OECD Review of the Corporate Governance of State‑Owned Enterprises in Ukraine 2026

3. Assessment of Ukraine against OECD Guidelines on Corporate Governance of SOEs

Abstract

Chapter 3 assesses Ukraine’s corporate governance framework for SOEs and its alignment with the OECD Guidelines on Corporate Governance of SOEs. It reviews Ukraine’s legal, institutional and policy frameworks in light of the provisions of the Guidelines and examines how these frameworks are applied in practice across the SOE sector. The assessment is structured in accordance with the seven chapters of the SOE Guidelines, covering: (i) rationales for state ownership; (ii) the state’s role as an owner; (iii) SOEs in the marketplace; (iv) equitable treatment of shareholders and other investors; (v) disclosure, transparency and accountability; (vi) the composition and responsibilities of the boards of SOEs; and (vii) SOEs and sustainability.

3.1. Rationales for state ownership

Key findings

I. The state exercises the ownership of SOEs in the interest of the general public. It should carefully evaluate and disclose the rationales that justify state ownership and subject these to a recurrent review.

Ukraine has taken important steps to clarify the rationale for state ownership through the adoption of the State Ownership Policy, triage lists and a privatisation strategy. However, ownership rationales for individual SOEs remain fragmented across multiple legal acts and special regimes, creating uncertainty around objectives, governance arrangements and performance expectations. The absence of a unified classification of SOEs - distinguishing commercial, non-commercial and strategic enterprises – complicates oversight, particularly given the size and diversity of the SOE portfolio. While the State Ownership Policy foresees publication of ownership rationales for each SOE, this requirement is currently suspended under martial law.

The review recommends strengthening the articulation of ownership rationales for individual SOEs in the short term and aligning the triage process more clearly with these rationales. This should include a structured overview of public policy objectives and public service obligations (PSOs) for each enterprise. Over the medium term, Ukraine should institutionalise a transparent, criteria-based triage mechanism to determine which SOEs should remain in state ownership and which are suitable for privatisation. Introducing explicit SOE categories and periodically reviewing ownership rationales would support strategic clarity and ensure continued alignment with state priorities.

Table 3.1. Recommendations on rationales for state ownership

	Short-term recommendation	Long-term recommendation
1	Sharpen articulation of ownership rationales for individual SOEs and align triage with these rationales.	Institutionalise and periodically apply triage to determine SOEs for retention, corportatisation or privatisation, by ensuring consistent, portfolio-wide application of the existing State Ownership Policy criteria.
2	Revise the State Ownership Policy to include explicit and transparent ownership rationales for economically significant SOEs, with flexibility as to where these rationales are documented (e.g. State Ownership Policy, annexes, sectoral documents), and progressively reflected in letters of expectations where appropriate once the framework stabilizes.	Base assessments and categorisation on transparent, technocratic criteria supported by market studies.
3		Establish clear contractual frameworks and adequate budgetary compensation for SOEs fulfilling PSOs.

Source: OECD Secretariat compilation.

3.1.1. Articulating the rationales for state ownership

I.A. The ultimate purpose of state ownership of enterprises should be to maximise long-term value for society, in an efficient and sustainable manner.

In Ukraine, the ultimate decision-making authority for establishing, retaining, or dissolving SOEs resides with the Cabinet of Ministers (CMU), as defined by the Law on Management of Objects of State Property. The CMU sets the conditions for SOE creation and operation, selects appropriate ownership entities, and oversees decisions on reorganisation or liquidation - particularly when enterprises are classified as strategically important. This centralised decision-making structure aligns formally with the expectation that state involvement in enterprises should serve the long-term interests of society rather than ad hoc political objectives.

Under Law No. 3587‑IX, the rationale for state ownership is now explicitly codified, along with standards for supervisory board composition, transparency obligations, disclosure requirements, and the primacy of institutional separation between ownership, policymaking and regulatory functions. These provisions collectively aim to promote efficient and sustainable value generation from SOEs by mandating accountability and institutional clarity. Furthermore, the State Ownership Policy adopted in November 2024 serves to operationalise this framework through a triage, classification criteria, and a mechanism for issuing letters of expectations to guide performance in accordance with strategic objectives. Although the State Ownership Policy replaced earlier bespoke ownership policies set for individual SOEs, it preserves longstanding aims to ensure that retained SOEs operate under clear commercial or public policy mandates.

The triage embedded in the State Ownership Policy classifies SOEs according to whether they should be retained, privatised, reorganised or liquidated, based on their public purpose, financial performance and market context. This systematic approach fosters efficient management of the state portfolio and avoids sustaining loss-making or mission-inappropriate enterprises. Special obligations, mandated under sectoral or public policy imperatives, are acknowledged within this framework but are differentiated from purely commercial mandates, thereby enabling targeted public policy implementation while preserving economic efficiency.

When it comes to SOEs of strategic importance,1 the CMU retains direct oversight over their governance and strategic decisions. These enterprises are subject to more rigorous review and approval processes, including direct validation of governance decisions at the highest executive level. While the State Ownership Policy and Law No. 3587‑IX provide a general governance framework, strategic SOEs are governed under additional scrutiny due to their significance, raising both opportunities for coherence in national strategy and challenges in safeguarding operational autonomy.

Overall, Ukraine’s ownership framework formally aligns with the OECD Guidelines on Corporate Governance of SOEs (“SOE Guidelines”) in emphasising state ownership’s long-term societal value, promoting efficiency through portfolio discipline, and differentiating between strategic and commercial roles. However, realisation of these principles requires robust implementation: consistent deployment of triage decisions, public disclosure of classification results, diligent use of expectations letters, and transparent management of strategic enterprises.

At the municipal level, Ukrainian municipalities are allowed to establish Municipally Owned Enterprises (MOEs). As of January 2025, there were 13 901 MOEs2 (Government of Ukraine, 2022[1]). MOEs are often established in competitive markets, for which no clear rationale for state intervention exists. MOEs operate under the oversight of local councils, and play a crucial role across various sectors, including healthcare, municipal administration, utilities, and transportation. Despite their importance, MOEs generally receive significant state aid and often underperform financially, with operational inefficiencies and governance challenges hindering their potential (OECD, 2021[2]). Compared to the corporate governance frameworks in SOEs, MOEs tend to operate with lesser transparency and more informal governance practices. While some local councils have begun implementing corporate governance reforms for certain MOEs, these efforts remain limited in scale and scope, and the overall governance system for MOEs remains underdeveloped.

Although MOEs are outside the direct oversight of the central government and scope of this Review, their operations, regulatory environments, and governance frameworks are critical components of Ukraine's broader economic and administrative landscape. While the overarching principles of good corporate governance are consistent for both MOEs and SOEs, their practical application can vary. Legal frameworks with corporate governance requirements for MOEs may differ, necessitating tailored reforms that address their specific context and challenges.

3.1.2. Ownership policy

I.B. The government should develop an ownership policy. The policy should, inter alia, define the overall rationales and goals for state ownership, the state’s and other shareholders’ role in the governance of SOEs, how the state will implement its ownership policy, and the respective roles and responsibilities of those government offices involved in its implementation.

In 2018, Ukraine adopted its first ownership framework, the Basic Principles – Introduction of an Ownership Policy for State-Owned Enterprises, which outlined general rationales for state ownership and high-level governance objectives, but offered little enterprise-specific guidance. Responding to fragmentation and weak mandates, the Cabinet of Ministers required the development of ownership policies for the top 15 SOEs in 2021.

In November 2024, Ukraine adopted a new and comprehensive ownership policy via CMU Resolution No. 1369. This policy was required as per the Law No. 3587-IX. The State Ownership Policy defines overarching rationales for state ownership, sets strategic ownership goals, and delineates institutional roles and responsibilities across the ownership function. It also establishes the procedural framework for implementing the policy, including the development of ownership rationales, the issuance of owner’s expectations, and performance monitoring mechanisms.

