Corporate governance reform at Ukrainian state-owned enterprises (SOEs) has reemerged as a national priority since April 2021 following management changes at energy giant Naftogaz.

Tellingly, at the July 2021 Ukraine Reform Conference in Vilnius, US Secretary of State Antony Blinken named a new law on SOE corporate governance as one of Ukraine’s top five priorities.

As initiators of the proposed corporate governance law currently under consideration, we would like to explain why it matters so much.

Corporate governance reform at Ukrainian SOEs enjoyed a very promising start in 2014, with Naftogaz initially pioneering bold changes inspired by the OECD Guidelines on Corporate Governance of SOEs. Reforms implemented at Naftogaz spurred changes at the national level, leading to a new law in 2016 that introduced independent supervisory boards, improved disclosure, and established stronger audit requirements at Ukrainian SOEs. The legal changes of 2016 were a good first step towards introducing better corporate governance and implementing OECD SOE Guidelines.

However, despite being launched in several important Ukrainian SOEs, corporate governance reform then stalled in 2018-2019 and was never completed. Some of the most important issues remained contested, such as the right to appoint and dismiss the CEO, the accountability of the supervisory board, and the appropriate remuneration of board members and top executives.

Reloading Ukraine’s corporate governance reforms – Atlantic Council