Cabinet approves controversial state ownership policy for SOEs

In Ukraine, significant developments in corporate governance of state-owned enterprises (SOEs) occurred during the week of November 25 to December 1, 2024. On November 29, the Cabinet of Ministers approved a state ownership policy focused on improving asset management within SOEs. This policy is crucial as it outlines a strategic approach in determining which sectors require state investment and attempts to optimize the state asset portfolio. It emphasizes the privatization or liquidation of those SOEs identified as non-strategically important for the country. Furthermore, the newly approved policy seeks to adopt modern corporate governance standards aligned with the Organization for Economic Co-operation and Development's (OECD) SOE Guidelines. Key components include the establishment of independent supervisory boards, clear governance structures, and responsible reporting mechanisms. This marks a pivotal shift toward ensuring accountability and transparency in managing state assets, as emphasized by the Economy Ministry statements. In addition to governance improvements, the Ukrainian parliament, the Verkhovna Rada, has completed several legislative processes related to taxation and energy management within this time frame. For instance, new tax regulations have been introduced that significantly increase taxes on banks retroactively. Historically, these tax changes reflect Ukraine's ongoing strategies to balance its budget amid external pressures, particularly due to the war with Russia, which has intensified after ongoing military conflicts affecting the nation's energy infrastructure. These developments represent Ukraine's commitment to reforming its SOE structure and financial legislative framework while navigating complex challenges introduced by external conflict. Observers note that these changes could potentially lead to enhanced efficiency and profitability for SOEs, ultimately benefiting the Ukrainian economy in the long run. However, the implementation of these policies will require careful monitoring to ensure real changes materialize in the management of state assets.