Overdue reform for public firms
A new draft law titled “Regulation of Aspects of Public Corporations’ Corporate Governance” is an overdue attempt to turn state-controlled firms into modern corporate entities and cure many of the dysfunctions that plague them.
“The new institutional framework for state-owned corporations transforms them from a long arm of the state to independent, transparent entities that work for the public interest,” Nikolaos Koulocheris, the Finance Ministry’s secretary-general for policy, told Kathimerini, adding that the aim is to turn these often cumbersome entities into productive, efficient and competitive companies.
Slogans aside, this draft law introduces much-needed changes such as minimum education and experience requirements for boards that haven’t existed thus far, making these positions a legal, if controversial, parking spot for the party faithful, failed candidates and the otherwise connected to the ministers of the day. So, a university degree and a minimum of five years’ experience are now required for an appointment to such a position. Not a cure-all, but a start.
The draft law adopts Organization for Economic Cooperation and Development “SOE Guidelines” on state-owned company governance that recommend a high degree of disclosure and transparency instead of the present model of the supervising minister acting, often opaquely, as the majority shareholder. Henceforth, the finance minister becomes the only authorized representative of the state. The law makes presenting to the general assembly annual business plans and four-year strategic plans mandatory and spelling out the ownership policy.
Another change, which one thinks should have been implemented years ago, is the obligation on the part of the state for a digital register of the companies it is a stakeholder in, either majority or minority.
Other provisions include a minimum representation of each sex on the board (at least a third of members), more flexible guidelines for hirings and compensation and tighter rules about the compatibility of a board position and other professional activities of the members.
The law has been submitted for public consultation and will then be tabled in Parliament.
