Effective corporate governance and SOE reform are key to Ukraine’s economic resilience.In Ukraine, the word “reform” is often perceived negatively, and corporate governance reform is frequently discussed either with confusion or solely in terms of high salaries of supervisory board members. However, the issue has long moved from purely technical discussions into the sphere of economic security.Year after year, Ukraine implements IMF structural benchmarks and EU support program indicators aimed at improving the management of state property. Core legislation aligned with OECD principles has already been adopted. Yet we continue to return to this reform. This time, following another scandal — the so-called “MindiGate” — the government decided to relaunch supervisory boards across all energy enterprises.So why is corporate governance so crucial for Ukraine? What is wrong, and what determines success?

Laws Exist — Results Are Questionable

The state sector dominates strategic industries: from electricity generation to banking and logistics. State-owned companies are still perceived not as efficient economic actors, but as sources of fiscal risk. Enterprise losses, contingent liabilities, and quasi-fiscal functions create risks for the state budget.That is why reform in line with OECD principles is not a donor whim, but the only path toward professionalizing the state as an owner and reducing fiscal risks.The disappointment of the current reform phase lies in the gap between formal compliance with international partners’ requirements and the actual quality of governance. After lengthy consideration and adoption of draft law No. 5593-d, there were expectations that OECD guidelines for SOEs had been fulfilled and that everything would now function properly. IMF benchmarks and EU indicators were also meant to reinforce this. However, progress remains stalled.

From Manual Control to Professional Ownership

According to OECD principles, the first question the state as owner must ask is: why do I own this enterprise?There must be a clear understanding of the objectives and tasks the state pursues as an owner. The problem is that the state often cannot clearly articulate the purpose of maintaining a particular enterprise. This answer is crucial for future “triage,” which has been announced many times.Triage involves categorizing enterprises based on strategic importance: retain in state ownership, privatize, or liquidate. If the state chooses to retain ownership, it must act as a professional owner — ensuring transparency and accountability.Effective corporate governance based on OECD principles relies on several key elements that are often overlooked in Ukraine:

• Level playing field. State-owned companies should not have advantages over private businesses.
• Transparency and accountability. Access to information, financial reporting, and audits are mandatory.
• Strong supervisory boards. These must be capable of saying “no” to political pressure. Supervisory boards must have authority, competence, and objectivity to provide strategic oversight and control management. Ukraine faces significant challenges in this regard.

Crisis of Trust in Supervisory Boards

We are witnessing a wave of supervisory board relaunches in energy-sector SOEs, the formation of a supervisory board at the Ukrainian Sea Ports Authority, and the selection of board members for Ukrposhta. This creates enormous pressure on the Ministry of Economy and the Cabinet of Ministers, as well as on line ministries acting as owners.However, the key issue is the human factor. Effective corporate governance is possible only when there is a professional owner — represented by a qualified official, typically a deputy minister of the responsible ministry, who understands the importance of the asset and the goals of the supervisory board and management.Since supervisory boards are selected by nomination committees and recruitment firms, such officials must clearly define expectations and requirements at the competition stage. Unfortunately, this dialogue is not always effective, leading to mixed results.Sometimes the issue stems from the absence of such effective owner representatives. In other cases, it may be due to comparatively low salaries of relevant deputy ministers.The human factor also affects the speed of competitions and appointments — both independent and state representatives. The law grants some discretion regarding timelines, creating opportunities for political interference and backroom maneuvering, which damages the reform’s credibility.Reform can only succeed with strong support from top government leadership and the state owner. Although representatives of the EU, World Bank, and EBRD participate in nomination committees as observers or advisors, their advice is not always heeded.State representatives on supervisory boards are often perceived as politically dependent, though this is not necessarily true. Open competitions should also be conducted for state representatives, recognizing that they must be professionals guided by the company’s interests, not political instructions.

The Challenge of 2026: Large-Scale Reorganization

In 2026, supervisory board representatives are being selected simultaneously for a large number of enterprises. At the same time, all state enterprises must be reorganized into joint-stock companies, LLCs, or state institutions due to the repeal of the Commercial Code and the absence of the “state enterprise” legal form.The chosen legal form will determine whether supervisory boards are required. However, reorganization itself demands significant discussion and effort by the state owner. While some reorganizations have begun, the lack of communication has led to speculation that this is preparation for privatization.This creates enormous strain on ministry officials who are simultaneously managing wartime operations and overseeing supervisory board appointments.

Can the Reform Succeed?

For the reform to succeed, Ukraine must shift from reform design to implementation discipline.This means:

• Policy unification: Each ministry must develop effective ownership policies, appoint professional supervisory boards and management teams, and cooperate with them.
• Abandoning “emergency regulation”: Stop adopting special laws or decrees for specific companies that contradict OECD principles.
• Real accountability of supervisory boards: Boards must be responsible for capital, risk management, and strategic development. During wartime, board members must meet frequently and make high-quality decisions. Independent foreign members should regularly or permanently be present in Ukraine to stay connected to wartime realities.

Corporate governance is not only about rules — it is about management culture. It concerns the interaction between the owner (the state), the supervisory board, and management.Ukraine needs professionals on supervisory boards and executive boards who can implement swift and firm decisions in the interests of both the company and the state. Only then will state assets become a source of resilience rather than a burden.People determine everything. Without government support and trust in the state from experts and professionals, qualified individuals will not join supervisory boards of state-owned companies.