Naslov
A Research on One tier System in Croatian Corporate Practice

Autori
Jurković Majić, Olivera ; Majić, Helena

Vrsta, podvrsta i kategorija rada
Sažeci sa skupova, sažetak, ostalo

Izvornik
HR Practices, Strategic and Entrepreneurial Challenges / - Pariz : EuroMed Press, 2015, 334-334

Skup
HR Practices, Strategic and Entrepreneurial Challenges

Mjesto i datum
Pariz, Francuska, 2015

Vrsta sudjelovanja
Predavanje

Vrsta recenzije
Međunarodna recenzija

Ključne riječi
one-tier system, two-tier system, corporate practice, strategic resoruces management, corporate management structures.

Sažetak
In 2008, Croatian Commercial Entities Act enabled joint stock companies to choose between two types of management structures: one-tier system consisted of general meeting of shareholders and administrative board ; and two- tier system consisted of general meeting of shareholders, supervisory board and management board. The Commercial Entities Act therefore adopted regulatory framework from Council Regulation No 2157/2001 on the Statute for a European Company in order to approximate positive regulation to the European acquis communitaire. However, one-tier system is not originally developed in the Union. It originates from Anglo-Saxon business communities, while two-tier system is considered to be a traditional, continental European corporate management system. Croatian legal system introduced joint stock companies to corporate practice in 1991, after the dissolution of former Yugoslavia and reform from command economy to liberalized market economy. At the beginning, the law mandated only two-tier system as a sole possible management structure in a joint stock company. Therefore, the one-tier system imposes itself as yet another novelty to an corporate management practice. First, this paper analyzes regulatory differences between one-tier and two-tier system according to Croatian Commercial Entities Act. Since these systems are convergent to each other to some extent, the paper also discusses complementary attributes of both systems. We will also research how approximated are the Croatian laws to the European legislation. Second, the paper analyzes contemporary corporate governance theory regarding these two systems. The comparative approach reveals advantages and disadvantages of both concepts, as well as their benefits and weaknesses. The most significant systemic difference refers to management and supervisory functions. One-tier system unifies both functions in one body – administrative board, while two-tier system separates functions to management and supervisory board. The two-tier system is therefore focused on balancing differing and conflicting stakeholder's interests and protection of minority interests. The strict supervision over executive management is considered to be the most significant attribute of this system. Eventhough the regulatory intention is to strengthen supervisory board's position, the practice often shows adversely results. This board does not have a capacity to interfere in every executive business activity and it depends on information provided by the management. Consequently, the supervisory board cannot exercize all of the assigned authorities efficiently. On the other side, one-tier system emphasizes the management efficiency and flexibility as the most important element of management. Third, we were wondering how the one-tier system is implemented in Croatian corporate practice. We have set out four hypotheses: H1 – one-tier system is still not implemented in Croatian corporate practice H2 – if implemented, the one tier system caused higher expenses for management purposes, instead of financial efficieny H3 – nor supervisory board, nor administrative board in one-tier system, do not intend to strengthen supervisory function by establishing commitees and specialized associated organs H4 – the managers and stakeholders are not acquainted enough with the one-tier system structure or they do not see the benefits of the system In order to confirm H1, H2, H3 we have conducted a secondary research on the sample of 50 Croatian joint stock companies listed on the Zagreb Stock Exchange. All the companies have more than ten shareholders and they are complex corporate systems with various stakeholders and interest. The data were retrieved from official corporate web-sites, the court's registry and annual financial reports of each company involved in the research. If there were inconsistencies in the collected data, only data retrieved from the court's registry were assessed as reliable. The collected data refer to: 1. the choice between two corporate systems ; 2. the number of boards' members ; 3. the number of specialized sub-commitees ; 3. correlation between the expenditure for work force and expenditure for boards' members personal income. In order to confirm H3, we have conducted a primary research on the sample of 10 managers. The members of administrative or management board answered the structured questionnaire in order to research their attitude towards the one-tier system. The findings of this paper show that one-tier system is still not accepted and it is completely underdeveloped in Croatian corporate practice. When and if implemented, it did not accomplish its primary goal – business efficiency. The papers also argues the causes to this situation and analyzes rare situations in which the companies optioned for one-tier system. Nevertheless, the paper shows that corporate management does not understand its attributes as well as advantages and disadvantages, regardless of whether they have implemented it or have not.

Izvorni jezik
Engleski

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