The State Ownership Policy classifies SOEs into categories based on ownership rationale and outlines procedures for privatisation, reorganisation, or liquidation of non-strategic entities. It further introduces financial and non-financial objectives, sets out procedures for setting and reviewing performance targets, and anchors the use of the letters of expectations as a central tool for aligning ownership intent with enterprise-level action. These expectations are to be operationalised through various internal SOE documents, including strategic development, investment, and financial plans. The State Ownership Policy also establishes principles for competitive neutrality and includes a dedicated privatisation strategy.

Importantly, the State Ownership Policy stipulates that its provisions apply to existing SOEs and makes clear that individual ownership rationales must be developed and disclosed within three months following the repeal of martial law. Until then and as noted earlier, many disclosure obligations - including those related to ownership rationales - remain suspended. While the State Ownership Policy itself is publicly available, the classification of SOEs based on ownership rationale (which is a requirement set out in the State Ownership Policy), adopted in December 2024 by CMU decision, has not yet been disclosed. Moreover, the State Ownership Policy does not include procedures for determining whether to establish new SOEs, potentially leaving gaps in how future state ownership is evaluated prospectively. For example, as the ownership policy was prepared during wartime, ownership rationales tied to defence purposes may unjustifiably allow for the expansion of the role of the state or exclude valid alternatives.

Although the State Ownership Policy formally defines roles and responsibilities among key actors, such as the Ministry of Economy, State Property Fund, Ministry of Finance, and sectoral ministries, the implementation of these provisions remains in progress. Notably, the State Ownership Policy does not yet include detailed institutional workflows for managing planning and monitoring State Ownership Policy across entities, nor does it centralise data management processes that would enhance coherence in implementation. Furthermore, while the ownership policy sets forth a strong legal foundation, operational practices such as the issuance of letters of expectations, performance reporting, and coordination among oversight bodies are still being institutionalised.

In line with the SOE Guidelines, Ukraine has taken significant legislative steps to define the rationales and governance goals of state ownership, establish the roles of government offices, and articulate how the policy should be implemented. Future efforts may focus on individual SOE-level disclosures, and providing full clarity on how ownership entities will manage performance in line with stated goals. As such, while the State Ownership Policy represents a major advancement in aligning Ukraine’s framework with international standards, the focus now must shift to full operationalisation and consistent application, particularly once martial law conditions are lifted.

Box 3.1. General objectives and rationale under the State Ownership Policy

The State Ownership Policy defines the general objectives for retaining enterprises under state ownership as:

• Meeting public demand for goods and services that are not provided by the private sector, particularly due to the low profitability of such activities

• Implementing public policy objectives that are not directly linked to generating state budget revenue

• Safeguarding economic competition

• Ensuring sustainable economic development while adhering to social and environmental responsibility principles

• Maximising the value of enterprises and business entities with state corporate rights

The State Ownership Policy also outlines the rationales for SOE ownership:

• Provision of essential goods and services in areas where private sector entities cannot operate effectively

• Natural monopolies

• Ensuring national security and defence capability

• Fulfilling public policy objectives

Source: Cabinet of Ministers of Ukraine (2024[3]), State Ownership Policy, https://zakon.rada.gov.ua/laws/show/1369-2024-%D0%BF.

3.1.3. Ownership policy accountability, disclosure and review

I.C. The ownership policy should be subject to appropriate procedures of accountability to relevant representative bodies and disclosed to the general public. The government should review at regular intervals its ownership policy and evaluate its implementation.

In accordance with the requirement for transparency and public accountability, Ukraine’s State Ownership Policy was adopted through a Resolution of the Cabinet of Ministers and is publicly accessible. However, while the government’s broader legislative and regulatory framework generally follows formal legislative procedures and involves some stakeholder engagement, the State Ownership Policy itself appears to have been developed without public consultation. Although laws are typically tabled and debated publicly, drafts are rarely released early enough for comment, and CMU protocol decisions are not always published.

Regarding regular review and evaluation, the State Ownership Policy establishes a clear framework: submissions to the CMU no later than one year after approval, and thereafter at least once every five years, to revise and assess implementation. This requirement implies a first review is due by March 2026. Moreover, the December 2024 CMU classification of SOEs - based on Ministry of Economy proposals - remains undisclosed, and there is no formal mechanism within the State Ownership Policy to evaluate the rationale behind establishing new SOEs.

3.1.4. Defining state-owned enterprise objectives

I.D. The state should define the rationales for owning individual SOEs and subject these to recurrent review. The rationales for ownership, and any public policy objectives that individual SOEs, or groups of SOEs, are required to achieve should be clearly linked to their main line of business, mandated by the relevant authorities and publicly disclosed.

In line with the SOE Guidelines, Ukraine has taken important legislative steps toward defining and systematising the rationale for state ownership. The adoption of Law No. 3587-IX, along with the approval of the State Ownership Policy by the Cabinet of Ministers, provides a foundation for identifying why the state retains ownership of specific enterprises. These legal instruments require that state ownership be guided by clear strategic and public interest considerations, with ownership entities mandated to prepare letters of expectations and other planning documents to ensure alignment with national policy objectives. The State Ownership Policy also outlines a triage (categorisation) process intended to group SOEs based on their ownership rationale - whether for retention, reorganisation, privatisation, or liquidation - thereby moving towards a more structured approach to portfolio management.

While the legal framework is largely consistent with the SOE Guidelines, several implementation gaps remain. Most notably, the State Ownership Policy does not yet include enterprise-level rationales for state ownership. Although the classification of SOEs into strategic categories was approved by the CMU in December 2024, the results of this classification have not been publicly disclosed. The State Ownership Policy explicitly defers the definition and publication of ownership rationales for individual SOEs until three months after the termination or repeal of martial law. As a result, at the time of writing, no public rationale exists that clearly links individual SOEs to their main lines of business or to public policy objectives.

Furthermore, while the State Ownership Policy introduces a requirement for its own review within one year of adoption and at least once every five years thereafter, no formal mechanism is yet in place to ensure recurrent review of the ownership rationales for each individual SOE. Nor is there a clearly defined procedure for evaluating the rationale behind the establishment of new SOEs, an omission that limits the scope of forward-looking portfolio planning. Although the legislative framework envisions the use of letters of expectations to communicate objectives and performance indicators to SOEs, these instruments are not yet systematically linked to disclosed ownership rationales.

Ukraine’s corporate governance reforms thus reflect a strong legal commitment to OECD standards on ownership rationale, but practical implementation remains at an early stage. Future efforts might concentrate on enterprise-level rationales, introduction of key provisions currently paused due to martial law, and clear mechanisms for recurrent review.

The enterprise objectives are determined by the ownership entity in the owner’s expectations letter. The approach described in the State Ownership Policy and summarised in the Table 3.2 is broadly consistent with the SOE Guidelines, which emphasise clearly defined and measurable objectives. However, it would be beneficial to explicitly single out sustainability indicators, currently grouped under non-financial objectives, and clearly distinguish between commercial (profit-oriented) and non-commercial (public service obligations) dimensions beyond just financial, operational, and non-financial classifications.

