A reform of corporate management of state-owned enterprises shall start in 2017. Approval of the regulatory acts on the procedure of establishment and functioning of supervisory boards of these enterprises by the Cabinet of Ministers is an essential element of this reform.
A relevant package of documents prepared with an active participation of experts is yet to be approved by the Cabinet of Ministers, although, according to the Memorandum between Ukraine and the IMF, it should have been adopted back in September 2016. Supervisory boards should have started to work at fifteen state-owned enterprises in early 2017. However, the corporate management reform has not been launched due to yet unclear reasons.
The experts stress that the said package of documents has been developed to harmonize the law of Ukraine on the management of state-owned enterprises with the Standards of the Organization for Economic Cooperation and Development. This is a requirement of the Ukraine-EU Association Agreement. Moreover, adoption of these regulatory acts is provided for by the action plan of the governmental and public initiative “Together Against Corruption” (Decree of the Cabinet of Ministers of Ukraine of October 5, 2016, No. 803-р “Some issues on preventing corruption in the ministries and other central executive authorities”).
Independent supervisory boards are effective instruments to boost the efficacy of management of state-owned enterprises. They help to reduce corruption in the process of public procurement, establish economically reasonable prices for goods and services of the enterprises, and minimize the risk of property embezzlement. Moreover, supervisory boards make state-owned enterprises less dependent on political influence.
In the long term, introduction of best practices of corporate management will significantly boost the quality and transparency of financial reporting of state-owned enterprises, give an opportunity to develop long-term strategies of enterprises development, and create extra possibilities for attracting external financing.
The experts of the RPR Economic Development Group call on the Cabinet of Ministers to immediately approve and publish the resolutions regulating establishment and functioning of supervisory boards of state-owned enterprises and launch the process of establishment as soon as possible.