New Standards of Ownership Supervision in Companies with State Treasury Shareholding

The Ministry of State Assets has introduced the Code of Good Practices for Ownership Supervision – a long-awaited document within the corporate governance community operating in the sector of companies with State Treasury shareholding.

The primary objectives of the Code include, in particular:

• enhancing the quality of corporate governance in companies with State Treasury shareholding and their subsidiaries;
• implementing clear, transparent, and modern standards of management and supervision;
• strengthening the rational and responsible use of public assets.

The new framework aims to establish clear standards of ownership supervision and to mitigate the risk of irregularities in the functioning of companies, inter alia, by specifying the duties of management boards, strengthening the role of supervisory boards, implementing effective internal control procedures, preventing conflicts of interest, and ensuring transparency of remuneration policies.

The Code is addressed to entities authorised to exercise rights attached to shares or equity interests held by the State Treasury, as well as to companies with State Treasury shareholding. Its application is also recommended for subsidiaries operating within capital groups of companies with State Treasury participation.

  The Code constitutes a specification and development of the existing principles of ownership supervision, systematising the practice of corporate bodies’ functioning. In particular, it:

• introduces the “comply or explain” principle as a mechanism enhancing transparency of corporate actions;
• sets standards of political neutrality for members of management boards and supervisory boards;
• specifies the rules for appointment, functioning, and performance evaluation of corporate bodies;
• strengthens the role of supervisory boards, including board committees and the internal audit function;
• organises the principles of cooperation between corporate bodies and standards for documenting their activities;
• establishes uniform and transparent qualification procedures for managerial positions.

In practice, the Code will serve as a significant benchmark for assessing the proper exercise of ownership supervision and the standards of accountability of individuals involved in managing companies with State Treasury shareholding, and consequently, public assets.

From the perspective of legal advisory services provided to companies with State Treasury participation, the Code is a document that systematically clarifies the ownership expectations of the State and supports the development of a stable, professional, and transparent management model.

The entry into force of the Code may require many State Treasury companies to conduct internal audits in order to verify and, where necessary, adjust existing procedures, as well as to amend the content of articles of association, internal regulations, and similar corporate documents.