Table 3.2. Targets and indicators in Ukraine’s state ownership policy

Type of objectives	Targets	Recommended Indicators
Financial objectives	Financial stability Efficient use of capital Ability to meet obligations Increasing profitability Dividends	Profitability (operating profitability, EBITDA profitability, return on equity, return on assets, revenue growth, growth of operating costs) Solvency (financial stability ratio, EBITDA interest coverage, debt-to-EBITDA ratio, debt-to-equity ratio, debt-to-assets ratio) Liquidity (current/ quick/ absolute liquidity ratio, accounts receivable turnover, accounts payable turnover) Payments to the state Budget financing volumes (if applicable) Other financial indicators, with corresponding formulas for their calculation
Operational objectives	Efficiency and effectiveness of the operations Optimising production processes Efficient use of its assets Capital investments Reducing operating costs Expanding activities and the supplier base Achieving a certain level of customer satisfaction Conducting activities within approved risk limits	Operational target indicators should be determined based on the SOE’s specific activities, sectoral characteristics, regulatory requirements, and legislative provisions. It is recommended that the ownership entities set between 3 to 7 operational target indicators for each SOE. If an SOE receives budget funding and/or engages in quasi-fiscal operations, it is recommended that operational objectives include efficiency improvements in the use of state budget funds, ensuring cost-effective and resource-efficient delivery of results.
Non-financial objectives	Specific public policy goals Meeting public interests (including national security and environmental protection) Fulfilling special obligations Corporate social responsibility Sustainable development Employee development	Fulfilling special obligations assigned to the SOE. Implementing measures outlined in national strategies and regional development programmes. Contributing to national security, including protecting critical infrastructure. Supporting state defence capabilities, ensuring public safety during martial law, integrating alternative energy sources, preparing for winter periods, or relocating the SOE. Undertaking enterprise reorganisation measures. Improving corporate governance. Ensuring transparency in SOE operations, financial performance, and key decisions affecting stakeholders. Implementing corporate social responsibility initiatives, including respecting human rights, contributing to social and economic development, and promoting environmental sustainability and renewable energy adoption. Enhancing human resource management practices. Developing and implementing a risk management system, including identifying, analysing, and monitoring potential threats and integrating adaptive risk mitigation mechanisms. Additional non-financial objectives may also be established for SOEs. The non-financial target indicators should be determined based on the SOE’s specific activities, sectoral characteristics, regulatory requirements, and legislative provisions. It is recommended to set between 3 to 7 non-financial target indicators for each SOE.

Source: Cabinet of Ministers of Ukraine (2024[3]), State Ownership Policy, https://zakon.rada.gov.ua/laws/show/1369-2024-%D0%BF.

The State Ownership Policy and the Methodological Recommendations issued by the Ministry of Economy envisage both interim and annual reporting on the achievement of targets set in the letters of expectations. However, the letters of expectations framework appear to duplicate certain aspects of the financial planning and reporting framework, and efforts should be made to avoid potential redundancy in SOE planning and reporting requirements (Verkhovna Rada of Ukraine, 2024[3]).

In August 2025, 38% of operating SOEs lacked approved letters of expectations, 41% lacked strategic development plans, 24% lacked financial plans, and 55% lacked medium-term investment plans for 2025. The high rate of non-approval may indicate that the planning framework requires adjustments. This could be addressed as part of a future review of the State Ownership Policy.

Box 3.2. Letters of expectations for selected SOEs in 2025

Ukrhydroenergo

The letter of expectations begins with a general description of the company’s activities and the current war-related context. It outlines financial, operational, and non-financial goals, specifying target indicator values for their achievement. Additionally, the letter describes the company’s corporate governance framework, including its current status and future plans. In the priority section, instead of prioritising specific goals, the company lists priority measures aimed at achieving these goals. The company acknowledges the costs of special obligations, as defined by the CMU, within its financial KPIs. However, these special obligations are not included in the company’s non-financial goals.

Ukrposhta

The letter of expectations outlines the main activities of Ukrposhta, along with its financial, operational, and non-financial goals, specifying target indicator values for their achievement. The objective of the enterprise is to ensure the continuous fulfilment of its functions as the national postal operator of Ukraine and the operator for pension delivery across all government-controlled territories, including frontline areas, where the security situation permits. According to the letter, Ukrposhta does not have any special obligations.

Lisy Ukrainy (Forests of Ukraine)

The letter of expectations outlines the main activities of Lisy Ukrainy, along with its financial, operational, and non-financial goals, specifying target indicator values for their achievements. The letter references the charter when describing the purposes of the enterprise, which include:

• forestry management, including the protection, conservation, sustainable use, and regeneration of forests

• hunting management, covering the protection, reproduction, and sustainable use of the state hunting fund within designated hunting grounds

• meeting the needs of the state or territorial communities on an industrial or commercial basis

• Generating profit from commercial activities.

According to the letter, Lisy Ukrainy does not have any special obligations.

Source: Questionnaire responses from the Ukrainian Government received in February 2025.

3.2. The state’s role as an owner

Key findings

II. The state should act as an informed and active owner, ensuring that the governance of SOEs is carried out in a transparent and accountable manner, with a high degree of professionalism and effectiveness.

There has been notable progress in Ukraine’s legal framework for state ownership, particularly through the new SOE Law and the State Ownership Policy. Nevertheless, ownership functions remain highly fragmented across nearly 80 institutions, with line ministries often combining policymaking, regulatory and ownership roles. This dispersion weakens accountability, limits professional oversight and results in uneven implementation of governance reforms. In practice, many SOEs still lack approved letters of expectations and strategic or financial plans, while incomplete boards and interim management arrangements continue to expose enterprises to political influence.

The Review recommends establishing a coordinated ownership model in the near term, with professional capacity to monitor performance, support implementation of the legal framework and reduce conflicts of interest. Ministries should clearly separate ownership, policy and regulatory functions and strengthen co-operation with the Ministry of Finance on fiscal oversight. Over the longer term, Ukraine should move towards a centralised or formally coordinated ownership entity with operational autonomy and clear accountability. Standardised letters of expectations, periodic policy reviews and a formalised role for supervisory board chairs would further strengthen the state’s capacity to act as an informed and professional owner.

Table 3.3. Recommendations on the state’s role as an owner

	Short-term recommendation	Long-term recommendation
1	Require ministries to separate policy, regulatory and ownership roles; establish interim (transitional) coordination framework which ensures oversight, monitoring and compliance with the new SOE Law.	Consolidate oversight of economically significant SOEs under a centralised or coordinated ownership model in line with international best practices, ensuring adequate autonomy, capacity and accountability.
2	Professionalise state ownership entities and raise their institutional capacity.	Establish portfolio-wide monitoring and professionalisation mechanisms for consistent state ownership practices.
3	Enhance institutional-level co-operation with Ministry of Finance on fiscal risk oversight and dividend strategy.
4	Work towards better compliance with the legal framework (address high rates of unapproved letters of expectations, plans).
5	Develop a single unified SOE categorisation framework used consistently across government and avoid parallel or overlapping categorisation systems, while allowing categorisation to be set out in formal secondary legislation or guidance.
6	Strengthen State Ownership Policy safeguards and formalise structured channels of dialogue between the shareholder and supervisory boards, including through the chair acting on behalf of the board as a collective body.

Source: OECD Secretariat compilation.

3.2.1. Simplification of operational practices and legal form

II.A. Governments should simplify and standardise the legal forms under which SOEs operate. Their operational practices should follow commonly accepted corporate norms.

In Ukraine, SOEs continue to operate under a broad range of legal forms, governed by multiple and sometimes overlapping regulatory frameworks (Table 3.4). As of September 2025, there remains no unified or simplified regime governing all SOEs, although important legal reforms have been adopted to standardise corporate structures and enhance governance. Historically, SOEs have been constituted as state unitary enterprises, treasury (budget-funded) enterprises, joint-stock companies, or more recently, limited liability companies. This regulatory diversity has resulted in inconsistent governance standards, with significant disparities in transparency, internal control, and disclosure practices across these forms (OECD, 2021[2]).

Large state-owned business groups, organised as holdings, concerns or state corporations, are also gradually being reorganised into JSCs, in line with efforts to consolidate governance practices and apply international norms. However, the JSC Law and other corporate legislation do not set out a clear legal framework to enable a robust governance model for group company structures, nor do they provide mechanisms to optimise processes for improving decision-making efficiency and clarifying responsibilities at the group level. Despite this trend, many SOEs still function as state unitary or state enterprises, which until 2024, were not subject to modern corporate governance requirements. To close this gap, the following pieces of legislation were adopted in 2024: Law No. 3587-IX and Law No. 4196-IX on the Regulation of Legal Entities During the Transition Period. These laws aim to modernise governance standards across legal forms, and phase out outdated organisational forms.

