1.     General context related to the assignment

SOEs play a crucial role in providing public services for the Ukrainian population – a role which is even more critical during the wartime period - but they also represent a significant budgetary and financial sustainability risk. In the last six years, Ukraine has taken several steps toward reforming corporate governance in the largest SOEs and aligning its practices with the OECD SOE Guidelines. Some of the achievements in this period include the adoption in 2016 amendments to the Law on Management of Objects of State Property, which introduced provisions requiring a majority of independent directors on supervisory boards of SOEs and more robust transparency and disclosure.

At the same time, corporate governance reform remains incomplete and hence remains one of the topics requiring reform following international recommendations. In the meantime, eighty-six per cent of the 3,300 centrally-owned SOEs still operate in the legal form of state unitary enterprise. The absence of a comprehensive ownership policy and decentralised ownership arrangements, with over 80 central executive bodies exercising ownership rights, result in diverging governance approaches and goal conflicts for individual SOEs, and an unclear role for the relevant ownership entities.

This creates systemic difficulties in managing the portfolio of strategic SOEs. Furthermore, the legal status of the SOE assets is not always clearly defined, which makes it difficult for them to attract market financing. Special legal form for state unitary enterprise is archaic and not understood by private investors. Current corporate governance structure of SOEs does not facilitate the attraction of strategic long-term investments. Due to difficulties in attracting financing, SOEs are undercapitalized and some are overleveraged.

Some of the key areas for improvement include optimizing the SOE portfolio and preparing the ground for privatisations and improving governance and performance of strategic SOEs. The corporate governance framework for SOEs requires harmonization with the OECD Guidelines on Corporate Governance of SOEs. This involves strengthening accountability and expanding the mandate of supervisory boards, enhancing SOEs' financial position through divesting non-core assets, ensuring public online auctions of sale or lease of assets of state enterprises. Following OECD SOE recommendations it is essential to:

·       Address inconsistencies in legal and regulatory frameworks.

·       Continue corporate governance reforms in the top-15 SOEs.

·       Implement best practices in transparency and disclosure in economically important SOEs, and upgrade financial and non-financial reporting.

·       Develop a comprehensive ownership policy with clear rationales for ownership.

·       Establish a centralised ownership coordination entity.

·       Ensure a level playing field with private companies.

·       Continue strengthening anti-corruption framework applicable to SOEs.

In November – December 2023, Expertise France held a series of exchanges with key international actors dealing with the reform of the state-owned enterprises in Ukraine. The findings enabled to draft a current state of arts related to the topic, as well as to identify possible cooperation and intervention areas. The elaborated concept note serves as a basis for the preparing further actions that could be eligible for the support within mAIDan programme.

During January – March 2024, Expertise France, through mAIDan Ukraine programme, has implemented series of the seminars on the topic of the centralised ownership function of the state. In addition, the delegation of representative of the Ministry of Economy, Secretariat of Cabinet of Ministers of Ukraine and State property fund of Ukraine participated in the study visit to Paris, France on the topic of the centralised ownership and operations of the State Shareholder Agency.

In continuation of provided assistance, MoE requested support of Expertise France in preparation of the  concept of centralised model of state ownership in Ukraine, as well as to facilitate the envisaged support work with the state actors. The activities of the next phase should consider the recommendations previously delivered by Expertise France regarding the principles and eventual structure of the concept note, and will include the coordination between international expert of Expertise France and local stakeholders, including MoE and its structural units, SPFU, Secretariat of Cabinet of Ministers and Ministry of Finances. 

2.     Purpose and objectives of the assignment 

The main objective of the assignment is to provide the expert assistance to Ministry of Economy or Ukraine in collaboration with other involved administrations/institutions regarding the preparation of the concept of centralized ownership model. The specific objective of this assignment is to draft the concept note in tandem with the international expert on the subject, as well as to facilitate the organization and implementation of the working group with national stakeholders with a purpose to elaborate a consensus model of centralized ownership.

As a Stage II of the assignment, after the completion of the above-mentioned task and upon the consent of the Ministry of Economy the expert may be engaged in the development of draft legal act on centralized management of SOEs based on concept.