Since 2005, CIPE has worked with the Corporate Governance Association of Turkey (COGAT; Türkiye Kurumsal Yönetim Derneği (TKYD)) on increasing awareness of good governance practices among Turkish directors; increasing the skills of current and prospective board members on how to construct a better governance structure within their organizations and in the Turkish private sector; and engendering a voluntary and broadly accepted culture of good governance amongst companies. Most recently, the work has also focused on preparing smaller and medium-sized businesses – particularly family-owned businesses – for compliance with new governance requirements in Turkey’s pending commercial code and encouraging Turkish firms to demonstrate their commitment to adopting best practices above and beyond those drafted into the amended code. COGAT’s efforts are being felt – since 2006, COGAT has reached 11, 027 people in 18 cities throughout Turkey through its awareness-raising and practical implementation workshops. COGAT has also worked with the Istanbul Stock Exchange and the Capital Market Board, helping to establish the Corporate Governance Index (CGI) which was launched in 2007.
In 2008, Transparency International noted that Turkey showed a significant reduction in perceived levels of corruption, moving from 66th to 58th out of 180 countries in transparency rakings. However, there is still work to be done. In the private sector realm, the power of financial markets to persuade companies to meet corporate governance standards or risk public criticism, lawsuits or a sell-off in their shares is still relatively weak. There also remains a high degree of cross-ownership between companies, particularly family-owned companies in Turkey. Controlling shareholders often play a leading role in the management and strategic direction of company groups, which has the potential to lead to abuse in situations, for example, where controlling shareholders impose commercial conditions that go against minority shareholders and the interests of the company as a whole.
In recognition of this, COGAT launched a new governance guide for family companies in Turkey on January 21, 2010. This publication is clearly meeting a demand and is immediately relevant in the context of the pending corporate governance requirements in Turkey’s revised commercial code, as well as a new government initiative to encourage IPOs among Turkey’s smaller companies. The launch of this guide, developed in partnership with CIPE, was one of a series of corporate governance events organized by COGAT this month. The guide is currently available in Turkish and will be available in English within the next couple of months.