The International Finance Corporation published the results of a study devoted to the management of subsidiary companies in bank holdings. They identified the following main principles of corporate management in a group of companies:
Quality control of corporate management of the holding at all its levels must be carried out by the parent company.
For more effective management of subsidiaries, it is advisable to create a specialized structure in the parent company (in the case of transnational holdings, this is considered a management standard).
The management company must develop a unified policy for managing subsidiaries that meets the accepted standards of corporate management in the holding. This policy is effective if there are built-in procedures for its implementation, control over its implementation, and regular training programs on corporate management.
Although subsidiaries are legally obliged to act in the interests of the entire association, they may conflict with each other in the management company and other structures. It is important for a holding to achieve a balance in the degree of independence of its subsidiaries so that it satisfies the needs of all. But this is a difficult task.
The board of directors of the parent company plays an important role in determining the group's development strategy and monitoring its implementation.
Tips for dealing with compliance risks
Risk analysis and regulation is not teacher data package limited to the management company. The boards of directors of subsidiaries must create an effective system of risk management and internal control that meets the standards of the holding.
Independent directors play an important role in good corporate governance practices. To achieve the goals of independent and objective thinking, subsidiaries may appoint group executives as directors who will be as effective as professional independents.
Regular evaluation of the board of directors is considered a best practice in corporate governance. Parent and subsidiary companies should conduct an analysis of its work to improve practices.
The management company must develop common standards for the main corporate procedures: charters, local regulations, regulations for the work of boards of directors, etc.
Supervisory authorities need to adopt legislation regulating governance issues in holding structures and establish a balance between mandatory and voluntary rules in the area of corporate governance, taking into account business and legal culture, as well as local traditions.
Case: VT-metall
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