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Broadening the Ownership of State-Owned Enterprises

A Comparison of Governance Practices

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The State continues to remain an important shareholder in listed companies worldwide, especially among emerging economies, which rely increasingly on mixed-ownership models. With the benefit of hindsight and more recent examples, this book provides fresh perspectives on the motivation to list state-owned enterprises (SOEs) and the process it entails. Drawing from the experiences of five economies (People's Republic of China, India, New Zealand, Poland and Turkey), the book concludes that broadened ownership generally has a positive impact on the governance and performance of these companies. However, country practices show that the act of listing cannot guarantee that these companies are completely averse to State interests; and deviations from sound corporate governance practices, as enshrined in the OECD Guidelines on Corporate Governance of SOEs, can in some cases, raise concerns with regards to non-State shareholder rights, commercial orientation, board independence, conflicting State objectives, transparency, disclosure and more.

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Main issues and comparative overview of national practices in broadening ownership of state-owned enterprises

The main drivers behind a government decision to float SOE shares differ according to the level of economic development and other sought public policy goals, such as capital markets development. The main dividing line is whether the state seeks to fully-privatise or if it plans to retain mixed ownership. Beyond improving corporate efficiency and driving company performance, listing can raise SOE governance standards in line with practices recommended by the OECD Guidelines on Corporate Governance of SOEs. An initial public offering can be complex to orchestrate involving the State in its multi-faceted role as shareholder, government owner and regulator. This chapter explores these and other related aspects drawing on a comparative overview of national experiences in China (People’s Republic), India, New Zealand, Poland and Turkey.

English

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