Corporate Governance of State-Owned Enterprises

391 Pages·2014·2.1 MB·English

Corporate
Governance of
State-Owned
Enterprises
Corporate
Governance of
State-Owned
Enterprises
A Toolkit
© 2014 International Bank for Reconstruction and Development / The World Bank
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Owned Enterprises: A Toolkit. DOI: 10.1596/978-1-4648-0222-5. Washington, DC: World Bank.
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CONTENTS
Acknowledgments xi
Abbreviations xi
Introduction to the Toolkit xv
Executive Summary xxi
1. Context and Overview 1
Past SOE Reforms 1
Role and Importance of SOEs 3
SOE Performance and Impacts 9
Corporate Governance Challenges in SOEs 12
The Benefi ts of Good Corporate Governance 16
Framework for Corporate Governance Reform 18
2. Legal and Regulatory F ramework 25
Key Concepts and Defi nitions 26
Overview of SOE Legal Forms and Frameworks 28
Key Issues in the SOE Legal Framework 31
Harmonizing SOE Frameworks with Private Sector Frameworks 33
Developing a State Ownership Framework for SOEs 45
3. State Ownership Arrangements 69
Key Concepts and Defi nitions 70
Overview of Ownership Arrangements 70
Improving Traditional Ownership Arrangements 71
Creating Advisory or Coordinating Bodies 75
Centralizing the State’s Ownership Functions 78
Ensuring the Effectiveness of Ownership Arrangements 93
v
4. Performance Monitoring 101
Key Concepts and Defi nitions 102
Objectives of a Performance-Monitoring System 102
Obtaining Baseline Information 104
Setting Mandates, Strategies, and Objectives 106
Structuring Performance Agreements 109
Developing Performance Indicators and Targets 117
5. Financial and Fiscal Discipline 133
Key Concepts and Defi nitions 134
Reducing Preferential Access to Financing 134
Identifying and Separating Out Public Service Obligations 138
Managing the Fiscal Burden and Fiscal Risk of SOEs 143
6. Board of Directors 159
Key Concepts and Defi nitions 160
Professionalizing Board Composition 162
Defi ning and Implementing Board Responsibilities 179
Enhancing Board Professionalism 189
Setting Board Remuneration and Evaluation 196
Providing Board Director Training 203
7. Transparency, Disclosure, and Controls 215
Key Concepts and Defi nitions 216
Guiding Principles 217
Improving SOE Reporting and Disclosure 220
Improving the Control Environment 228
Undertaking an Independent External Audit 235
8. Special Issues in Mixed-O wnership Companies 243
Key Concepts and Defi nitions 244
Overview of Issues in Mixed Ownership Companies 244
Overseeing State Minority Shares 246
Protecting the Basic Rights of Minority Shareholders 248
Promoting Shareholder Participation 250
9. Implementing Reform 257
Contextualizing Reform 258
Paying Attention to the Reform Process 261
Appendix A Country-Level Tools: Instruction Sheet 277
vi Corporate Governance of State-Owned Enterprises: A Toolkit
Appendix B Country-Level Tools: A ssessment Questionnaire 281
Introduction 281
Glossary of Key Terms 282
Appendix C Country-Level Tools: Sample S urvey Instrument 317
Company Identifi cation Data 318
Survey 319
Appendix D Company-Level Tools: Instruction Sheet 335
Appendix E Company-Level Tools: State-Owned Enterprise
Progression Matrix 337
Appendix F Company-Level Tools: I nformation Request
List and Interview Guide 343
Financial Discipline 343
Board of Directors 344
Transparency, Disclosure, and Controls 346
Treatment of Minority Shareholders 351
Commitment to Corporate Governance 352
Appendix G Company Level Tools: Sample
Company-Level C orporate G overnance
I mprovement P rogram 355
State-Owned Enterprise Company 356
Annexes
4A Examples of Key Performance Indicators for the Water Sector 129
6A IFC–World Bank Progression Matrix for State-Owned
Enterprises: Structure and Functioning of the Board 206
6B Guidelines for Centralized Management of the Board
Nomination Process 207
6C Advantages and Disadvantages of Different Approaches
to Board Evaluation 210
7A IFC–World Bank Progression Matrix for SOEs: Transparency,
Disclosure, Control Environment 240
8A IFC–World Bank Progression Matrix for State-Owned
Enterprises: S hareholder Rights 254
9A IFC–World Bank Progression Matrix for SOEs: Commitment
to Corporate Governance 276
Contents vii
Boxes
1.1 The Still Substantial Role of SOEs in Major Emerging Market
Economies 5
1.2 Expanded State Ownership through Nationalization and
Acquisition 8
1.3 Summary of the OECD’s Guidelines on Corporate
Governance of SOEs 19
2.1 Varied Defi nitions of SOEs and the Parastatal Sector 26
2.2 Application of Constitutional and Supranational Law 29
2.3 Countries with General Public Enterprise or SOE Laws 30
2.4 Countries with SOEs under Company Legislation 31
2.5 Employee Outcomes during Corporatization in France 39
2.6 New Zealand Rail: From Civil Servants to Private Employees 40
2.7 The United Kingdom’s Principles of Competitive Neutrality
in Procurement Processes for Custodial Services 42
2.8 The Listing of Petrobras on the Brazilian Stock Exchange 44
2.9 Examples of Countries with Modernized State Ownership Laws 46
2.10 The Philippines Government-Owned and Controlled
Corporation Governance Act 48
2.11 Decree for Improving the Governance of State-Owned
Banks in Tunisia 50
2.12 New Legal Framework for Chile’s Codelco 52
2.13 Summary of Norway’s Ownership Policy 55
2.14 Summary of Bhutan’s Ownership Policy 57
2.15 Corporate Governance Scorecard in the Philippines 63
2.16 Steps in Developing an SOE Governance Code 64
3.1 Challenges and Constraints of Advisory Bodies in India and
the United Kingdom 77
3.2 Separation of Ownership and Regulation 79
3.3 A Separate Ministry for State-Owned Enterprises in Indonesia 83
3.4 The Mission of the French Government Shareholding Agency 85
3.5 A Specialized Ownership Agency in China 86
3.6 A State Holding Company in Hungary 89
3.7 An Investment Company in Malaysia 90
3.8 A Sovereign Wealth Fund in Bahrain 92
3.9 Key Lessons from GCC Countries in Achieving Political
Insulation 94
4.1 Mandates in State-Owned Development Banks 107
4.2 Past Experience with Performance Contracts 110
4.3 Using Task Forces to Help in Performance Management
in India 114
viii Corporate Governance of State-Owned Enterprises: A Toolkit