It has clearly led to a loss of investor confidence, which in turn has reduced significantly the amount of investment in Russia's recovering economy. Among the primary corporate governance problems in Russia today are capital dilution, transfer pricing, and failure to comply with information disclosure requirements. In the past several months, President Putin's economic advisors have included corporate governance reform and investor protections on the Government's economic agenda. Moreover, progress in this area has been linked to the World Bank SAL-3 loan agreement. Several key pieces of legislation are already in the pipeline for Duma consideration later this year.
More detail is provided below.
In March, the Duma established a Commission for Investor Rights Protection, which will review the Law on Protection of the Rights and Legal Interests of Investors in the Securities Market and the Law on Joint-Stock Companies. To capitalize on Russia's current positive momentum and improve the likelihood of substantially increasing long-term investments by Russian and foreign investors, investor protections should be strengthened. By demonstrating its commitment to fostering the rule of law through enhanced investor rights and near-term progress in the following legislative initiatives, the Putin Government will spur increased confidence investor confidence and lay the foundation for substantial investment in Russia. Amendments to the Law on Protection of the Rights and Legal Interests of Investors in the Securities Market. The Law on Protection of the Rights and Legal Interests of Investors in the Securities Market was enacted on March 5, 1999.