Below is a detailed summary of the strength of minority shareholder protections against misuse of corporate assets by directors for their personal gain.
| Score | Score Description | ||
|---|---|---|---|
| Extent of disclosure index (0-10) | 5.0 | ||
| Which corporate body can provide legally sufficient approval for the Buyer-Seller transaction? (0-3) | 2 | Board of directors excluding interested members | |
| Is disclosure by the interested director to the board of directors required? (0-2) | 1 | Existence of a conflict without any specifics | |
| Is disclosure of the transaction in published periodic filings (annual reports) required? (0-2) | 2 | Disclosure on the transaction and on the conflict of interest | |
| Is immediate disclosure of the transaction to the public and/or shareholders required? (0-2) | 0 | No disclosure obligation | |
| Must an external body review the terms of the transaction before it takes place? (0-1) | 0 | No | |
| Extent of director liability index (0-10) | 6.0 | ||
| Can shareholders sue directly or derivatively for the damage caused by the Buyer-Seller transaction to the company? (0-1) | 1 | Yes | |
| Can shareholders hold the interested director liable for the damage caused by the transaction to the company? (0-2) | 1 | Liable if negligent | |
| Can shareholders hold members of the approving body liable for the damage cause by the transaction to the company? (0-2) | 1 | Liable if negligent | |
| Must the interested director pay damages for the harm caused to the company upon a successful claim by a shareholder plaintiff? (0-1) | 1 | Yes | |
| Must the interested director repay profits made from the transaction upon a successful claim by a shareholder plaintiff? (0-1) | 1 | Yes | |
| Can both fines and imprisonment be applied against the interested indrector? (0-1) | 0 | No | |
| Can a court void the transaction upon a successful claim by a shareholder plaintiff? (0-2) | 1 | Voidable if negligently concluded | |
| Ease of shareholder suits index (0-10) | 8.0 | ||
| Before filing suit, can shareholders owning 10% of the company’s share capital inspect the transaction documents? (0-1) | 1 | Yes | |
| Can the plaintiff obtain any documents from the defendant and witnesses during trial? (0-3) | 3 | Any relevant document | |
| Can the plaintiff request categories of documents from the defendant without identifying specific ones? (0-1) | 1 | Yes | |
| Can the plaintiff directly question the defendant and witnesses during trial? (0-2) | 2 | Yes | |
| Is the level of proof required for civil suits lower than that of criminal cases? (0-1) | 0 | No | |
| Can shareholder plaintiffs recover their legal expenses from the company? (0-2) | 1 | Yes if successful | |
| Extent of shareholder rights index (0-10.5) | 10.5 | ||
| Can shareholders amend company bylaws or statutes with a simple majority? | 1.5 | Yes | |
| Can shareholders owning 10% of the company's share capital call for an extraordinary meeting of shareholders? | 1.5 | Yes | |
| Can shareholders remove members of the board of directors before the end of their term. | 1.5 | Yes | |
| Must a company obtain its shareholders’ approval every time it issues new shares? | 1.5 | Yes | |
| Are shareholders automatically granted subscription rights on new shares? | 1.5 | Yes | |
| Must shareholders approve the election and dismissal of the external auditor? | 1.5 | Yes | |
| Can shareholders freely trade shares prior to a major corporate action or meeting of shareholders? | 1.5 | Yes | |
| Strength of governance structure index (0-10.5) | 3.0 | ||
| Is the CEO barred from also serving as chair of the board of directors? | 0 | No | |
| Must the board of directors include independent board members? | 0 | No | |
| Must a company have a separate audit committee? | 1.5 | Yes | |
| Must changes to the voting rights of a series or class of shares be approved only by the holders of the affected shares? | 1.5 | Yes | |
| Must a potential acquirer make a tender offer to all shareholders upon acquiring 50% of a company? | 0 | No | |
| Is cross-shareholding between 2 independent companies limited to 10% of outstanding shares? | 0 | No | |
| Is a subsidiary barred from acquiring shares issued by its parent company? | 0 | No | |
| Extent of corporate transparency index (0-9) | 3.5 | ||
| Must ownership stakes representing 10% be disclosed? | 0 | No | |
| Must information about board members’ other directorships as well as basic information on their primary employment be disclosed? | 0 | No | |
| Must the compensation of individual managers be disclosed? | 0 | No | |
| Must financial statements contain explanatory notes on significant accounting policies, trends, risks, uncertainties and other factors influencing the reporting? | 1.5 | Yes | |
| Must annual financial statements be audited by an external auditor? | 1 | Yes for listed companies | |
| Must audit reports be disclosed to the public? | 1 | Yes for listed companies | |