RIGA - State-owned enterprises belong to our citizens, so these companies have a stronger obligation to explain their objectives to the public, Prime Minister Evika Silina (New Unity) said Tuesday at a conference on the Organization for Economic Co-operation and Development's (OECD) latest guidelines on corporate governance of state-owned enterprises.
The prime minister underlined that this obligation is particularly important during the times of economic volatility.
Silina noted that good corporate governance increases investor confidence, facilitates the initial public offering (IPO) process and promotes public and stakeholder trust. It also contributes to sustainable economic growth and environmental protection.
According to Silina, a number of reforms have been carried out to strengthen corporate governance. For instance, two weeks ago, the Saeima adopted legislative amendments providing for a division of state-owned companies into three additional groups based on their source of income and the nature of activities.
Until now, state-owned enterprises have been divided into large, medium-sized and small companies, depending on the number of employees, total balance sheet and net turnover. This classification is currently used to determine the number and remuneration of members of the executive boards and supervisory boards of wholly state-owned companies.
The law will further subdivide public corporations into three groups based on their sources of revenue and the nature of their activities: commercial activities or the provision of public functions, as well as the amount of state or municipal budget funding received.
The amendments also stipulate that a letter of expectations will have to be drafted before a business development strategy can be developed, Silina said.
The prime minister informed that the government had signed an agreement with business organizations on the introduction of good corporate governance principles to promote economic growth and innovation.
"Together we have the opportunity to set an example of excellence in governance, which will attract investment and benefit all Latvian citizens," Silina said at the conference.
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