Revision of OECD Guidelines on Corporate Governance of State-Owned Enterprises and implications for state-owned enterprise reform in China

LU Tong1

(1.Institute of World Economics and Politics, Chinese Academy of Social Sciences)

【Abstract】The OECD Guidelines on Corporate Governance of State-Owned Enterprises was first published in 2005 and revised in 2015. The revised version emphasizes national ownership, reaffirms the principles that the state as the owner of SOEs should follow, advocates fair market competition among SOEs and equal treatment of all shareholders to protect shareholder interests. Meanwhile, the SOEs should meet higher-level transparency and information disclosure requirements and the board of directors should shoulder their fiduciary responsibility. The Guidelines can serve as an important reference for China’s SOE reform in terms of corporate governance, transparency, accountability mechanism and the effective exercise of the state’s ownership.

【Keywords】 OECD; state-owned enterprise; corporate governance; state ownership;

【DOI】

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(Translated by MO Yingqi)

    Footnote

    [1]. [1] Lu, T. & Dang, Y. International Economic Review (国际经济评论), (4): 134–149 (2015). [^Back]

    [2]. [1] Lu, T. China National Conditions and Strength (中国国情国力), (3) (2016). [^Back]

    [3]. [2] OECD, The Size and Sectoral Distribution of State-Owned Enterprises, 2017. The statistical data do not include China. [^Back]

    [4]. [3] OECD, The Size and Sectoral Distribution of SOEs in OECD and Partner Countries, 2014, OECD Publishing, p. 9. [^Back]

    [5]. [4] OECD, Disclosure and Transparency in the State-Owned Enterprise Sector in Asia: Stocktaking of National Practices, 2017. [^Back]

    [6]. [5] Lu, T. China National Conditions and Strength (中国国情国力), (4) (2018). [^Back]

    [7]. [1] Lu, T. China National Conditions and Strength (中国国情国力), (4) (2018). [^Back]

    [8]. [2] These Principles have been renamed the G20/OECD Principles of Corporate Governance following their revision in 2015 and their endorsement by the G20 Finance Ministers and Central Bank Governors Meeting on September 4–5, 2015. [^Back]

    [9]. [1] According to OECD, Partners that are invited to participate in any of the Organization’s Committees and other bodies are referred to as Associates with the same rights and obligations as OECD Members. Associates are expected to participate in Committee work and the decision-making process and comply with the Committee’s decisions, proposals and resolutions unless otherwise noted. They have to pay a certain amount of fees. [^Back]

    [10]. [2] Invitees are invited to one meeting at a time for discussion on specific issues. A Committee needs a one-off clearance from Council to invite a certain Partner as Invitee. Invitees are out of the decision-making process and not subject to the Committee’s decisions, proposals and resolutions. Invitees do not pay fees. [^Back]

    [11]. [3] The OECD Council has designated China, Brazil, India, Indonesia and South Africa as Key Partners of the OECD based on a Resolution on Enlargement and Enhanced Engagement in 2007. [^Back]

    [12]. [4] The Ministry of Commerce was in charge of the international cooperation and coordination with OECD and the representatives of SASAC participated in the drafting session of the Guidelines. The author participated in the seminar on revising the OECD Guidelines on Corporate Governance of State-owned Enterprises in Beijing on September 12, 2013 as an expert. Representatives of the OECD Working Party, leaders of the Ministry of Commerce and the SASAC, as well as representatives of some Chinese SOEs were present at the seminar. [^Back]

