OECD - Implementing the OECD Guidelines on Corporate Governance of State-Owned Enterprises: Review of Recent Developments

Governments in both mature and emerging economies are important owners of commercial enterprises and corporatised assets. These state-owned enterprises (SOEs) are an important part of a majority of world economies, including the most advanced ones. SOEs are most common in strategic sectors such as energy, minerals, infrastructure, other utilities and, in some countries, financial services. Ensuring that governments efficiently manage these assets is therefore crucial for the competitiveness of the broader enterprise sector, economic growth and sustainable development more generally.

The OECD Guidelines on Corporate Governance of State-Owned Enterprises (SOE Guidelines) provide an internationally agreed benchmark to help governments assess and improve the way they exercise their ownership functions in SOEs. They provide concrete advice to countries on how to manage more effectively their responsibilities as company owners, thus helping to make SOEs more competitive, efficient and transparent. The Guidelines include a set of good practices on the legal and regulatory framework for SOEs, the professionalisation of the state ownership function and the corporate governance arrangements of SOEs. First developed in 2005, the Guidelines were updated in 2015 to take into account developments since their adoption and to reflect the experiences of the growing number of countries that have taken steps to implement them.

This report documents changes in state ownership and SOE governance in both OECD and partner economies and assesses the extent to which the Guidelines have served as a roadmap for reform in individual countries since 2015, following the most recent update of the Guidelines. According to the Recommendation of the Council on Guidelines on Corporate Governance of State-Owned Enterprises the Corporate Governance Committee, through the Working Party on State Ownership and Privatisation Practices , is instructed to follow up on the implementation of this Recommendation and to report to the Council no later than five years following its adoption and as appropriate thereafter. On 15 November 2018, the Working Party, based on an issues note prepared by the Secretariat, discussed options for the fulfilment of this requirement by 2020.

As part of the Working Partys work toward assessing the implementation of the OECD Guidelines on Corporate Governance of State-owned Enterprises until the year 2020, delegates agreed to undertake a questionnaire-based exercise which aimed to stocktake and assess what changes have arisen in state ownership and SOE governance in OECD Member states and partner countries since the work towards revising the SOE Guidelines commenced (starting in 2013 and leading to the OECD Council adoption of the 2015 revision).

Importantly, this exercise should not be read as penalising countries that had largely implemented the instrument prior to its revision and who therefore have little (further) progress to report. Understandably, the countries that have higher standards of SOE governance have reported less policy changes relevant to the implementation of the SOE Guidelines in the past five years to the OECD Secretariat.

This stock-taking report integrates responses from the national authorities in 29 jurisdictions that are responsible for the ownership function of SOEs. The questionnaire was addressed to state-owned enterprise (SOE) ownership entities, in addition to departments of government (e.g. ministries of finance and/or industry) with broader responsibility for SOEs. Both the initial and interim drafts of the report were subject to consultations and reviewed by the Working Party in March and October 2019.

The countries that reported SOE governance changes to the Secretariat (through their questionnaire responses and a series of interviews) were: Argentina, Belgium, Brazil, Chile, the Czech Republic, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Israel, Italy, Japan, Korea, Latvia, Lithuania, the Netherlands, New Zealand, Norway, Poland, Slovak Republic, Spain, Sweden, Switzerland, Turkey and the United Kingdom. The United States reported that it is not aware of any policy changes in the areas covered by the SOE Guidelines during the relevant review period.

As for national practices by Costa Rica, the reflected policy changes have been gathered from the latest version of the OECD Corporate Governance Review of Costa Rica, and the final version will be published in early 2020. It should also be noted that the changes in state ownership function in Austria during the review period have been reflected in this report based on the Austrian governments presentation given during the meeting of the OECD Working Party on State Ownership and Privatisation Practices on 18 October 2019.

The report was prepared by Chung-a Park with oversight from Hans Christiansen, both of the Corporate Governance and Corporate Finance Division in the OECD Directorate for Financial and Enterprise Affairs. It also benefits from comments and inputs from Korin Kane. Editorial and project co-ordination were provided by Katrina Baker, Elisabetta Pilati and Edward Smiley.

This report complements an earlier stock-taking publication, OECD (2011) Corporate Governance of State-Owned Enterprises: Change and Reform in OECD Countries Since 2005 . Another publication, OECD (2018) Ownership and Governance of State-Owned Enterprises: A Compendium of National Practices , documents the current status quo in individual countries regarding aspects of their ownership practices and SOE corporate governance. It will be revised and updated to reflect information included in the present report. It is available as a living document on the Working Partys website www.oecd.org/corporate/soes .