VIDEO INTERVIEW | Prof. Dr. Goran Koevski: The hardest thing to change is the mentality of the people, and the easiest is the law

Goran Kaevski - professor at the Justinian First Faculty of Law / Photo: "Sloboden Pechat" - Dragan Mitreski

Share capital can be understood as a good basis for the entrepreneurial spirit of an individual who possesses expertise, knowledge or a certain skill to invest them. By buying shares, instead of putting the money in a bank account, you can make a profit from the movement of the value of the share on the stock market. Macedonia is in this company, but the processes are not overly dynamic.

- If the individual has free money, instead of putting it in a bank account and expecting interest, he should find a way to invest it in securities or shares. Today we live in an information age where data can be obtained about any issuer of securities. My work experience, which is related to the work on the stock exchange in Macedonia, helps me in the education of students, because I can compare and combine theoretical knowledge with practical work on the stock exchange and the acquired experience. This was emphasized by Prof. Dr. Goran Koevski from the Faculty of Law "Justinian First" from Skopje.

Education, legal framework and possession of capital are objective prerequisites to start a private business, on the one hand, but habits, awareness of security and mentality are difficult to change for the individual and the community when it comes to buying shares and investing in the stock market, on the other hand.

-Our market is not dynamic when compared to the European and world stock markets. If I judge based on the personal attitude of the students I teach about shareholding, the conclusion is that most of them would choose saving in a bank over buying shares. I try to understand their choice and behavior and in order to bring them closer to the shareholding, I suggest that they read a certain annual report, then the balance sheet and other positive examples. It is known that in Macedonia there are 5 companies on this market that we all know and how their share price moves. Limited liability companies still have a hard time deciding to convert to joint-stock companies, although in this way they can much more easily get additional capital, which they lack in times of crisis. The fear of managerial chairs is the main reason for this inertia. The mentality of people is the most difficult to change, and the law is the easiest - pointed out Prof. Dr. Goran Koevski.

Macedonia is changing the conditions compared to several decades before. In particular, it has been a member of NATO for three years, it started the negotiations for obtaining the status of a member of the EU, then there is a certain movement in the market and an increase in the presence of foreign companies in the country. Companies are expected to follow these processes in the direction of their restructuring. However, the situation is not like that.

-Limited liability companies (LLCs) rarely or only one of them manifested a desire to register in a joint stock company. In other words, it means that the LLC needs to increase the capital of the company and changes its status to AD. Increasing the capital through the issue of shares and transformation of the company is a philosophy, first of all, of individuals coming from outside Macedonia. The reason why LLCs do not practice this approach to raising capital, I think, is because of the historical context that we belong to the German-Japanese model of corporate governance or according to the tradition of the so-called continental law that implies poring over the bank when investing or opening one's own business. In the United States, compared to Europe, private business relies on the issue of securities, not on loans from banks - Professor Koevski pointed out and added that there are examples where European companies' previous operation is changing and approaching the American one.

LLCs are facing a big challenge, which is that they cannot continue in the old way, and they are not ready to do business in a new way. The founder of the company is faced with the dilemma of being the owner-boss or manager-director.

- The experience in Macedonia, but also in other countries, shows that 75% of small and medium-sized enterprises in the form of LLCs do not survive the first generation of ownership, that is, when the children have to take over the business as an inheritance, the Company does not continue to exist. In other words, the company collapses. I see the solution to such a problem in education and recruitment of good managers who would take the place of the winner of the enterprise. If his successors are not skilled in business development it is much better for the company to be managed by capable individuals and thus continue to survive. By transforming from LLC to AD, companies can provide easy access to capital so they don't have to wait for loans from banks, improve management, ensure stability and further growth and development. The private sector should understand that good corporate operations not only facilitate companies' access to new capital, but can be an instrument for improving the companies' operations themselves, Prof. Dr. Goran Koevski.

In order to be able to attract foreign capital and to be able to expect domestic entrepreneurs to invest in their own country, legal certainty is required, that is, the law must not be changed for at least one year from its enactment.

- Laws in Macedonia change very quickly and before the expiration of the period of one year from its enactment. There are examples where the law that comes into force 6 months after its adoption is changed twice. The message sent by the state is legal uncertainty for all those who want to invest, and it is difficult to explain this behavior to potential investors - pointed out Prof. Dr. Goran Koevski.

The whole conversation with Prof. Dr. Goran Koevski, see him in the video:

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