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

Annex A. OECD questionnaire for the progress report on changes in national SOE ownership and governance practices over the last five years (2013-2018 period)

Your government is invited to contribute to a stocktaking of recent changes in SOE governance by filling out the below questionnaire.

Background

This questionnaire has been prepared by the OECD Secretariat for the progress stock-taking report as part of the “Implementing the SOE Guidelines” project to be completed by the year 2020. On 15 November 2018, delegates of the 31^st Working Party on State Ownership and Privatisation Practices agreed to undertake a questionnaire-based exercise which aims at stocktaking and assessing what have been the changes in state ownership and SOE governance in OECD member and partner countries since the work toward revising OECD Guidelines on Corporate Governance of State-owned Enterprises (the starting point was in 2013, leading to the Council adoption of the 2015 OECD Guidelines on Corporate Governance of State-Owned Enterprises) commenced.

Responses to the questionnaire will be compiled into a substantive progress report shedding light on progress and changes regarding national practices with regard to each chapter of the SOE Guidelines. An initial submission including the questionnaire-based report of any progress, guidance and best practice in areas covered by the SOE Guidelines will be presented to Delegates for review and consideration at the next meeting of the Working Party on 11-12 March 2019.

Work toward a final report will continue following the meeting and could be considered again at the meeting in October. The end product will take as a starting point key elements of the OECD publications entitled Corporate Governance of State-Owned Enterprises: Change and Reform in OECD Countries since 2005 (2011) and Ownership and Governance of State-Owned Enterprises: A Compendium of National Practices (2018), which demonstrated changes in national legal and regulatory frameworks, exercise of the ownership function and SOE governance since the SOE Guidelines’ inception.

The questionnaire is 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 the enterprises. Each section comprises a set of broad questions, where respondents are invited to highlight related recent reform experiences and challenges in detail. Respondents are encouraged to provide additional information and background documentation where available.

I. Rationales for state ownership

In case there have been no significant changes in this area in the past 5 years, please check “none” □ and go to the next item number II.

1. Does your government have an explicit ownership policy defining the overall objectives of state ownership? If yes, have there been changes to this policy? Please consider the following areas of possible change:

• How the ownership policy is determined (e.g. through legislation; cabinet decision; government decree). How often, if at all, it is reviewed and updated.

• Specific legislation or guidelines that define how state-owned enterprises should be managed or controlled.

• The main purpose(s) of state ownership offered as part of the ownership policy.

• Supplementary or specific objectives or classifications for individual (groups of) state-owned enterprises.

2. If the answer to question 1 is no (or if certain categories of SOEs operate in a different legal and regulatory environment), have there been SOE-relevant changes in other applicable laws and regulations, such as general corporate law, laws pertaining to SOEs or company-specific acts of parliament, fiscal bills, or more general “expectations” communicated by the ownership function? If yes, please provide details.

3. If the answers to questions 1 and 2 are no, have there been other changes in rules determining under which circumstances SOEs may be created or ownership terminated? If yes, please provide details.

4. Have there been material changes in the financial and non-financial objectives of individual SOEs? If yes, please describe the reasons behind and the nature of the changes.

II. The state’s role as an owner

In case there have been no significant changes in this area in the past 5 years, please check “none” □ and go to the next item number III.

5. Please briefly describe any changes in the institutional arrangements for the exercise of the state ownership function. In particular changes in the following areas:

• The institution(s) (agency, ministry, specialised unit, etc.) that are responsible for exercising state ownership rights in SOEs.

• The laws, policies and regulations guiding the operations of these institutions.

• The relationship (institutional, political or otherwise) between ownership entities and other parts of the government sector.

• Accountability of the ownership entity to relative representative bodies.

6. Have the legal forms of incorporation of SOEs changed? If so, please provide details.

7. Have there been material changes in the way the state exercises its role as an active and informed enterprise owner? In particular, changes in:

• Board nomination practices.

• The setting and monitoring of objectives and mandates for individual SOEs.

• Reporting systems to monitor, audit and assess SOE performance and compliance with governance standards;

• Disclosure requirements for SOEs, including public disclosure.

• Dialogue with external auditors and state control organs.

• Remuneration policies for SOE boards and executive management.

III. State-owned enterprises in the marketplace

In case there have been no policy changes in this area in the past 5 years, please check “none” □ and go to the next item number IV.

8. Have the authorities in your country expressed a commitment (or changed an existent commitment) to address aspects or elements of competitive neutrality in the presence of government-controlled businesses? If yes, please provide details.

