Law On Amendments to Certain Legislative Acts of Ukraine on Improving Corporate Governance of Legal Entities in Which the State Is a Shareholder (Founder, Participant) (No. 5593-д) was signed by President of Ukraine Volodymyr Zelenskyy. MPs voted for the Law on 22 February 2024.

Preparing the draft law for adoption in the second reading has been one of the priorities of the Ministry of Economy over the past year.

“The President has signed the law that defines the rules of corporate governance of state-owned enterprises. This allows taking corporate reform to a new level and scaling up the work that has been going on for 8 years. It is also an important signal to investors that Ukraine will act according to the rules that are understandable to the civilised world, the basis of which is consistency and performance evaluation for the sake of efficiency,” Yuliia Svyrydenko, First Deputy Prime Minister of Ukraine - Minister of Economy of Ukraine, said.

The adoption of the law is also part of the European integration process and the IMF programme. The law brings Ukraine closer to OECD standards and balances them with the requirements of wartime.

The law provides for that the Government will develop a State Property Policy. This is a strategic document that determines for what purpose the state owns enterprises, which companies are strategic and should be kept in state ownership, and which should be transferred for privatisation.

For strategic companies, a shareholder and the Ministry of Finance will set requirements through letters of expectation with indicators of profitability, liquidity and solvency.

Supervisory boards will decide how to meet these targets. In addition, supervisory boards will have the authority to appoint and dismiss company executives. An internal control system is emerging - instead of audit committees, there will be effective tools: compliance, risk management, and internal audit.

Instead, the Government is to develop and approve a procedure for assessing the performance of supervisory boards and a procedure for determining remuneration.

The law also provides a clear list of grounds and procedure for dismissing members of supervisory boards.

While working on the draft law, the Ministry engaged a technical support project from the EBRD, and expert assistance was also provided by representatives of international organisations, including the EBRD, IMF, OECD, USAID, international partners and members of the Ukrainian Parliament.