Behind the corruption of small companies in the stock market / Why is corporate governance ignored in Iran?

According to Tejaratnews, a simple definition of “corporate governance” refers to the creation of laws that protect the interests of shareholders against the decisions of the company’s board of directors. The creation of these rules prevents the board of directors from jeopardizing the interests of the shareholder for personal gain. But what corruption does the absence of these laws cause in listed companies and why are there no corporate governance laws in Iran?

“Unfortunately, there is no issue of corporate governance in our capital market,” said Mohammad Kheiri, a stock market expert. However, these laws are important in the world and especially for joint stock companies. This is so important in the world that one of the most important factors for a shareholder to make an investment decision is the issue of corporate governance.

He continued: “Currently, the main events that occur in our stock market, and especially in small companies in the field of how to report and respond to the shareholder, is due to the lack of corporate governance laws.” We have seen many times in the stock market that the board of directors of a company has abused the rent of a company for personal gain and running a business for itself. It has often happened that board members have acted on dividends, risky investments, and without considering shareholder interests.

What is the cause of injustice in the stock market?

The stock market expert explained that the lack of corporate governance rules along with the long-term management of board members eventually leads to financial corruption. There are many examples of this in the stock market. It often happens that a board of directors moves in the absence of rules and based on personal interests. So we see small shares are acquired in small volumes.

Kheiri pointed out: This is while the corporate governance gives independence to each member of the board of directors as a representative of the shareholder. This deprives the board of directors of the right to abuse. Of course, there are benefits and rewards for the board of directors. But the absence of these rules makes the board give itself a right it does not deserve. And finally, we see a mismatch between the interests of shareholders and the board of directors and tasteful decisions in companies.

“These personal tastes exist even on the OTC market,” said the stock market expert. In the discussion of reopening symbols and setting and canceling prices, observers show tasteful behavior with the authority they have. This issue has repeatedly provoked protests from shareholders and activists. All this is due to the lack of proper laws that cause injustice in the stock market.

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