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Reform Support

Enhancing competencies of supervisory boards and audit committees in state-owned enterprises

Enhancing competencies of supervisory boards and audit committees in state-owned enterprises

Supporting reforms to foster an attractive business environment and increase competitiveness

Funding Programme
Year
  • 2019

Enhancing competences of supervisory boards and audit committees in state-owned enterprises 

The Commission supported Croatia in developing a new framework for enhancing the composition and competences of state-owned enterprises’ supervisory board and audit committees, hence an improvement in their effectiveness.  

Context   

In Croatia, state-owned enterprises (SOEs) continue playing a critical role in the economy. The state portfolio of state-owned enterprises is managed by the Ministry of Physical Planning, Construction and State Assets, which alongside line ministries, manages companies of special interest. Other SOEs are in the domain of the Restructuring and Sale Center (CERP).  

The enhancement of the supervisory boards and audit committees in the SOEs has been introduced in the National Reform Plan adopted in April 2018 and followed in the National Reform Plan adopted in April 2019.  This represents  one of the key steps to further improve corporate governance in these companies.  

Support delivered  

The Croatian Ministry of Physical Planning, Construction and State Assets received technical support from December 2019 until October 2021 to enhance the competences of supervisory boards and audit committees in state-owned enterprises.   

The project, funded by the European Union via the Structural Reform Support Programme (SRSP), consisted of:  

  • Recommendation report on improvements of composition and effectiveness of supervisory boards and audit committees in SOEs  
  • Guidance document on the effectiveness of SOE supervisory boards  
  • Guidance document on the roles and functioning of SOE audit committees  
  • Training of the supervisory board and audit committee nominees and current directors of SOEs  
  • Methodology document for determining the conditions and method for selecting candidates for a member of supervisory board in legal entities of special interest to the Republic of Croatia  

Results achieved  

The aim of the project was to develop a framework for enhancing the composition of SOEs’ supervisory boards and audit committees and improving their effectiveness. This was achieved by developing guidance and methodology documents and performing capacity-building activities (workshops) for the Ministry and CERP. This facilitated the transfer of knowledge and enabled them to support, guide and supervise the respective SOEs in implementing the guidance.  

Through these activities, a new framework has been designed to enhance the composition of SOEs’ supervisory boards and audit committees and improve their effectiveness. The framework is in the process of being implemented by the Ministry.  

The Guidance document on the effectiveness of SOE supervisory boards and the Guidance document on the roles and functioning of SOE audit committees have been adopted and published on the website of the Ministry (links below).   

The process for adopting a Government Decree on conditions for election and appointment of members of supervisory boards and management boards of legal entities of special interest to the Republic of Croatia and the manner of their election has also been initiated. 

The Decree should be adopted by the end of the first quartal of 2022. 

More about the project