    [13]. [1] Valuable comments are given by OECD’s institutional consultation partners, the Business and Industry Advisory Committee and the Trade Union Advisory Committee, as well as the Argentine Institute for Governance of Organisations, the Asian Development Bank, the Baltic Institute of Corporate Governance, the Brazilian Association of Capital Market Investors, the Brazilian Institute of Corporate Directors, Guberna, the Inter-American Development Bank, the International Corporate Governance Network, the Latin American Development Bank, the Malaysian Directors Academy, the Myanmar Development Resource Institute Centre for Economic and Social Development, the Myanmar Institute of Certified Public Accountants, the Pakistan Institute of Corporate Governance, the Philippine Institute of Certified Public Accountants, the Philippine Institute of Corporate Directors, the Singapore Institute of Directors, the Union of Myanmar Federation of Chambers of Commerce and Industry and the United Nations Economic Commission for Africa. [^Back]

    [14]. [1] OECD. Corporate Governance Accountability and Transparency: A Guide for State Ownership. Li, Z. & Xie, H. (trans.) Beijing: China Financial & Economic Publishing House, (2011). [^Back]

    [15]. [2] Lu, T. China National Conditions and Strength (中国国情国力), (4) (2018). [^Back]

    [16]. [3] Norwegian Ministry of Trade, Industry and Fisheries, Diverse and Value-creating Ownership, 2014. [^Back]

    [17]. [1] Lu, T. & Dang, Y. International Economic Review (国际经济评论), (4): 134–149 (2015). [^Back]

    [18]. [2] The author obtained the latest information after exchanging with the Ownership Department of the Norwegian Ministry of Trade, Industry and Fisheries in October 2017. [^Back]

    [19]. [3] Lu, T. & Dang, Y. International Economic Review (国际经济评论), (4): 134–149 (2015). [^Back]

    [20]. [1] Lu, T. China National Conditions and Strength (中国国情国力), (4) (2018). [^Back]

    [21]. [2] Lu, T. & Dang, Y. International Economic Review (国际经济评论), (4) 134–149 (2015). [^Back]

    [22]. [1] OECD, Competitive Neutrality: Maintaining a Level Playing Field Between Public and Private Business, 2012. [^Back]

    [23]. [2] OECD. Corporate Governance Accountability and Transparency: A Guide for State Ownership. Li, Z. & Xie, H. (trans.) Beijing: China Financial & Economic Publishing House, 33 (2011). [^Back]

    [24]. [3] Lu, T. & Dang, Y. International Economic Review (国际经济评论), (4): 134–149 (2015). [^Back]

    [25]. [1] OECD. Corporate Governance: A Survey of OECD Countries. Li, Z. & Xie, H. (trans.) Beijing: China Financial & Economic Publishing House, (2008). [^Back]

    [26]. [1] Actions of SOEs should be guided by relevant international standards, including the OECD Guidelines for Multinational Enterprises, which have been adopted by all OECD member countries and reflect all four principles contained in the ILO Declaration on Fundamental Principles and Rights at Work; and the UN Guiding Principles on Business and Human Rights. [^Back]

    [27]. [1] Norwegian Ministry of Trade and Industry, The Government’s Ownership Policy, p. 10, 2007. [^Back]

    [28]. [1] The provisions grant the enterprise the right to withhold and recover compensation from executives in cases of managerial fraud and other circumstances, for example when the enterprise is required to restate its financial statements due to material noncompliance with financial reporting requirements. [^Back]

    [29]. [1] Lu, T. International Economic Review (国际经济评论), (6): 134–145 (2016); Lu, T. Economic Information Daily (经济参考报), (2017-8-10). [^Back]

    [30]. [1] According to a report by China News Service on November 23, 2017, the Opinions on Establishing a System Where the State Council Reports to the Standing Committee of the National People’s Congress on Its Management of State-Owned Assets was adopted at the first meeting of the Central Leading Group for Comprehensively Continuing Reform of the 19th CPC Central Committee.报刊文摘, (2017-12-4). [^Back]

This Article

ISSN:1007-0974

CN: 11-3799/F

Vol , No. 05, Pages 119-134+7

September 2018

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Article Outline

Abstract

  • Context of the Guidelinesand their revisions
  • What can we learn from the Guidelines (2015)?
  • Implications of the Guidelines for SOE reform in China
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