description
Corporate governance in the contemporary sense entails the structure of supervisory mechanisms by means of which those who provide financial resources for corporations ensure that they gain a return on their investment. At the same time, they must not jeopardise the long-term development and existence of the business system of the corporation at issue. The legal foundation of corporate governance is, as a general rule, derived from majority ownership of the capital in the corporation. This is transparent as regards public limited companies and some other types of share-limited companies. The hypothesis is that public institutions are also corporations. In general, public institutions do not have their own funds. Regardless of the fact that public institutions do not have equity (as accounting and legal category. Public institutions have basic resources needed for business which are not equity as capital category), the founder thereof (i.e. the state or a municipality) is, as a general rule, not accountable for the obligations of the institution, which is also registered in the court register upon the registration thereof. A public institution is, naturally, always accountable with all its assets, whereas the founder of the institution is not accountable to its creditors. In such a context, a public institution is a sui generis non-membership corporation that is in fact similar to company (or corporation in USA) in terms of the type of the accountability. The anomaly of the system lies in the fact that minimum capital, which would to a certain extent protect creditors, is not prescribed when establishing a public institution. Thus, particular relations of corporate gover%nance also derive therefrom. A corporate legal relation within a public institution between the state or a municipality and the public institution itself is implemented within the scope of the right of a public founder of the public institution (i.e. the state or a municipality), in general, to directly appoint the majority of the board-members of the institution. Due to their inability to directly manage the institution, the state or municipality transfers the authority to manage such to its members on the board of the institution, who exercise this power on their behalf. This applies to both state-founded and municipality-founded public institutions. In the analysis, the author summarises the relationships between the founder of a public institution (i.e. the state or a municipality) and the public institution's bodies (i.e. the board of the institution, the director, or the expert council thereof) and proposes certain necessary changes to the relevant legal order.