9. If there is a commitment to competitive neutrality, have the rules or institutions involved in enforcing this commitment changed? If yes, please provide details.

10. Respondents are encouraged to consider and report any changes pertaining to the following areas of competitive neutrality:

• Structural separation of SOEs’ public policy objectives from their actions in competitive markets.

• Costing and accounting for commercial and non-commercial activities in the SOEs.

• Requirements regarding SOEs’ rates of return, operating margins and other financial performance metrics.

• Differences in taxation of SOEs, and their operations in the marketplace, relative to other enterprises.

• Differences in regulatory treatment of SOEs and other enterprises.

• Differences in access to financing between SOEs and other enterprises.

• Public procurement rules affecting procurement by SOEs and SOEs’ role as suppliers to other public sector institutions.

IV. Equitable treatment of shareholders and other investors

In case there have been no policy changes in this area for the past 5 years, please click “none” □ and go to the next item number V.

11. Have there been changes in the implementation of the G20 OECD Principles of Corporate Governance that directly affect SOEs? This could include, but is not limited to:

• Ensuring that all shareholders are treated equitably.

• Rules guiding transparency and disclosure of information to shareholders.

• Policies with regards to communication and consultation with shareholders.

• Facilitating the participation of minority shareholders in shareholder meetings.

• Ensuring market-consistency in transactions between SOEs and the state.

12. Have national corporate governance codes (or SOE-specific codes where applicable) changed and, if so, are SOEs wholly or partly subject to these codes?

13. Have the rules guiding SOEs’ involvement in co-operative projects such as joint ventures and public-private partnership changed?

V. Stakeholder relations and responsible business

In case there have been no policy changes in this area for the past 5 years, please click “none” □ and go to the next item number VI.

14. Have there been changes in the state’s general approach to stakeholders’ rights established by law or through mutual agreements? If so, please provide details. Also please describe any changes in reporting requirements with regards to stakeholder relationships.

15. Are there new requirements with regard to SOE board obligations to establishing internal controls, ethics and compliance programmes or measures?

16. Please describe any changes in government policies, requirements and expectations regarding responsible business conduct (RBC) in SOEs. Please also describe any changes in the way the government’s expectations regarding RBC are communicated to SOEs and enforced.

17. Have there been changes in the rules or national practices bearing on SOEs’ role vis-à-vis the political system, including campaign contributions, sponsorship and lobbying? If so, please provide details.

VI. Disclosure and transparency

In case there have been no policy changes in this area in the past 5 years, please click “none” □ and go to the next item number VII.

18. Please describe any changes in the overall disclosure and reporting obligations placed on individual SOEs. This may include, but is not limited to:

• Enterprise objectives and their fulfilment.

• Enterprise financial and operating results.

• Governance, ownership and voting structure of the enterprise.

• Remuneration of board members and key executives.

• Board qualifications and selection processes.

• Material foreseeable risk factors.

• Financial guarantees.

• Material transactions with related entities.

• Relevant issues relating to employees or other stakeholders.

19. Have there been changes to the rules and practices bearing on external auditing of SOE financial statements. Have there been changes in the roles assigned to independent auditors and the state audit/control functions? If yes, please provide details.

20. Have there been changes in aggregate annual reporting by the state about its SOE portfolio? This could include the inception (or cessation) of aggregate reporting; changes in the coverage of reporting (i.e. which SOEs are included) and its public availability; and changes in the types of data and qualitative information included in the reports.

VII. The responsibilities of the boards of state-owned enterprises

In case there have been no policy changes in this area in the past 5 years, please click “none” □

21. Have there been changes in the roles of SOE boards of directors, as established in legislation or by relevant regulations or owner’s expectations? This could include, but is not limited to:

• The board’s powers to appoint/dismiss senior executive management.

• The boards’ powers to set corporate strategy and supervise management.

• The boards’ powers to oversee internal and external auditing procedures.

• Regular evaluation/self-evaluation by the boards and their individual members.

• The reporting lines between the internal audit function and the board (and/or relevant committee or equivalent)

22. Have there been changes in the composition of boards of directors across the national SOE sector? In particular, have there been a change in the number of active politicians in SOE boards? Also please provide information about any changes in the balance between independent directors and state representatives (including any new rules or guidelines in this respect); the professional qualifications of directors; avoidance of conflicts of interest; and gender equality and inclusiveness.

23. Have there been changes in the extent to which SOEs have established specialised committees to support the board of directors? If so, please provide details regarding the remits of the committees and the number and sectors of operation of the SOEs that have enacted the changes.