Transcript OECD Guidelines on Corporate Governance of State Owned

OECD Guidelines on Corporate Governance of State
Owned Enterprises
Lars Johan Cederlund
Senior advisor
Ministry of Industry, Employment and Communications,
Sweden
Chairman OECD Working Group on Privatisation and
Corporate Governance of State Owned Assets
MINISTRY OF IND USTRY, EMP LO YMENT AND CO MMUNICATIO NS
The Guidelines and the role of SOEs
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Direct application in commercial SOEs
Focus on federal or state-owned SOEs
Comparative report gives information
Comparative report allows benchmarking
MINISTRY OF IND USTRY, EMP LO YMENT AND CO MMUNICATIO NS
Why Guidelines?
• Need for an integrated Corporate Governance model, best practice
collection
• Contribution to growth from professional governance of SOE:s
• Better balance between privatisation and governance was asked for by
politicians
MINISTRY OF IND USTRY, EMP LO YMENT AND CO MMUNICATIO NS
SOE employees as percentage of total
employment in OECD countries
14%
12%
10%
8%
6%
4%
2%
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Turnover/GDP and value added/GDP
for SOEs in OECD countries (percent)
50%
45%
40%
35%
30%
Turnover / GDP
25%
VA / GDP
20%
15%
10%
5%
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Percentage of market capitalisation in
OECD countries
60%
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40%
30%
20%
10%
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New Corporate Governance model
• Complement to the OECD Principles of Corporate Governance which
are developed for privately-owned companies
• Non-binding guidelines, agreed by member states for their proper
activities, best practice
• The Guidelines is an integrated product, with individual Guidelines
linked/connected to the others
• Do not preclude/alter Privatisation policies
MINISTRY OF IND USTRY, EMP LO YMENT AND CO MMUNICATIO NS
Priorities
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Level-playing field with the private sector
Reinforcing the ownership function
No mixing of political and business decisions
Improving transparency
Empowering SOE boards
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Chapter I, Legal and regulatory framework
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Separate regulation and shareholding
Transparency on special obligations
Level-playing field in markets
Competitive conditions in access to finance
MINISTRY OF IND USTRY, EMP LO YMENT AND CO MMUNICATIO NS
Chapter II The state as an Owner
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Clear and disclosed ownership policy
No direct interference in day-to-day activities
Let boards carry out their responsibilities
Centralisation/coordination of the ownership function
Accountability secured
Effective exercise of ownership rights
MINISTRY OF IND USTRY, EMP LO YMENT AND CO MMUNICATIO NS
Chapter III Other Shareholders
• All shareholders should be treated equitably
• High degree of transparency towards all shareholders
• Facilitate participations in AGM for minority shareholders
MINISTRY OF IND USTRY, EMP LO YMENT AND CO MMUNICATIO NS
Chapter IV Stakeholders
• Rely on OECD Principles of Corporate Governance
• Report on stakeholder relations
• Develop, implement and communicate compliance with codes of
ethics
MINISTRY OF IND USTRY, EMP LO YMENT AND CO MMUNICATIO NS
Chapter V Transparency
Basis for much of the other Guidelines
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Disclosure at ownership level and at company level
Internal audit
Independent external audit
High quality standards for accounting and audit
Disclosure as listed companies
Disclosure of material information, including objectives, ownership
and voting rights, financial assistance from the state transactions with
related entities and risk factors
MINISTRY OF IND USTRY, EMP LO YMENT AND CO MMUNICATIO NS
Chapter VI Boards
Critical governance organ
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Full responsibility
Able to appoint CEO
Act in the best interest of the company
Independent judgement
Good corporate governance standards
Systematic evaluation
MINISTRY OF IND USTRY, EMP LO YMENT AND CO MMUNICATIO NS
Possible effects of the Guidelines
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Basis for structured reform
Facilitate benchmarking
Awareness of important values on the state’s balance sheet
Better value-creation due to more effective corporate governance
MINISTRY OF IND USTRY, EMP LO YMENT AND CO MMUNICATIO NS