The objective of this Report is to present a first attempt at a comparative overview of main practices and related issues in the corporate governance of state-owned enterprises in the OECD area. The Report forms the basis and accompanying documentation for the Guidelines on Corporate Governance of State-Owned Enterprises.
Scale and Scope of State-owned Enterprises in OECD Countries
Direct state intervention in the economy, although always present since the ancient civilisations, increased strongly in the 20th century as a result of the Great Depression and other financial crises, the Second World War and its associated ...
The Organisation of the Ownership Function within the State Administration
The organisation of the exercise of ownership rights (thereafter the "ownership function") within the state administration varies from one country to the other, and is very much dependant on the traditional administrative organisation, the significance of the state sector in the economy prior to the privatisation waves of the 1980’s and 1990’s, as well as from recent reforms carried out in regulation and the management of state-owned assets.
Relationship of State-owned Enterprises with other Shareholders
As noted in Chapter 1, on average around 40% of SOEs involve other shareholders. In approximately a half of these the state is a majority shareholder. Not all these firms involve public investors since only some 10% are listed, although they are usually among the largest enterprises.
The Role of Stakeholders in Corporate Governance
The importance of stakeholder relations per se for building sustainable enterprises has been recognised by the OECD Principles of Corporate Governance. "The competitiveness and ultimate success of a corporation is the result of teamwork that embodies contributions from a range of different resource providers including investors, employees, creditors, and suppliers. (…)
Transparency and Disclosure
Transparency and disclosure are even more important for SOE’s than for other companies since it is important to show that political control is being exercised at arms length and to make their goals clear to the public. By reporting to their ownership entities, the Parliament or the general public, SOEs increase their transparency and accountability.
The Board of Directors of a State-owned Enterprise
An increasing number of OECD countries have undertaken important reforms to professionalise and empower SOE boards. To this end, they seek to limit political interference and have increased the independence and competence of SOE boards through structured and skill based nomination processes.
Annex I.1. OECD State-owned Enterprises
OECD Guidelines on Corporate Governance of State-owned Enterprises
In several OECD countries, State-Owned Enterprises (SOE) still represent a substantial part of GDP, employment and market capitalisation. Moreover, State-Owned Enterprises are often prevalent in utilities and infrastructure industries, such as energy, transport and telecommunication, whose performance is of great importance to broad segments of the population and to other parts of the business sector. Consequently, the governance of SOEs will be critical to ensure their positive contribution to a country’s overall economic efficiency and competitiveness.
I would like to express my appreciation to all the members of the OECD Working Group on Corporate Governance of State-Owned Assets and especially to its Chair Mr. Lars-Johan Cederlund and co-Chairs, Ms. Anita Ryng and Mr Eric Preiss, whose dedication and expertise made this project a success. I would also like to thank all those officials and experts from around the world who participated in our consultations, submitted comments or otherwise contributed to ensuring the quality and relevance of the OECD Guidelines on Corporate Governance of State-owned Enterprises.
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