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28 April 2005

OECD Guidelines on Corporate Governance of State-Owned Enterprises

The OECD has approved new Guidelines on Corporate Governance of State-Owned Enterprises to give concrete advice on how to manage more effectively their responsibilities as company owners. The Guidelines are based on the OECD’s Principles of Corporate Governance, revised in 2004.

The Guidelines call on governments to ensure among others a level-playing field for state-owned enterprises competing with the private sector by clearly separating the state’s ownership role from its regulatory role, and allowing more flexibility in capital structures while making sure that state-owned enterprises face competitive access to finance.

The Guidelines also demand to introduce a transparent nomination process for boards, on separating the role of Chairman and CEO and giving boards the power to appoint CEOs systematically monitoring the board’s performance.

The OECD expects that the Guidelines will be used as a reference by its members in improving the governance of their state-owned enterprises, including in situations where they wish eventually to privatise. In many OECD countries the state remains an important owner of large firms operating in key sectors, including energy, utilities and infrastructure. But a recent OECD study reveals the challenges facing such firms, including conflicting corporate objectives, unclear board responsibilities and opaque appointment procedures.

The OECD will also use the Guidelines in discussions with many non-member countries which are looking for advice on how to better manage the state-owned enterprises that often dominate their economies



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