A new Capital Markets Board (CMB) decision passed Oct. 12 to improve management quality might increase government control over the country’s biggest companies, according to worried economists.
The new rule obliges companies to include more independent board members; the regulation that applies to the 22 biggest companies listed on the Istanbul Stock Exchange (İMKB) will improve management quality, according to market czar Vedat Akgiray.
“The new rule aims to protect smaller shareholders,” Akgiray said yesterday during a press conference in Istanbul.
The rule says a third of board members of 22 out of 30 companies listed on the Istanbul bourse’s ISE 30 index should be independent, according to decision-makers appointed by the government. The CMB is not considered an independent authority due to an August regulation.
“More independent members of boards would bring more transparency and accountability in administration,” Akgiray said.
Economists and businessmen, however, have raised concerns.
According to Yavuz Semerci, an economics columnist at daily Habertürk, the government has granted itself the right to assign members to the boards of the biggest companies of Turkey.
“I do not know whether this right will be used fairly or not in the future,” Semerci said.
The independent candidates should have the ears of the management and represent common sense, said Mustafa Çamlıca, chairman of Ernst & Young Turkey.
“If they don’t represent common sense and act under the influence of some board members, there would be no use for the decision,” he said in survey released yesterday and conducted by Myexecutive, a research firm.
Rıdvan Yirmibeşoğlu, who is a board member on the CRA Global law company, disagrees. “More than the half of the members of the board should be independent,” he said in the same survey. “This would balance the power and increase equal representation of the different voices at the board.”
The new rule was announced Oct 12, the same day of a meeting for the troubled board of Turkcell, which is facing a longstanding dispute over the management between Turkey’s Çukurova, Russia’s Altimo, and Sweden’s TeliaSonera companies.
“The recent decision of the capital board has nothing do with the Turkcell board meeting,” told Akgiray the Hürriyet Daily News.
Telia Sonera and Altimo, which hold a majority of shares in the company, instructed their proxy voter to abstain from further voting on a dividend distribution issue at the meeting in Istanbul this week.
According to Habertürk’s Semerci, Mehmet Emin Karamehmet, chairman of Çukurova, might be planning to buy the rest of the company’s shares by partnering with some new Turkish investors and foreign investment funds. If that happens ahead of the company’s next board meeting, independent board members will likely be more crucial.
The non-Turkish partners want to replace current Turkcell Chairman Collin Williams, claiming that he constantly favors the company’s founding shareholder, Karamehmet.
“Williams always prevents the board from making crucial decisions about the company,” Evgeny Dumalkin said following last year’s board meeting that ended without a result in a dividend payment discussion.
“One more time we see that Williams does not care about Turkcell’s market value and the interests of the small investors. He only cares for his position on the board,” said Dumalkin.
TeliaSonera and Altimo own 37 percent and 13.22 percent of Turkcell, respectively.
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Source : hurriyetdailynews.com
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