New rules of play for the public sector: an expert perspective from the capital markets

How can the system for managing state-owned companies be reformed so that international standards finally take hold in the Ukrainian context? This very issue and potential solutions were discussed at a meeting in Kyiv, where the Commission presented its perspective on corporate reform in the public sector.

The event was organized by the Ukrainian Network for Integrity and Compliance (UNIC). Participants discussed why supervisory boards and formal procedures sometimes fail to protect against crises, and what institutional changes could make management effective. In particular, they analyzed governance issues at Energoatom. This example demonstrated that without the actual implementation of compliance (essentially, fair rules of the game), the system simply will fail to work.

During the discussion, NSSMC Commissioner Maksym Libanov emphasized that high-quality corporate governance is the key criterion for assessing Ukraine’s readiness for integration into the European space:

“The EU takes a very strict and conservative approach to everything related to the internal market, as this is the foundation of its economy. For all 27 EU countries, as well as for Ukraine, which plans to join this club, the rules must be the same. Creating this level playing field is one of the key issues that the European Commission will be reviewing as part of our negotiation process under Chapter 6,” — noted Libanov.

According to him, this year the Commission, together with the Organization for Economic Cooperation and Development (OECD), will finally update the Corporate Governance Code, the current version of which has been in effect since 2020 and no longer aligns with the latest international recommendations. At the same time, a new EU Directive on multiple-voting share structures is being drafted — and it alters the basic principle of “one share, one vote,” which effectively marks a break with established philosophy.

The participants also addressed the issue of gender balance in corporate governance bodies. The Commission analyzed more than two thousand joint-stock companies and found that Ukraine already meets the minimum European requirements: in executive bodies, the ratio of women to men is 52% to 48%, and in supervisory boards, it is 65% to 35%.

“We quite often underestimate ourselves. The practices we already have in place have long been in line with European recommendations,” Libanov noted.

Additionally, the discussion also focused on state ownership policy. The first version of this document, adopted two years ago, established the basic approaches — in particular, the so-called “triage”: the classification of state-owned companies into those that should remain under state ownership, be liquidated, or be privatized. The document is currently being updated, and the results of this work are expected to be announced in the near future.

The Commission is convinced that meeting EU corporate governance requirements and closing the relevant negotiation benchmarks will create a solid foundation for the integration of the Ukrainian capital market into the European one.