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The distinctive characteristics for effective boards in SOEs

The distinctive characteristics for effective boards in SOEs. Prof Bistra Boeva Brussels 2013. Corporate governance in SOEs: Bulgarian case -249 SOEs. :

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The distinctive characteristics for effective boards in SOEs

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  1. The distinctive characteristics for effective boards in SOEs Prof BistraBoeva Brussels 2013

  2. Corporate governance in SOEs: Bulgarian case -249 SOEs : • Diversified policy: various ministers act as Principals in the above holdings; lack of special policy in terms of CG • problematic areas: procurement for the SOEs ; lack of transparency in public procurement procedures; ; lack of transparency in the governance of big infrastructure projects and PPP projects • Political nominees for board members; unstable board membership: political instability leads to changes in the boards of SOEs and appointments of key players- CEOs; lack of competence among board members • My main point and unshakable position: reform in the area of corporate governance for SOE s is a must.

  3. SOEs in EU Member States • Legal entities, State ownership , Government is the shareholder: 100% or less; commercial activities • Duality of objectives : delivering of public goods (political sensitive area ) and market based principles of operations; • SOEs are common with natural monopolies and infrastructure . 870 SOEs within EU Member States( 2011 statistics - n.a for Latvia and Lithuania ) - infrastructure , railways, defence industry, telecommunications, forestry, ports, airports, nuclear industry, oil and gas, chemistry, research activities; • Different origins of SOEs in EU Member States ; • Two models of regulation: centralization model and diversification

  4. Problems in the domain of Corporate Governance of SOEs in certain EU countries • Formal approach or lack of implementation of standards of corporate governance; SOEs follow the pattern of privately owned commercial entities; • Duality of State policy: in its capacity as regulator the State promotes good corporate governance: harmonization trend in the EU led to common polices in MS in terms of supporting and promoting Corporate Governance. In its capacity as owner/ major or single shareholder the State’s behavior differ in MS, on one hand, and on the other the State does not facilitate good CG practices . • Corporate Governance in SOEs is not among the priorities of Action plan 12 .12.2012

  5. . How to build on effective boards in SOEs . OECD Guidelines • The boards of state-owned enterprises should have the necessary authority, competencies and objectivity to carry out their function of strategic guidance and monitoring of management. They should act with integrity and be held accountable for their actions.; • The boards of SOEs should be composed so that they can exercise objective and independent judgement. Good practice calls for the Chair to be separate from the CEO.; Baltic Guidance • board members qualification: political skills and understanding( understanding and knowledge about the mechanics of government functions), balance between people from the politics and other board members; independent , well selected; private sector experience; diversity; leadership

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