Board Leadership and Corporate Governance for State Owned Enterprises

The Government, as a major shareholder in SOEs, faces a wide range of risks associated with the operations of SOEs, including financial, reputation, political and operational risks. It is the responsibility of each Executive Authority (in whom the primary responsibility for appropriate SOE oversight and accountability to Parliament rests) to ensure that these risks are identified, reduced and managed. In this regard, a key requirement of SOEs is to report and account for their performance to the relevant Executive Authority in respect of financial and non-financial matters, at the same time, however, maintaining independence in the conduct of their duties and free from day to day involvement by the Executive Authority. In order to ensure that there are no actual or perceived conflicts of interest and that SOEs achieve the Government's broad policy objectives and ensuring that the SOE's boards operate efficiently and effectively, the Government would like to spell out its intentions and envisaged relationship with SOEs in this Protocol, Shareholder Compacts and Policy Framework for SOE released by the relevant Executive Authorities from time to time.

The board of the SOE has absolute responsibility for the performance of the SOE and  is fully accountable to the shareholder for such performance. As a result, the board should give strategic direction to the SOE, and in concurrence with the Executive Authority appoint the chief executive officer and ensure that an effective succession plan for all directors and key executives is in place and adhered to.

Practical examples based on Corporate Governance Principle when Managing SOE’s will be used to highlight the operationalization of the theory into practice