copy the linklink copied!4. Equitable treatment of shareholders and other investors
According to the OECD Guidelines on Corporate Governance of State-Owned Enterprises (SOE Guidelines), where state-owned enterprises (SOEs) are listed or otherwise include non-state investors among their owners, the state and the enterprises should recognise the rights of all shareholders and ensure shareholders’ equitable treatment and equal access to corporate information. The state should strive for full implementation of the G20/OECD Principles of Corporate Governance when it is not the sole owner of an SOE, and of all relevant sections when it is the sole owner of an SOE. This chapter presents material changes in national practices concerning equitable treatment of SOE shareholders particularly by subjecting SOEs wholly or partially to national corporate governance codes (or SOE-specific codes where applicable).
copy the linklink copied!Main trends
In the past 5 years, around half of the countries surveyed in this report have made material changes in practices concerning equitable treatment of SOE shareholders. They have done so particularly by subjecting SOEs wholly or partially to national corporate governance codes (or SOE-specific codes where applicable). While these changes are not specific to SOEs, they do apply to any SOEs with non-state minority shareholders that are listed on a stock exchange. Notably, the Czech Republic, Germany, Italy and Latvia have made progress regarding the implementation of the G20/OECD Principles of Corporate Governance, an internationally-agreed instrument that aims at enhancing rights of shareholders and enhancing efficiency of corporate governance at the same time.
Changes in the implementation of the G20 OECD Principles of Corporate Governance that directly affect SOEs
In the Czech Republic, the Czech Institute of Directors published the “Code of Corporate Governance of the Czech Republic” in 2018 which is addressed to all companies and provides practical instructions in corporate governance. Also, the G20/OECD Principles of Corporate Governance that directly affect SOEs are being continuously implemented by legislative means. This Czech Institute of Directors published the Czech translations of the “OECD Guidelines on Corporate Governance of State-Owned Enterprises” in 2017 and the “G20/OECD Principles of Corporate Governance” in 2016.
In Estonia, in 2018, an exception was made to the State Assets Law, limiting the information flow from listed companies to the state in order to put the state in an equal position with minority holders. Since 2018, the listed SOEs have an exemption from requirements of the State Assets Act that are not in line with stock market regulations and would give the state an unfair advantage compared to other shareholders. For instance, listed SOEs are not required to share minutes of supervisory board meetings with ministries anymore.
In Germany, the 2016 amendment of the German stock corporations Act (Aktiengesetz– AktG) resulted in several changes regarding transparency requirements for share ownership, the number of members of the supervisory board, details and requirements for the convening of a general shareholders’ meeting and procedural changes to the non-disclosure obligations of members of the supervisory board. These were appointed by the regional administration bodies (Gebietskörperschaften).
In 2017, certain amendments were made to the German Limited Liabilites Companies Act (GmbHG) for the transposition of the EU anti-money laundering directive. These changes include the introduction of a transparency register which facilities access to information regarding the ownership of shares in limited liabilities companies. Further changes will be made to the AktG following the transposition of the second EU shareholders’ rights directive (SRD II). This will include new rules regarding shareholder information and identification; directors’ remuneration; related party transactions; and transparency requirements for institutional investors, proxy advisors and asset managers. These changes are currently (June 2019) in the process of being transposed into German law. Since there is no special corporate law for SOEs in Germany, these new corporate law rules apply to both privately held enterprises and SOEs.
As for the German Corporate Governance Code (Deutscher Corporate Governance Kodex– DCGK) there have been several amendments in 2013, 2014 and 2015. An additional revision is planned for 2019 following the transposition of the second EU shareholders’ rights directive (SRD II) into German law. The DCGK is applicable to entities (including SOEs) that are formed as publicly listed stock corporations (börsennotierte Aktiengesellschaften). Thus, SOEs that are formed as publicly listed corporations are subject to the DCGK and not PCGK. All other SOEs are subject to the Public Corporate Governance Code (Public Corporate Governance Kodex– PCGK).
In Italy, with regard to the treatment of shareholders, the Directive (UE) 2017/828 of the European Parliament and of the Council of 17 May 2017 intended to encourage long term shareholder participation and to increase transparency between a company and its investors. The efforts concern: shareholder identification, simplification of the exercise of shareholder rights, transparency of remuneration policy for top managers and a clearer disclosure about transactions with related entities. The Ministry of Economy and Finance has undertaken a consultation, open to public comments, on the draft of the Legislative Decree for the adoption of the Directive (UE) 2017/828 (Shareholder Rights Directive) into the Italian corporate law. The deadline for the approval of such Decree was set for 10 June 2019.
In Latvia, SOE operations are subject to the Law on Governance of Shares and Commercial Law. There are no differences in both laws regarding minority shareholders rights. Furthermore, SOEs in their actions have to follow Commercial Law where the Law on Governance of Shares has no regulations to solve particular issue. For example according to the Commercial Law ( section No 174.4, the annual accounts, the auditor’s opinion and the report of the council, together with a notice of the convening of a meeting of shareholders, shall be sent to all shareholders or promulgated in accordance with Sections 214 and 273 of this Law. Other minority rights are mainly stated in Commercial law sections 172.5 (Bringing an Action by the Company), 173.3 (Release from Liability), 179.4 (Approval of the Annual Accounts of the Company), 183 ( Internal Audit of the Company) 2611 (Increase of Equity Capital with a Condition) and 365 (Protection for Minority Shareholders). In addition, SOEs are required to follow the same regulations as any other private company.
The state as a shareholder and SOEs must publish all basic relevant information regarding their actions according to the Law on Governance of Shares (see articles 29. and article 58 of Law on Governance of Shares). There are no specific rules for SOEs’ involvement in co-operative projects such as joint ventures and public-private partnerships. Such an involvement should be based solely on legal acts, in particular, Commercial Law.
In France, the provisions of the order 2014-948 relating to the governance and capital transactions of companies with public participation may apply if the formation of the joint venture involves a transfer or acquisition transaction from another company. In some cases, especially if the operation involves exit from the public sector, such operations must be allowed. The rules on public-private partnerships have been partly revised in the past 5 years. The Public Procurement Ordinance of 23 July 2015, Decree No. 2016-360 of 25 March 2016 on public procurement and Decree No. 2016-361 of 25 March 2016 on defence or security procurement have unified and consolidated the different public-private partnership formulas into a single form: the partnership market. The purpose and scope of the partnership contracts have been redefined. The supervision of the use of these types of markets has also been strengthened in order to secure its use.
Source: Questionnaire responses from French authorities.
References
OECD (2020a), Corporate Governance in Costa Rica, OECD Publishing, Paris, forthcoming.
OECD (2020b), Transparency and Disclosure Practices of State-Owned Enterprises and their Owners, Paris, forthcoming.
OECD (2018), Ownership and Governance of State-Owned Enterprises: A Compendium of National Practices, http://www.oecd.org/corporate/ca/Ownership-and-Governance-of-State-Owned-Enterprises-A-Compendium-of-National-Practices.pdf
OECD (2015), OECD Guidelines on Corporate Governance of State-Owned Enterprises, 2015 Edition, OECD Publishing, Paris, https://doi.org/10.1787/9789264244160-en.
OECD (2011), Corporate Governance of State-Owned Enterprises: Change and Reform in OECD Countries since 2005, OECD Publishing, Paris, https://doi.org/10.1787/9789264119529-en.
Note
← 1. Nasdaq, Corporate governance code for the companies listed on NASDAQ Vilnius,
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