Advantages and disadvantages of the two level systems in corporate governance

AuthorRabiana Llanaj
PositionEuropean University of Tirana.
Pages33-39
33
Vol. 4 No.1
May, 2018
Balkan Journal of Interdisciplinary Research
IIPCCL Publishing, Graz-Austria
ISSN 2410-759X
Acces online at www.iipccl.org
Advantages and disadvantages of the two level systems in corporate
governance
RabianaLlanaj
European University of Tirana
Abstract
Thereis nosingle denitionof CorporateGovernance thatcan beapplied inall situations
andjurisdictions Thevariousdenitions thatexist todaydependmainlyoninstitutions or
authorsaswellastheplaceandlegaltraditions
TheOECDinpublished theprinciplesofcorporategovernancebyprovidinga detailed
denitionof corporategovernance suchas Theinternalinstrument bywhich corporations
operateonthebasisofastructurebydeningthecompanysobjectivesthemeansofachieving
these objectives and performance monitoring.
Corporate Governance is a system of relationships dened by structures and processes
For example a relationship between shareholders and administrators consists in making
shareholders available to capital administrators in order to achieve return on their investment.
ShareholdersalsochooseasupervisorybodytorepresenttheirinterestsThisbodyinAlbanian
law is called the Supervisory Board in cases of companies with a two tier management
systemwhichmainlyexercisescontrolovertheadministratorsCorporateGovernanceisata
higherlevelofmanagementwhichensuresthatthecompanyismanagedintheinterestofits
shareholdersThe LawonBusinessOrganizationsprovidesalternativeformsoforganizing
acompanywhere ajointstock companymaychoose dependingonits statutetoadaptto
asoletier systemofgovernanceor atwotieredsystemof governanceInthiswayIn aone
level system the Board ofAdministration BA as the sole administrative body exercises
simultaneouslythefunctionsof administrationandsupervisionofthecompanysactivityIn
twolevelsystematizationtheadministrationandoversightfunctionsaredistributedbetween
thetwobodiestheSupervisoryCouncilSCandoneormoreadministratorsInthispaperwe
willfocusontheadvantagesanddisadvantagesoftheTwotiercorporategovernancesystem
focusing on the principles and models of governance.
Keywords: Corporate Governance Towtier corporate Shareholders OECD principles
Administrative Council,ResponsibilityTransparencyAccountability
1. Fundamental Principles of Corporate Governance
CG principles are very important principles based on honesty, responsibility,
transparencyandaccountabilityTheOECDprinciplespublishedinandrevised
inandareknowngloballybyprovidingguidancebasedonprinciplesofgood
governanceOECDCorporateGovernanceprinciplesarebasedonvalues
Honesty: Thecorporategovernancesystemshouldprotecttherightsofshareholders
and ensure equal treatment for all shareholders, including minority and foreign
shareholders All shareholders will have the opportunity to seek eective
reinstatement of the violation of their rights.
Responsibility:Thecorporategovernancesystemwillaccepttherightsofstakeholders
interest groups deriving from the law and will encourage active cooperation

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