Law No. 3587-IX modernises and standardises governance standards across all SOE types, establishing clearer requirements for disclosure, internal controls, and supervisory boards. Law No. 4196-IX provides the legal basis for the eventual elimination of outdated forms such as state unitary and treasury enterprises and encourages their transformation into JSCs or LLCs. While both laws represent a major step forward, implementation will depend on institutional capacity, political support, and financial and technical resources, particularly given the volume of legacy enterprises still operating under the older frameworks.

Table 3.4. Overview of legal forms of SOEs in Ukraine

Legal Form	Scope	Governance Requirements	Subject to NSSMC Oversight	Current Reform Status
State Unitary Enterprise	Legacy form. Mostly small and medium SOEs. Often service providers	A supervisory board is mandatory if an SOE meets the criteria outlined in the State Ownership Policy. The disclosure requirements are envisaged by the same Policy.	No	Phased out under Law No. 4196-IX. Transformation into JSCs or LLCs encouraged.
Treasury (Budget-Funded) Enterprise	Entities funded through the state budget. Often service-based.	Limited financial independence. No modern governance framework.	No	To be phased out under Law No. 4196-IX.
Joint-Stock Company	Common among large SOEs. Corporatised entities from privatisation era.	A supervisory board is mandatory if an SOE meets the State Ownership Policy criteria, is a listed company, or falls under the category of an enterprise of public interest, subject to the JSC and SOE Law. In addition to NSSMC's disclosure requirements, the disclosure obligations outlined in the State Ownership Policy apply.	Yes	Modern governance framework in place. Standardisation ongoing.
Limited Liability Company	Increasingly used for operationally flexible enterprises.	No capital market requirements. Governance regulated by LLC Law. Disclosure requirements are envisaged by the State Ownership Policy. No NSSMC disclosure.	No	Increasingly used; requires complementary internal regulation to ensure transparency and accountability.
State Corporations/ Holdings	Previously used for complex group structures.	Governance varies. Often informal and uncoordinated.	No	Being transformed into JSCs to standardise governance.
Municipal Enterprise	Subnational entities for local service provision.	Weak governance standards. No mandatory supervisory board.	No	To be phased out under Law No. 4196-IX and new entities prohibited. Voluntary transformation into business companies allowed (no fixed timeline).
State-Owned Bank (JSC form)	Financial institutions under state control.	High governance standards: independent board, risk/audit/internal control units; subject to the JSC Law and Banking Law, regulated by NBU	Yes	Strong regulatory framework; aligned with Basel Principles.

Note: Until recently, JSCs – particularly those established during the privatisation wave of the 1990s and 2000s – were the dominant legal form among corporatised SOEs. LLCs were not widely used in the public sector; however, recent reforms have increasingly embraced them as a flexible and efficient alternative, particularly for enterprises not engaged in capital markets. The successful operation of the GTSOU as a state-owned LLC demonstrates this potential. Nevertheless, SOEs operating as LLCs fall outside the regulatory purview of the NSSMC, raising concerns about gaps in public disclosure and financial transparency. Tailored solutions may be needed at the level of companies’ internal regulations to ensure that these entities meet comparable standards to JSCs in governance and oversight.

Source: Verkhovna Rada of Ukraine (2024[4]), Law No. 3587-IX on State-Owned Enterprises; https://cis-legislation.com/document.fwx?rgn=157299/. Verkhovna Rada of Ukraine (2025[5]), Law No. 4196-IX, https://www.avnbmu.com.ua/en/news/on-the-law-of-ukraine-dated-january-9-2025-no-4196-ix/ ; OECD Secretariat analysis.

MOEs face an even more fragmented regulatory environment. Governed primarily by the outdated Commercial Code and local government legislation, MOEs are often used for the provision of public services at the subnational level. The entry into force of Law No. 4196-IX in early 2025 partially brings MOEs under its remit by suspending the creation of new entities in outdated forms and allowing for voluntary transformation into business companies. However, the law sets no specific deadline for reorganisation, meaning implementation will likely vary depending on local discretion and resources. Importantly, the corporate governance of MOEs remains underdeveloped compared to SOEs, with ongoing discussions around a dedicated draft law still pending formalisation.

The repeal of the Commercial Code marks a significant shift in Ukraine’s corporate legal landscape. Moving forward, business activity will be governed under the Civil Code and sector-specific laws such as the SOE Law and JSC Law. This will require careful legal harmonisation but offers the potential for greater legal clarity and standardisation.

A specific category of SOEs is formed by state-owned banks, which operate under a more developed governance framework. Established as JSCs, these institutions are subject to general corporate legislation, the SOB governance regime, and banking-specific regulation from the NBU. State-owned banks must maintain independent supervisory boards and robust internal control systems, aligning with international standards such as the Basel Principles. While this three-tiered governance regime adds regulatory complexity, it has contributed to improving governance and operational resilience in the banking sector.

While Ukraine still operates under a legally fragmented SOE landscape, major legislative efforts to standardise and modernise the legal forms and governance of SOEs are being implemented. The success of these efforts will rest on their full and timely implementation, adequate support for transformation at all levels of government, and continued legal harmonisation to avoid regulatory loopholes. The shift towards JSCs and LLCs as dominant forms is a welcome evolution, and should be complemented by clear and enforceable rules to ensure transparency and accountability regardless of form.

3.2.2. Ownership expectations and operational autonomy

II.B. The state should clearly define owners’ expectations, allow SOEs full operational autonomy to achieve them and refrain from intervening in the management of SOEs. The state as a shareholder should redefine SOE expectations in a transparent manner and only in cases where there has been a fundamental change of mission.

In Ukraine, political interference and ad hoc control over large SOEs have historically undermined progress in corporate governance reform. Although supervisory boards of major SOEs have been legally entrusted with exclusive powers - such as appointing and dismissing CEOs - governments have circumvented these provisions by exploiting legal loopholes, including the mechanism allowing management bodies to temporarily exercise supervisory board functions in their absence. This has enabled politically motivated appointments and dismissals, often to the detriment of good governance.

High-profile episodes have exposed the fragility of governance autonomy. The dismissal of Naftogaz’s supervisory board in 2021 and the more recent events at Ukrenergo - where growing political pressure triggered board resignations - have drawn criticism from Ukraine’s international partners. These events highlighted the persistence of informal political control and the need for a clearer and more resilient governance framework that both empowers professional boards and shields SOEs from undue interference.

Recent reforms most notably through Law No. 3587-IX have sought to rebalance this relationship by embedding the principles of strategic ownership, operational autonomy and accountability. As noted earlier, the law requires ownership entities to annually issue letters of expectations, which outlines key priorities and performance indicators. This mechanism introduces clarity around the state’s role as shareholder and reinforces its accountability obligations. In parallel, the law empowers supervisory boards to develop strategic plans, financial documents and investment programmes within this framework, ensuring that performance expectations are implemented at arm’s length.

Moreover, supervisory boards are now responsible for preparing proposals regarding financial indicators - including profitability, liquidity, and dividend targets - and participating in structured consultations with the ownership entity during the drafting of the owner’s expectations letters. When implemented, this establishes a more balanced model of engagement, in which the ownership entity retains strategic control while supervisory boards and executive management retain operational independence to execute these expectations.

The State Ownership Policy reinforces the principle of operational autonomy by codifying clear boundaries between the ownership entity, the supervisory board, and executive management. It prohibits the ownership entity from exceeding its mandate or interfering in operational decisions, while obliging supervisory boards to respect the independence of the executive body in day-to-day matters. These safeguards are designed to shift the state’s role from operational overseer to strategic shareholder and to better align SOE governance with international standards (Verkhovna Rada of Ukraine, 2025[6]). The sunsetting of certain requirements imposed during martial law will also help reduce legal ambiguities in the application of Law No. 3587-IX.

