Boards of Directors of State-Owned Enterprises

An Overview of National Practices

image of Boards of Directors of State-Owned Enterprises

Boards of directors of state-owned enterprises (SOEs) play a fundamental role in corporate stewardship and performance. Over the last decade, OECD  governments have sought to professionalise SOE boards, ensure their independence and shield them from ad hoc political intervention. In general these approaches have worked; yet, more remains to be done to meet the aspirational standards of established by the OECD Guidelines on Corporate Governance of State-Owned Enterprises. This report seeks to shed slight on good practices drawing on national practices from over 30 economies.



Board composition: Constraints and guidelines

A central recommendation of the SOE Guidelines is that boards should be composed to exercise independent and objective judgment. In most countries SOE boards are composed of a mix of civil servants, other individuals tasked with pursuing the public interest and independent directors. The trend, fuelled by a growing commercialisation of SOEs, is toward a greater reliance on independent board members – or persons with relevant commercial experience. Ensuring the recruitment of suitable board members can be based on formal eligibility rules, processes to advice or vet ministerial candidates for board appointment or actual or de facto nomination committees proposing candidates of the ultimate decision of ministers. Board composition can be further influenced by limitations on the number of board positions and/or affirmative action targeting gender and minority groups. Employee representation on boards generally follows private sector practices, but can differ for some SOEs (especially in the context of privatisation).


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