Upon entering the European ERM-II Exchange Rate Mechanism on 10 July 2020, Croatia has committed to improve the governance of state-owned enterprises (SOEs) by revising and aligning national legislation with the OECD Guidelines on Corporate Governance of State-Owned Enterprises (the “SOE Guidelines”). While Croatia has already taken steps in this direction in recent years, there is room for improvement according to the OECD Review of the Corporate Governance of State-Owned Enterprises in Croatia. The Review was launched during an official virtual release event on 8 June 2021, involving representatives from the Croatian Government, the OECD and the European Commission, which financially supports the project under which the Review was developed.
The OECD Review of Croatia describes and evaluates the corporate governance framework of the Croatian state-owned enterprise sector relative to the SOE Guidelines. The Review recognizes the importance of recent reforms to improve corporate governance of SOEs, many of which have been financed by EU funds, and developed and implemented with technical support provided by the European Commission in cooperation with the European Bank for Reconstruction and Development (EBRD). However, more would be required to ensure a sustainable reform process in line with international standards.
The Review identifies 11 recommendations or priority areas for reform that should contribute to improve Croatian ownership and corporate governance practices relative to SOEs. Key recommendations include strengthening the state ownership function (notably through the establishment of an ownership coordination entity); improving transparency and disclosure practices as well as strengthening board autonomy and independence, amongst other aspects. Due to the current fragmented state of the legal and regulatory framework governing SOEs in Croatia, the OECD also recommends consolidating existing and relevant rules into one comprehensive law on SOEs.
According to the Croatian authorities, the Review is the most comprehensive and therefore the most valuable overview of the current corporate governance framework. In regard to the Review’s recommendations, Croatia is committed to carry out further reforms as indicated in the Review. As the current ownership rights are exercised among many ownership entities, comprehensive reforms will be needed (including through the development of a new Law) that should have an impact on the entire state administration. The new comprehensive law on SOE will be drafted in cooperation and with the technical support of the OECD, which should ensure that the law is drafted according to best international practices. On this basis, the Croatian authorities intend to develop an Ownership Policy and reform the institutional framework in order to achieve a greater centralization of the ownership function, in line with the first recommendation in the Review.
From the EU perspective, better management of state-owned enterprises is important to support a resilient recovery of the economy and to provide public services to citizens. DG REFORM is glad to continue its long-standing partnership on this key reform with the Croatian Authorities.