3.2.3. Independence of boards

II.C. The state should let SOE boards exercise their responsibilities and should respect their independence. The ownership entity should establish and maintain appropriate frameworks for communication with SOEs’ highest governing body, and typically through the chair.

Ukraine has taken significant legislative steps to strengthen the independence and accountability of SOE supervisory boards. Law No. 3587-IX has considerably reinforced board authority by granting supervisory boards exclusive powers over the appointment and dismissal of executive management, as well as the approval of strategic, financial, and investment plans. The governance framework now centres on accountability to the ownership entity rather than subordination, allowing boards to be independent in exercising their duties. To operationalise this principle, supervisory boards have been formally granted the right to participate in consultations with ownership entities on decisions affecting the company. This has established a structured framework for institutional dialogue, ensuring that boards are not only legally empowered but also meaningfully engaged in setting strategic direction and interpreting owners’ expectations. The supervisory board is no longer seen as a technical extension of ministerial control but as an autonomous governance body operating within a rules-based ownership system.

The legal framework since 2017 further reinforces board independence by requiring that a majority of supervisory board members be independent. Even state representatives serving on the board are mandated to act independently and in the best interests of the company, bearing the same fiduciary responsibilities as independent members, although this principle is not always fully reflected in practice. Independence criteria are clearly defined under the JSC Law and SOE Law, and the selection of independent board members follows a competitive, merit-based process as outlined in Cabinet of Ministers Resolution No. 142/2017. This includes requirements regarding the candidate’s professional reputation, experience, and competencies.

Ownership entities are now tasked with nominating state representatives who meet (or contribute to) the established board profile and competency requirements, but it remains to be seen to what extent they apply structured board profile assessments or competency frameworks when making these nominations. Inconsistent application of such standards could lead to de facto political appointments.

Further clarity is provided in the State Ownership Policy, which delineates roles and responsibilities between the ownership entity, the supervisory board and executive management. The State Ownership Policy expressly prohibits ownership entities or other state actors from interfering in decisions that fall within the exclusive remit of the board or day-to-day operations. These safeguards are essential to insulating SOE boards from undue political pressure. Specific State Ownership Policy mechanisms include a prohibition against exceeding authority by any governing body and recognition of executive operational autonomy by supervisory boards.

The role of the corporate secretary, as outlined in the JSC Law and echoed in the State Ownership Policy, is also important to coordinate shareholder relations, support board function, and uphold governance practices. However, the position remains unevenly implemented across SOEs, particularly those not organised as JSCs.

While the legal framework has been strengthened, there is still continued risk of informal interference which underlines the need for stronger implementation of the legal safeguards introduced under the 2024 reforms. The case of Ukrenergo (see Box 3.3) provides a recent illustration. Despite being granted exclusive governance powers, the board faced mounting pressure from the government, ultimately leading to executive and board resignations in 2024. In conclusion, Ukraine has built a solid legislative and policy framework to support independent, competent, and strategically engaged SOE boards. However, effective implementation remains uneven, and certain institutional gaps - particularly with regard to board appointment practices, including the nomination and selection of state representatives to supervisory boards - must be addressed to ensure that supervisory boards can truly exercise their responsibilities free from interference.

Box 3.3. Governance Challenges at Ukrenergo

In May 2025, the Ministry of Energy of Ukraine, acting as the sole shareholder, approved amendments to the charter of the state-owned transmission system operator NPC Ukrenergo. The changes introduced a new voting requirement for the supervisory board, whereby the appointment and dismissal of the CEO, along with approval of long-term investment and development plans, required a qualified majority of five out of seven board members. Given that the board is composed of four independent directors and three state representatives, this change effectively grants the state a blocking minority over key corporate decisions.

These amendments were enacted without prior consultation with international financial institutions, most notably the EBRD, which is a major creditor of Ukrenergo. In response, the EBRD issued formal communications to the Ministry of Energy and the Ministry of Finance on 6 June 2025, indicating that the changes may violate loan agreements and could trigger provisions related to loan withdrawal or early repayment. The EBRD further urged the government to repeal the amendments, warning that they undermine commitments to uphold international corporate governance standards. Other international partners similarly raised concerns regarding consistency with Ukraine’s reform commitments under international financing arrangements.

In June 2025, following domestic and international stakeholders’ requests, the Ministry of Energy approved additional amendments to Ukrenergo’s charter. The charter introduced a simple-majority mechanism for CEO appointments following unsuccessful voting under a qualified majority rule, with the chair holding a casting vote in the event of a tie. Under the revised charter, the supervisory board may now appoint a CEO by simple majority, but only on the third round of voting, and only if previous attempts under the qualified majority rule have failed. In the event of a tie, the chair’s vote becomes decisive. While this modification partially alleviated immediate concerns, it did not fully restore the supervisory board’s exclusive authority as envisaged under Law No. 3587-IX, and retained elements of shareholder veto over key board decisions. Additional governance provisions - such as limiting the supervisory board’s consideration to executive candidates proposed through management channels - may further affect the board’s discretion in senior appointments. As governance arrangements continue to evolve, aligning charter provisions with the principle of board autonomy remains important.

Other major energy SOEs have faced similar governance challenges. In May 2025, the Ministry of Energy amended GTSOU’s charter to require a qualified majority for the appointment of a CEO. Moreover, Energoatom and Ukrhydroenergo’s charters were also amended to include qualified majority provisions for strategic decisions. Such charter amendments are viewed to undermine supervisory board independence in key energy SOEs. These practices raise concerns regarding the consistency of charter-level governance arrangements with the intent of recent SOE legal reforms, particularly regarding the protection of board autonomy and the role of independent directors.

Overall, these developments illustrate the tension between formal legal compliance and the practical realities of state influence. They also highlight the ongoing importance of sustained engagement to ensure the sustainability of Ukraine’s SOE reform agenda. They further underscore the need for systematic alignment of SOE charters with the SOE Law and State Ownership Policy, to prevent the reintroduction of discretionary controls through subsidiary legal instruments.

Source: ICIS (2025[7]), Ukrainian electricity, gas TSOs at risk of state interference after charter changes, https://www.icis.com; Interfax-Ukraine (2025[8]), Ukrenergo management board expected by end of July alongside green bond restructuring completion, https://en.interfax.com.ua/news/economic/1084848.html.

3.2.4. Centralisation of the ownership function

II.D. The exercise of ownership rights should be clearly identified within the state administration and be centralised in a single ownership entity. If this is not possible, relevant ownership functions should be coordinated by a designated body with a clear mandate to act on a whole of-government basis.

Ukraine has a decentralised ownership model for its SOEs with over 80 central executive bodies, ministries, and state agencies exercising ownership rights. The Cabinet of Ministers is formally assigned the ownership rights to key SOEs, including Naftogaz Group and Ukrzaliznytsia, though operational oversight is often delegated to respective line ministries. Although a renewed legal framework is now in place, this structure has historically led to challenges such as overlapping roles in policy formulation, regulation, and ownership, resulting in potential conflicts of interest and inefficiencies in SOE management. The table below outlines the updated institutional framework for state ownership in Ukraine.

