Doing Business measures the protection of minority investors from conflicts of interest through one set of indicators and shareholders’ rights in corporate gover­nance through another. The data come from a question­naire administered to corporate and securities lawyers and are based on securities regulations, company laws, civil procedure codes and court rules of evidence. These scores are the sum of the extent of conflict of interest regulation index and the extent of shareholder governance index. To make the data comparable across economies, several assumptions about the business and the transaction are used. In Austria, for example, deriva­tive suits are available for shareholders holding 10% of share capital. The prejudicial transaction cannot be voided. Adding these numbers gives Austria a score of 5 on the extent of director liability index. The index ranges from 0 to 10, with higher values indicating greater powers of shareholders to challenge the transaction. In Croatia, for example, shareholder holding 10% of Buyer’s shares can directly review documents related to suspected misman­agement by Mr. James and the CEO without filing suit in court. Adding these numbers gives Croatia a score of 6 on the ease of shareholder suits index. The extent of shareholder governance index is the sum of the extent of shareholder rights, extent of ownership and control and extent of corporate transparency indices. The protecting minority investors indi­cator set captures changes related to the regulation of related-party transactions as well as corporate governance every year. The change must be mandatory, meaning that failure to comply allows shareholders to sue in court or for sanc­tions to be levelled by a regulatory body such as the company registrar, the capital market authority or the securities and exchange commission. The changes must affect the rights and duties of issuers, company managers, directors, and shareholders in connection with related party trans­actions or, more generally, the aspects of corporate governance measured by the indicators. For example, in each economy, related-party transactions must be approved by the board of directors including board members who have a personal financial interest in seeing the transaction succeed.
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