise in a exceptionally broad instance. Since then, the Czech Republic has come up a lasting way to speedily arrive at standards of other laissez-faire economy markets and gleefully get your hands on growth into the European Union. As the marketplace continues its progression, the need for physical phenomenon of data and alliance linking lath members and managers in firms greatens.

From the Czech Republic's protagonist privatization program in 1992 to the past due 1990's, firm organisation was viewed negatively and/or non-existent for publicly listed Czech companies. A course of action began with a need of regulation, unceasing with a deficit of enforcement, and ultimately rotated directions germ in 1998 with the Securities Commission Act. Even now, as Czech companies endeavour to go more contending on a global criterion in the market, the understanding amongst firms of the involve for structured corporate brass and more transparence in their newspaper writing of gen takes grip as a continuous endeavour obligatory to gossip and line up enterprise goals next to those of another stakeholders.

Through an analysis of the top ten in public traded companies, in expressions of marketplace capitalization, on the Prague Stock Exchange, I will judge the handiness of rumour on the subject of business firm establishment in command to tell apart the on-line communicate of submission near the Corporate Governance Code. This intelligence will ladle as a criterion and will let investors to tell the positions of the biggest companies on the PSE to some other companies inwardly the Czech Republic, and utilise the knowledge unanimously to the Czech securities marketplace. The grades allow investors and some other stakeholders to get an belief of firm brass practices and the physical phenomenon of information in the companies operating in the Czech Republic nowadays.

Current State of Corporate Governance

I go around now to the investigating of the house organization speech act in today's Czech open market. Using the ten greatest in public traded companies (see Table 1) nominated on the Prague Stock Exchange in vocabulary of market capitalization, I will determine the level of their stated house brass principle revealing as saved in their peak recent annual reports. This is the 2004 time period buzz for all of the companies. Furthermore, I will in brief valuate the availability of facts on the companies' websites.

Table 1
Top Ten Listed Companies on the PSE

Rank Company Market Cap. (Mil. CZK)Market Cap. (Mil. USD)

1 ČEZ 402,881 16,293

2 Erste Bank 317,598 12,844

3 Český Telecom 160,014 6,471

4 Komerční Banka 128,397 5,193

5 Unipetrol 42,922 1,736

6 Zentiva 41,683 1,686

7 CETV 39,718 1,606

8 Philip Morris ČR 32,816 1,327

9 Severočeské Doly 14,434 584

10 Prazská Energetika 11,492 465

Source: Prague Stock Exchange, Novermber 2005

ČEZ

ČEZ, a cosignatory tired company, is the large all-powerfulness conglomerate in Central and Eastern Europe. The company's website has an collector division with rumour on shares, bonds, and business information, and lists the mean solar day of the time period unspecialized meeting, but does not make available rumour clearly cognate to business firm governing body practices and support in at-large. Shareholder structure, relations, and dividends are presented on the website. Within the period of time report, ČEZ follows the German business firm governing body model, and has key members of the floorboard likewise cog of management. Board shop and section members are discussed generally. The sheet of directors meets time period as a substance of practice, where on earth the plan is time unit. The ensemble complies beside the Commercial Code on the topic of haven of shareowner rights, and bases its corporate brass on the Corporate Governance Code. The ČEZ Group in actuality participated in the 2004 writing of the Corporate Governance Code. Overall, the friendship reports on furthermost of the key firm governance areas, but does not have one bit dedicated to their policy, making it necessary to scan the full document for at issue figures.

Erste Bank

Erste Bank, based in Austria, is the ascendant financial services bourgeois in Central Europe. Its website contains an capitalist family stretch in which careful reports is provided, and too a house organization passage in which the business discloses it follows the Austrian Code of Corporate Governance in pattern. In the annual report, the camaraderie discloses it follows all of the enactment rules of the Code, and adheres to peak of the recommendations. It directs individuals to the website for the actualized victuals of firm governance, production the substance accessible, but not elaborated inwardly the annual chitchat itself. Furthermore, policies about stockholder rights were not soft to discern.

Český Telecom

Český Telecom is a telecommunications commission that operates principally in the Czech Republic. The corporation has a website with investor message as well as floorboard composition and notification of the period broad tryst. In addition, access to the company's yearly document leads to common business firm body meeting. The camaraderie acknowledges developed writing in this sphere of influence dawn next to the 2004 period story as compared to prior period reports, and as expressed in the 2002 yearly report, the enterprise will be in comprehensive compliance of the Corporate Governance Code by 2005. One transcribe ready-made in the anecdote includes a register of the members of the supervisory board that serve as independent, an grievous condition as suggested by the 2004 Code.

Komerční Banka

Komerční Banka is among the utmost measurable phytologist in the Czech Republic and the Central and Eastern European region, and provides all-round services for clients in retail, corporate, and investment banking. The company's website provides admittance to key investor information, and has an saver links box. However, location is not a circumstantial corporate administration wedge. Accessing the annual papers allows one to see record of the requirements of corporate governance, but here is neither peculiar approach of their overall principle towards firm organisation nor remark of their adherence or deficiency nearby of to the Corporate Governance Code.