Table 3.5. State ownership in Ukraine: updated institutional framework

Institution	Responsibilities
Cabinet of Ministers	Assigns ownership responsibilities to relevant ministries/agencies and approves classification of SOEs. Approves state ownership policy. Oversees audits and strengthens internal control and compliance requirements for SOEs. Approves CEO and supervisory board appointments for major SOEs, and appoints committees as required. Adopts State Ownership Policy, dividend and remuneration policies. Approves borrowing/ guarantee rules for SOEs.
Ministry of Economy	Submits SOE portfolio reports to Cabinet; aggregate reporting process is ongoing (first aggregate report to be produced by 2026). Oversees the exercise of the state’s corporate rights by ownership entities and monitors SOE performance. Prepares State Ownership Policy and methodical guidance for financial planning. Identifies strategic SOEs tied to national security and economy. Coordinates nomination processes for supervisory board appointments in key SOEs. Works with international partners on corporate governance reforms aligned with OECD principles.
Ministry of Finance	Monitors fiscal impact of SOEs and approves budget subsidies for SOEs managed by line ministries. Approves financial indicators to include in key SOE strategic documents. Continues oversight of state‑owned banks (dual role with NBU for banks). Works with Cabinet on dividend policy and fiscal risk management.
Line Ministries	Decides establishment, restructuring, liquidation of SOEs under their ownership (strategic decisions still require Cabinet approval). Approves owner’s letters of expectations and conducts audits. Approves supervisory board performance evaluations. Appoints/ dismisses SOE executives when boards are not yet established.
National Bank of Ukraine	Does not perform general ownership functions except over the Settlement Centre and delegated bank oversight roles. Oversees corporate governance in state‑owned banks; can demand management changes and evaluate corporate governance systems. Ensures currency stability, maintaining banking sector stability.
State Property Fund	Holds authority to establish, manage and liquidate SOEs/ property. Leads privatisation activity, including transition of certain SOEs to SPFU for sale/ preparation. Continues managing sanctioned property and state real estate as required. Acts as state representative in partially privatised companies. Maintains the Unified Register of State‑Owned Property.

Note: Updated as per the government reorganisation in July 2025.

Source: OECD Secretariat research.

While Ukraine has made important steps towards clarifying the state’s ownership function, the country has yet to consider different ways to centralise ownership. Ownership rights remain fragmented across nearly 80 institutions, including line ministries, the State Property Fund, other state bodies, and local authorities. This dispersion of responsibilities hinders effective oversight and strategic direction, and falls short of the SOE Guidelines’ recommendation to centralise ownership under a single dedicated entity - or at minimum, to coordinate functions through a clearly mandated body operating on a whole-of-government basis (OECD, 2021[2]).

Reforms introduced through Law No. 3587-IX and the State Ownership Policy mark progress towards institutional convergence. Both establish unified requirements for all ownership entities, such as preparing annual letters of expectations, approving key financial indicators, and participating in the development of corporate strategies. In addition, the State Ownership Policy foresees the creation of coordination mechanisms to harmonise methodologies, planning processes, and appointment practices across the SOE sector. These provisions aim to increase coherence and promote convergence of approaches towards the dispersed SOE portfolio.

However, systemic agency problems persist, particularly due to overlapping roles within line ministries. Ministries often serve as both policymakers and ownership entities, a structural duality that creates conflicts of interest. Ministries responsible for setting regulatory policies for a sector may simultaneously exercise ownership over SOEs within the same domain.

In practice, while some ministries have established separate structural units or designated staff for ownership-related functions, these arrangements remain largely internal, informal, and uneven across ministries. Regulatory, policymaking, and ownership responsibilities often continue to be exercised within the same institutional hierarchy, without formal firewalls, separate reporting lines, or dedicated governance mandates, limiting the effectiveness of functional separation.

Table 3.6. Overview of ownership entities

Ownership entity	Number of SOEs
State Property Fund	1 689
State Forest Resources Agency	90
Ministry of Energy	142
Ministry of Justice	126
Ministry of Defence	104
JSC Ukrainian Defence Industry	101
National Academy of Sciences	94
National Academy of Agrarian Sciences	92
Ministry for Development of Communities and Territories	46
Ministry of Economy, Environment and Agriculture	50
Ministry of Culture and Information Policy	44
State Migration Service	32
State Administration of Affairs	26
Ministry of Education and Science	20
Ministry of Health	20
State Agency for Restoration and Infrastructure Development	14
State Agency for Exclusion Zone Management	13
Ukrainian State Construction Corporation "Ukrbud"	13
Administration of the State Service of Special Communications and Information Protection	10
State Service on Food Safety and Consumer Protection	8
Secretariat of the Verkhovna Rada (Cabinet of Ministers of Ukraine)	10
Cabinet of Ministers	10
State Service for Geodesy, Cartography, and Cadastre	9
State Space Agency	10
Ministry of Finance	9
Other	134

Note: Data for 2023.

Source: Questionnaire responses from the Ukrainian Government received in February 2025.

Despite the legal separation of ownership, supervisory, and executive functions as introduced by the State Ownership Policy, these distinctions remain largely nominal in practice. Many ministries continue to operate under dual mandates, blurring lines between these responsibilities with the potential to shape SOE decisions through a sectoral or political lens rather than based on commercial logic or efficiency considerations.

3.2.5. Accountability of the ownership entity

II.E. The ownership entity should have the capacity and competencies to effectively carry out its duties, and be held accountable to the relevant representative bodies. It should have clearly defined and transparent relationships with relevant public entities.

Ukraine has established a multi-layered framework for the accountability of ownership entities, although the coherence and functionality of this framework remain uneven. Ownership entities - mainly line ministries and the SPFU - are indirectly accountable to the Verkhovna Rada via government ministers. However, formal parliamentary oversight is provided through Article 16-1 of Law No. 3587-IX, which mandates the Committee on Economic Development of the Verkhovna Rada to oversee SOE governance. The Committee can conduct hearings, review budgetary flows from SOEs, summon officials and propose legislative changes. While the committee does not intervene in SOE operations, its role provides democratic oversight and policy accountability.

Complementing this institutional oversight, the State Ownership Policy introduces a structured system of performance reporting. Ownership entities must annually submit enterprise-level performance and financial data to the Ministry of Economy and financial support data to the Ministry of Finance. These inputs are consolidated into an Annual Aggregated Report on SOE Performance, intended to provide holistic data on governance, financial results, implementation of ownership expectations, and compliance with corporate governance standards. The first report under the new framework is expected to be submitted to the Cabinet of Ministers by 1 July 2026, covering the results of 2025. The Ministry of Economy is currently developing the necessary regulatory framework and data collection procedures to ensure readiness, and has signalled its commitment to full public disclosure once martial law is lifted - a positive step towards restoring transparency (see also assessment under II.F.4).

Despite these formal processes, implementation practices vary across the SOE portfolio. While legal reporting obligations are robust, the timeliness, completeness, and public availability of reports are inconsistent, particularly among large and strategically important SOEs operating under martial law exemptions. Oversight by external bodies, such as the State Audit Service and the Accounting Chamber, adds an additional layer of control. These entities possess significant sanctioning authority and contribute to fiscal and operational scrutiny, however, their findings are primarily used for compliance and audit purposes and are not yet systematically consolidated or fed into state ownership evaluations at the portfolio level.

Furthermore, capacity limitations and fragmentation among ownership entities hinder effective implementation of the state ownership policy and related public policy objectives. The reporting obligations are widely dispersed across institutions, and the absence of a professionalised centralised or coordinated ownership function dilutes strategic oversight at the portfolio level, rather than at the level of individual enterprises. Coordination is further complicated by the fact that some ownership bodies (e.g. the SPFU) are accountable to multiple actors (President, Parliament, Cabinet), leading to blurred mandates and challenges in consistently enforcing governance expectations across the SOE portfolio. In practice, instances have arisen where line ministries and coordinating authorities have held differing interpretations of their respective responsibilities - for example in relation to charter amendments - creating uncertainty as to which institution holds ultimate decision-making authority.

3.2.6. The state’s exercise of ownership rights

II.F. The state should act as an informed and active owner and should exercise its ownership rights according to the legal structure of each enterprise and depending on its respective degree of ownership or control. Prime responsibilities of the ownership entity include:

II.F.1. Being represented at the general shareholders meetings and effectively exercising voting rights.

Ukraine has established a legal framework for state representation at general shareholder meetings, with clear rules set out in Article 11 of the SOE Law and further operationalised by CMU Resolution No. 678. These instruments provide that designated state representatives act on behalf of the ownership entity based on formal powers of attorney and must follow explicit voting instructions, particularly for significant transactions (above 25% of company assets). The JSC Law ensures regular shareholder oversight by mandating annual shareholder meetings and allowing for extraordinary meetings under certain conditions.

