By Axel  Reiserer

With the introduction of a new corporate governance code, just published, the Macedonian Stock Exchange is taking another significant step towards the adoption of European standards on local capital markets.

The code was developed jointly by the Macedonian Stock Exchange (MSE) and the Securities and Exchange Commission of North Macedonia, with support from experts at the European Bank for Reconstruction and Development’s (EBRD) Legal Transition Team. The technical cooperation project was financed by Luxembourg.

The code applies to companies with shares listed on the official market of the MSE that meet the criteria set out in the listing rules. These companies will be required to report annually on whether they have followed the practices in the code. As in other European countries with capital markets of a similar size and structure, North Macedonia’s new code applies an approach known as “comply or explain”.

This approach allows companies not to apply a particular standard – for example, one that may not be feasible due to the company’s size or structure – provided they explain to shareholders and the market why they have chosen to do so. All other listed companies that do not meet the criteria of the listing rule are encouraged to report voluntarily on how they implement the code.

The goal of the new corporate governance code is to support the successful development of local companies. “Effective governance can improve a company’s performance in a number of ways”, the code says, citing the skills, diversity and experience of supervisory and management board members, strong operational control systems and policy transparency as examples. The code also introduces for the first time principles and provisions on corporate sustainability, as well as the environmental and social impact of their operations.

CEO of the MSE, Ivan Steriev said: “The new code of corporate governance of the Macedonian Stock Exchange not only replaces the current regulation, but redefines and enlarges the scope of listed companies to which the code is addressed and replicates best international corporate governance practices. The code is a strategic milestone for the entire market, as it is a comprehensive roadmap towards good corporate reputations and the sustainable long-term development of companies. It will have positive implications not just for the capital market of North Macedonia, but the wider community as well.”

President of the Securities and Exchange Commission, Nora Aliti,added: “Efficient, resilient and fair capital markets are built on a range of foundations. One very important building block is good corporate governance. The new code provides a robust framework of good rules and standards that set the expectations and boundaries of listed companies, which will result in sufficient disclosure to allow investors to make informed decisions. As regulators, we are confident that the new corporate governance code has the right balance between encouraging growth and providing for a suitable level of investor protection.”

EBRD Head of North Macedonia, Andi Aranitasi,  said: “We are delighted to support the MSE and the Securities and Exchange Commission in developing a new code of corporate governance. We are very pleased that the code sets robust and modern standards to promote the further development of the capital market in North Macedonia. We would like to thank the MSE and the Commission for their open and proactive cooperation and Luxembourg for its generous support of this initiative. The EBRD will continue to support the authorities in establishing a reporting and monitoring framework associated with the new code and motivating firms to build their governance practices around the code’s provisions.”

Since 1995, the Macedonian Stock Exchange has been providing a transparent, secure, cost-effective and efficient marketplace for equities, along with capital market services to meet the needs of investors, issuers and stakeholders. It currently lists 96 companies, with a total market capitalisation of more than €3.4 billion.

The Securities and Exchange Commission of North Macedonia is an independent and autonomous agency charged with the regulation and supervision of the securities market and its participants and with the protection of investors.

The EBRD regards the development of local capital markets as one of its priorities. Local capital markets provide a reliable source of funding, contributing to financial resilience and sustainable growth. The EBRD aims to strengthen local capital markets and to encourage the use of local currencies in the countries where it invests. In its operations, the EBRD combines investment with policy engagement and advisory services to help deliver successful reforms.