Unipetrol

Unipetrol, a horde of companies that direct in the natural science industries two-dimensional figure of the Czech Republic, is a core company in Central Europe. The company's website has shortest links to section members as powerfully as an hoarder page beside entree to its period reports, but does not supply elaborate firm governing body figures. The yearly word does not amend upon the business firm governing body proposal of the guests. There is no affirmation concerning the company's line of reasoning towards corporate governance, and the hearsay fixed is primarily a listing of sheet members. Qualifications are not given, and shareowner rights are not unveiled or discussed.

Zentiva

Zentiva is a pharmaceutic bloc that holds prime positions in the Czech and Slovak markets, and amongst the large players in Central and Eastern Europe. Zentiva's website provides extended firm governing body information, together with the effective rules governing the boarding. Investor family as well has a obvious configuration on the company's website, and lists shareholder information, the solar day of the popular meeting, and separate all important data. As expressed in the period report, the group adheres to the Dutch Corporate Governance Code.

CETV

Central European Media Enterprises, or CME, is traded on the Prague Stock Exchange as CETV. The company, supported in Bermuda, is an international small screen mass medium company, and operates a assemblage of networks and stations cross-town Central and Eastern Europe. The company's website includes the members of the section and their qualifications, as resourcefully as business enterprise results and band policies such as as their Code of Ethics. Interestingly, analyst reports about CME are approachable on the company's website. CME is timetabled on NASDAQ, so yearly word gen is approachable finished their website below SEC filings.

Philip Morris ČR

Philip Morris ČR is an affiliate of Philip Morris International, whose parent firm is Altria Group. The website for Philip Morris directs all investors investigative going on for investor subject matter to its parent company's website, tho' quite a lot of commercial enterprise data, its indiscriminate assignation date, and agenda is disclosed for its Kutna Hora location in the Czech Republic. Just as was the covering for CETV, Altria Group has rife info disclosed in its SEC filings. On the Altria Group website, corporate organization is discussed extensively, and the by-laws as asymptomatic as commission members and governance guidelines are tabled.

Severočeské Doly

Severočeské Doly is the greatest creator of beige coal in the Czech Republic. The firm mines, processes, and sells suntanned fossil fuel and its by-products. The company's website lists the pane members and their qualifications and investor shop. There is no strip steadfast to firm organization structure or line. Within the time period report, the people unveiled they do not comply near the Corporate Governance Code, but it does credit the juristic requirements and it hopes to espouse much standards in the planned. Key areas of house brass are easy to brainstorm in the report, and tho' the institution states it does not haunt the Code, it does an absolutely well behaved job of reportage needed as healed as suggested substance.

Prazská Energetika

Prazská Energetika is an electricity purchasing, distribution, and gross sales cast in operation in Prague and Roztoky, and an physical phenomenon merchandiser in the wholesale market in the Czech Republic. Prazská Energetika's website lists the guidance and flat timber members, shareholder structure, and provides access to its time period reports. There is not a slot clearly for house organization. In the period of time report, the joint venture reports act numbers as sought after by the Commercial Code, but does not go into very good subtlety astir house brass particularly. Furthermore, it does not remark its adhesion to any cut of the Corporate Governance Code.

Conclusions

After reviewing the information provided any on the timetabled companies' website or their period report (see Table 2), it was revealed that the physical phenomenon of info has been achieved. At smallest possible as stated, record all of the companies follow beside enactment viands of the Commercial Code and separate Acts, and six of the ten companies obey with the recommendations of the Corporate Governance Code. Of the cardinal that have not adopted the standards of the Code, a number of mention of the firm governance set of guidelines is made through the revelation of the applicable statistics.

I have recovered that companies timetabled on the Prague Stock Exchange near a gargantuan marketplace capitalization have improved upon their business firm body newspaper journalism in their 2004 annual reports from last age. Steps have been understood by these companies to follow the recommendations of the Corporate Governance Code even formerly they have change state enactment regulations. Although these are stated measures that have been taken, it is acknowledged the policies are followed as a end result of the attender authentication a propos the reporting of rumour restrained in the period of time reports. Overall, capitalist fervour in the Czech securities open market should improve in night light of the flared transparency of information, and the future civil law of added business firm governing body requirements will rearrange upon this added.

Table 2

Results of Company Analysis

Disclosure of Information ČEZ EB CT KB U Z CETV PMČR SD PE

Does the company share a confidence Y Y Y Y N Y Y Y Y Y
corporate body structure
and policy?

Does the establishment use the Y Y* Y N N Y** Y*** Y*** N N
Corporate Governance Code
as a basis?

Is investor relation Y Y Y Y N Y Y Y Y Y
disclosed and pick rights?

Board bias & Y Y Y Y Y Y Y Y Y Y
qualifications disclosed?

Board appendage wage Y Y Y Y Y Y Y Y Y Y
disclosed?

Does the website enclose a N Y N N N Y N Y N N
corporate organization area?

*Austrian Code of Corporate Governance
**Dutch Corporate Governance Code
***United States Securities and Exchange Commission Requirements
Source: 2004 Annual Reports for Respective Companies