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State Owned Enterprises: Disclosure and Transparency Policy

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Practice Advice on Ethics and Accountability

State Owned Enterprises: Disclosure and Transparency Policy (OECD)

Summary Advice: The OECD reccomends that in order to ensure appropriate disclosure and transparency at the SOE level, the state as an owner should first develop a coherent disclosure policy for its portfolio companies. This policy should identify what information should be disclosed; how and to whom the information should be disclosed; and the procedures for ensuring the quality of the information.

Main Points: The following is guidance on how to develop a disclosure and transparency policy for SOEs

Review existing requirements

  • The ownership entity should first review the existing legal and regulatory requirements in terms of SOE transparency and disclosure.
  • These might differ according to the legal structures of SOEs and be based on different pieces of legislation and regulation, including statutory laws, specific SOE laws as well as general company laws, specific regulations, principles or codes, etc.
  • Reviewing disclosure requirements implies not only reviewing the different elements of information supposed to be disclosed, but also whether effective mechanisms are in place to enforce these requirements, as well as the existence of effective remedial mechanisms for those harmed by inadequate or misleading disclosure.

Review effective disclosure practices by SOEs

  • In addition to reviewing the existing legal and regulatory framework, the ownership entity should review effective practice of SOEs.
  • This review could allow identifying areas where SOEs do not implement existing requirements as well as areas where SOEs have developed voluntary good practices going further than existing requirements.

Identify weaknesses and discrepancies

  • Existing disclosure and transparency requirements should be compared with the recommendations of the OECD Guidelines and the Principles of Corporate Governance, as well as with the listing requirements.
  • Based on this comparison and the review of effective practice, the ownership entities might identify discrepancies or weaknesses in the existing legal and regulatory framework.

Adapt and complete the transparency and disclosure framework

  • Based on these reviews of the legal and regulatory framework and effective practices, the ownership entity might consider the following actions to complete the set of transparency and disclosure requirements:
    • propose amendments to the current legal and regulatory framework;
    • develop specific new regulation(s) encompassing existing as well as additional and necessary requirements;
    • develop specific principles, guidelines or codes that would complement the existing framework and mandate or encourage better practice at SOE level.
  • In considering these different types of instruments, the ownership entity should take into full consideration their respective strengths and weaknesses, including their “enforceability”, adaptability, etc.

Consult adequately

  • Focused and structured consultation should be carried out while reviewing the legal and regulatory framework, whatever the type of instrument chosen.
  • These consultations should include SOE management and board members, regulators, relevant professional organisations, members of Parliament, stakeholders, etc. In case of principles and codes, key players might even be the driving forces in their development.

Make appropriate use of RIAs

  • When possible, the state should carry out regulatory impact assessments to base proposed legal or regulatory changes on evidence.
  • To do so, it will be necessary to clarify the regulatory objectives, consider alternative approaches and compare respective costs and benefits. In doing so, appropriate use of existing guidance could be made.

Communicate effectively on the new framework

  • The ownership entity should communicate actively on the new transparency framework for SOEs. Such communication could target SOEs concerned, relevant institutions, the general public and the media. Its objective would be:
    • to ensure that SOEs fully understand their obligations and the underlying rationale for such disclosure;
    • to give an opportunity to members of Parliament to clarify their own expectations and better understand how they could actively play a role in the SOE accountability framework;
    • to raise awareness of the general public and the media on what is expected from SOEs in terms of disclosure.

Develop appropriate guidance in sensitive areas

  • The ownership should also develop, when necessary, appropriate guidance to help SOEs effectively implement the new framework. This guidance should focus on areas where:
    • new requirements have been added;
    • previous implementation of existing requirements was weak;
    • there is significant concern or complexity.

Develop specific and relevant mechanisms to encourage and follow up implementation

  • In addition to a new framework, the ownership entity might put in place specific mechanisms that would ensure, encourage, reinforce and follow effective implementation of transparency requirements by SOEs.

Source: OECD (2010). OECD, “Accountability and Transparency: A Guide for State Ownership” Corporate Governance, OECD Publishing at (accessed 22 February 2013).

Page Created By: Matthew Seddon. The content presented on this page is drawn directly from the source(s) cited above, and consists of direct quotations or close paraphrases. This material does not necessarily reflect the official view of the publishing organization.

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