In wholly SOEs, where the state is the sole shareholder, formal general meetings can be replaced by official decisions of the ownership entity, such as owners’ decisions, ministerial orders or Cabinet resolutions. This streamlined process is legally valid but the quality and consistency of voting instructions from ownership entities can vary in practice, and there is limited evidence on how systematically the state exercises its shareholder rights in this way to influence strategic decision-making, as opposed to other means such as shareholder dialogue.

II.F.2. Establishing and safeguarding well-structured, merit-based and transparent board nomination processes, actively participating in the nomination of all SOEs’ boards, and contributing to gender and other forms of board and management diversity.

Following the adoption of the SOE Law and revised nomination procedures, the framework governing the appointment of supervisory board members has been streamlined. Board nominations are now primarily regulated by the SOE Law and CMU Resolutions Nos. 142 and 143. In accordance with these instruments, ownership entities are responsible for amending SOE charters to incorporate supervisory boards, adopting board nomination policies, and forming nomination committees that set and apply selection criteria. Supervisory boards may determine their own internal committee structures, except where specific committees are mandated by law. Independent board members are generally appointed through competitive processes, although under the wartime legal framework - notably CMU Resolution No. 643 - competitive selection under the centralised Nomination Committee currently applies only to 11 SOEs, while the general nomination procedure remains suspended for other enterprises during martial law. State representatives are either appointed by the ownership entity or, in the case of strategic SOEs, nominated through procedures involving the centralised nomination committee.

For strategic SOEs, the ownership entity participates in the nomination committee, whereas for other SOEs the committee is composed of at least three members, primarily representatives of the ownership entity, and may additionally include the chair of the SOE’s supervisory board or its nomination and remuneration committee, provided such person is not a candidate and consents to participate. For SOEs subject to the centralised nomination procedure under CMU Resolution No. 142 - currently applicable to 11 enterprises - a centralised nomination process is in place. A permanent nomination committee - comprising ministers or their deputies, representatives of ownership entities, and four independent experts with advisory voting rights - is tasked with overseeing competitive selections. These committees are supported by executive search firms that assist in drafting vacancy announcements and evaluation criteria, developing candidate criteria and submitting shortlists. Following the formal adoption of revised nomination procedures by the Cabinet of Ministers on 31 December 2025 (Resolutions Nos. 142, 143 and 777), the functioning of the committee has been further formalised through clearer timelines, procedural rules, and standardised documentation, helping to address earlier concerns related to unstructured and non-transparent processes.

Despite this framework, implementation has been undermined by temporary wartime exemptions and lack of procedural clarity. CMU Resolution No. 643, introduced under martial law, permits SOE board appointments without competitive selection procedures. It arbitrarily exempts several enterprises from the requirements of CMU Resolution No. 142, effectively sidelining formal nomination processes foreseen by the SOE Law. However, on 31 December 2025, the Cabinet of Ministers formally adopted revised Resolutions Nos. 142, 143 and 777, developed with EBRD support. The amendments fulfilled an IMF structural benchmark originally due in August 2025 and responded to repeated concerns raised by international partners regarding the effectiveness and credibility of SOE board nomination processes, particularly in the energy sector. Rather than replacing the existing Nomination Committee framework, the revisions strengthen and operationalise it by addressing practical implementation gaps identified during earlier selection rounds.

The revised framework introduces a number of substantive improvements aimed at strengthening merit-based selection and reducing political discretion. Most notably, it introduces the concept of a board profile, prepared by the supervisory board and approved by the shareholder, which serves as the reference point for assessing candidates. This shifts selection away from evaluating individual candidates in isolation towards building a balanced and complementary board as a collective body.

For SOEs subject to the centralised nomination process, ownership entities must provide SOE performance data and draft candidate criteria to the Ministry of Economy and the CMU. If the shareholder fails to initiate the selection process in a timely manner, responsibility formally shifts to the Ministry of Economy, reinforcing shared accountability for continuity of board governance. The nomination committee is tasked with reviewing candidate shortlists, requesting additional integrity or criminal checks where appropriate, approving announcements, and submitting final proposals for Cabinet approval. Initial candidate vetting is typically conducted by the executive search firm, while the committee’s secretariat supports the execution of further background checks.

Although the SOE Law mandates that SOEs must initiate the nomination process for board members at least three months before term expiry (or within 10 days of early dismissal), this requirement has not been uniformly met. In the case of Ukrzaliznytsia, the previous supervisory board’s term formally expired on 28 December 2024, but the competitive nomination process for a new board under the SOE Law was not completed until October 2025, indicating a delay between expiration and appointment of a new supervisory board.

In the case of state-owned banks, supervisory boards are governed by the Law on Banks and Banking rather than the SOE Law. Under this framework, the nomination process must begin four months prior to the expiry of board members’ terms, and incumbent members continue exercising their duties until new appointments are approved. However, delays in board member approvals at Ukreximbank - particularly for independent candidates awaiting clearance from the National Bank of Ukraine - illustrate practical obstacles to full compliance with these procedural requirements.

Updated nomination procedures under the revised Resolutions Nos. 142, 143, and 777 explicitly define competitive selection timelines for independent members, including minimum notice periods, required qualification frameworks, and notification obligations for expiry of board terms. To reduce delays and candidate attrition, the amendments introduce clearer and shorter timelines for each stage of the selection process, as well as staggered documentation requirements. Supporting documents such as diplomas, criminal record certificates and references are now required only at the shortlisting stage and only where the information is not already available through the Diia government portal.

The amendments also significantly strengthen procedures for selecting state representatives. Their nomination is no longer treated as a separate or subsequent process but is aligned, to the extent feasible, with the selection of independent directors. At least two candidates must now be proposed for each state representative position, and their assessment must demonstrate how, together with independent members, they contribute to fulfilling the approved board profile. In addition, the revised procedure allows ownership entities, where appropriate, to use the general competitive selection procedure for independent supervisory board members when appointing state representatives.

Box 3.4. Nomination committee in strategically or economically important SOEs

For entities deemed economically important for the economy, the CMU has formed a centralised Nomination Committee (hereafter “the Committee”), and the Ministry of Economy provides informational, organisational, and logistical support. The composition of the Committee has changed over the years, and it currently consists of the following:

• Minister of Economy (who can be substituted by a Deputy Minister if the Minister is absent)

• Minister of Finance (who can be substituted by a Deputy Minister if the Minister is absent)

• First Deputy State Secretary of the Cabinet of Ministers of Ukraine

• Head or deputy head of the ownership entity

• Four independent (non-governmental) experts (approved by the CMU)

Importantly, under the revised procedures, voting rights within the Committee differ depending on the nature of the decision. Only state representatives have the right to vote on matters directly related to the determination of the winners of the competitive selection procedure. For other matters - including approval of the information note on the results of the selection procedure, evaluation of the performance of executive search firms, and approval of procedures for appointing non-state members of the Committee - independent experts also have the right to vote.

The decision of the Committee is no longer taken through secret voting, as this mechanism has been abolished under the revised procedure. Decisions are adopted based on the majority of votes of committee members entitled to vote state representatives and present at the meeting. Under the updated framework, the process for selecting winners of competitive selections has been strengthened through the introduction of a ranking-based methodology. Each Committee member assigns ranking scores to candidates on the shortlist, ranging from 1 to the maximum number corresponding to the total number of shortlisted candidates. These scores are aggregated, and candidates with the highest total ranking are recognised as the winners of the competitive selection. When assigning ranking scores, Committee members are required to take into account the need to ensure the overall suitability and balance of the supervisory board as a collective body.

Once the results are submitted, the CMU takes the decision on the appointment of the proposed candidates, the contestants are notified, and the information becomes publicly available.

