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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.

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Board evaluations

The systematic evaluation of SOE board increases professionalism and is commonly considered good practice. They serve directors (not least the Chair) as a vehicle for assessing and improving the board’s modus operandi, and they provide the ownership function with valuable information concerning possible changes to board composition. Administrations that run their SOEs relatively close to general government tend to rely on top-down approaches through which the ownership function evaluates the board in light of corporate objectives. In more commercial SOEs the trend is to rely largely on board self-evaluations. All such evaluations assess the workings of the board as a whole; some extend to an assessment of individuals. Self-evaluations are often assisted by external evaluators from private companies, or in some cases from within the general government sector. An evolving consensus is to create strong feedback links from the board (self) evaluations to the board nomination process.

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