If the CMU were the ownership entity launching the selection process, the Committee would include (instead of the head or deputy head of the ownership entity) the Minister or Deputy Minister of the central executive body engaged in forming and implementing state policy in a given field. That is, if the Ministry of Economy or the Ministry of Finance were the ownership entities, then the Committee would only include the Minister of Economy (or First Deputy), the Minister of Finance (or Deputy), and four independent experts.

For SOEs whose supervisory boards are appointed outside the centralised Committee framework, the revised resolutions introduce an important safeguard by requiring the chair of the supervisory board or the chair of the SOE Committee to participate in the selection commission. This aims to strengthen professional input and reduce shareholder-driven discretion in non-centralised selection processes.

Source: OECD (2021[2]), OECD Review of the Corporate Governance of State-Owned Enterprises: Ukraine, https://doi.org/10.1787/7755a3f9-en.

State representatives in economically important SOEs are also subject to approval by the nomination committee but do not require a transparent selection process. The ownership entity proposes candidates for the Committee’s approval; if no consensus is reached, the Ministry of Economy can escalate the matter to the CMU. In contrast, in most other SOEs, state representatives are directly appointed by ownership entities without a formal nomination procedure.

Gender and other forms of diversity in board composition are recognised in legislation but weakly enforced in practice. Under the revised procedures, diversity considerations have been more clearly defined and formally incorporated into the nomination framework. The SOE Law requires adherence to principles such as professionalism, openness and equality. The State Ownership Policy also encourages diversity, but enforcement mechanisms are limited. Currently, only about 20% of SOE board members are women. Law No. 12376, introduced in January 2025, proposes that gender quotas in SOEs meet certain thresholds (over 250 employees, EUR 50 million in revenue, or EUR 43 million in assets). The draft law includes quotas applicable to different genders, rather than being limited solely to female representation.

Overall, Ukraine’s legal and procedural framework for board nominations in SOEs includes some of the elements required by the SOE Guidelines: clearly defined roles for ownership entities, use of nomination committees, competitive selection processes, a formalised board profile, enhanced procedural clarity, aligned state representative selection, staggered documentation requirements, clear timelines, and strengthened transparency mechanisms, and growing reliance on professional search firms. Achieving a fully functional, transparent, and merit-based nomination process will require the full implementation of ongoing legal reforms and the reversal of current martial law derogations.

II.F.3. Setting and monitoring the implementation of broad mandates and expectations for SOEs, including on financial targets, capital structure objectives, risk tolerance levels and sustainability consistent with the state’s rationales for ownership.

Ukraine has made notable progress in formalising the state's role in setting and overseeing strategic mandates and performance expectations for SOEs, particularly following the State Ownership Policy and accompanying methodological guidelines. Central to this effort is the owner’s expectations letters, which outlines performance goals for each SOE in alignment with the state’s rationale for ownership. These letters aim to serve as an accountability mechanism, ensuring SOEs operate consistently with public policy priorities and maintain financial discipline.

The expectations letters must be based on each SOE’s strategic development plan, a medium-term document outlining operational and financial objectives over a period of at least three years. These strategic plans form the basis for annual targets and are required to be made public. The Ministry of Economy has issued methodological recommendations to guide the preparation of these documents, enhancing consistency across the SOE portfolio. For SOEs that are large, state-funded, or engaged in activities with fiscal impact, pre-approval from the Ministry of Finance is required before key financial indicators are finalised, adding an additional layer of oversight.

The expectations letters must include quantifiable financial indicators, such as return on assets, liquidity and solvency ratios, state payments (including dividends and taxes), volume of state budget financing, and engagement in quasi-fiscal operations. These indicators are tailored to the enterprise’s sector and operations, and are intended to act as measurable benchmarks for monitoring performance. In parallel, ownership entities are also responsible for approving maximum capital investment thresholds for SOEs, again with Ministry of Finance input where applicable, ensuring alignment with broader fiscal and budgetary constraints.

Despite the formalisation of these instruments, their effectiveness in practice remains contingent on robust implementation and follow-up. As noted previously, 38%, of operating SOEs lacked approved letters of expectations, 41% lacked strategic development plans, 24% lacked financial plans, and 55% lacked medium-term investment plans for 2025. In conclusion, the State Ownership Policy outlines a strong policy framework, but consistent application across the SOE sector and a systematic performance monitoring process - linked to board evaluations and incentive structures - will be essential to ensure proper oversight.

II.F.4. Setting up reporting systems that allow the ownership entity to regularly monitor and assess SOE performance, and oversee and monitor their compliance with applicable corporate governance standards, including by making use of digital technologies.

Ukraine has taken steps to establish reporting systems that allow for more regular and centralised monitoring of SOE performance and compliance with governance standards, although gaps in enforcement and data integration remain. The legal and regulatory framework governing SOE reporting is comprehensive but complex, built around the State Ownership Policy, the amended SOE Law, and implementing instruments such as CMU Resolutions No. 832 and No. 1067. According to Article 16 of the SOE Law and CMU Resolution No. 832, ownership entities are accountable to the Ministry of Economy and must submit periodic reports on SOE performance. The State Ownership Policy and related legislation require quarterly and annual reports across multiple dimensions, including:

• the performance against the letter of expectations

• progress on strategic development plans

• financial and investment plans

• fulfilment of capital investment thresholds

• quasi-fiscal operations

• the supervisory board’s annual report, which must assess the fulfilment of SOE objectives.

Ownership entities in Ukraine are legally obliged to disclose information on SOE economic and financial performance, submitting these both to the Ministry of Economy and, historically, making them publicly available. To enhance transparency, the Ministry of Economy and Transparency International Ukraine, developed the ProZvit portal, which until 2021 hosted financial statements of over 3 500 state enterprises, providing basic profitability and loss data per enterprise. The portal was formally transferred to JSC Prozorro.Sale in 2021. However, public access to ProZvit was suspended in early 2022 due to security concerns under martial law, and the platform has not been regularly updated since. Limited resources and insufficient technical capacity have prevented its modernisation or relaunch, creating a continued gap in publicly available SOE data. Internal reporting systems such as Best Zvit reportedly aggregate performance data but remain inaccessible to the public. Re-establishing a functioning and secure disclosure platform – either through ProZvit or a modern alternative – remains critical to restoring transparency and accountability in the SOE sector.

Digitalisation has also extended to financial reporting. Under the Law on Accounting and Financial Reporting in Ukraine and Resolution No. 419/ 2000 on the Procedure for Submission of Financial Statements, a unified electronic reporting system in XBRL format has been implemented. Operated by the NSSMC, this system allows for standardised, machine-readable financial submissions aligned with international reporting standards, improving data quality and accessibility for oversight entities.

For JSCs, particularly those with state ownership, the NSSMC mandates compliance with disclosure rules and corporate governance requirements. JSCs must submit annual corporate governance reports using a “comply or explain” model referencing the National Corporate Governance Code. Despite this framework, compliance and data quality remain uneven across the SOE portfolio, especially for enterprises not structured as JSCs or with weak internal governance. Reporting obligations are fragmented across multiple legal instruments, creating duplication, inconsistent application, and inefficiencies.

The integration of sustainability risks into SOE risk management frameworks is progressing but remains uneven across the sector. Ukraine’s State Ownership Policy and legal framework emphasise the importance of responsible business conduct, including the need for enterprise-level risk-based due diligence to identify, prevent, and mitigate adverse impacts on people, society, and the environment. However, practical implementation of these sustainability obligations remains limited, and systematic integration into board-level risk management and reporting is not yet widespread.

Table 3.7. SOE reporting instruments, responsible institutions and information disclosed

Reporting Instrument	Responsible Institution	Type of Information Disclosed
Law on Management of State Property Objects	Cabinet of Ministers/ Ownership entities	Strategic plans, performance indicators, general meeting resolutions, charters
Law on Transparency of Use of Public Funds	State Treasury/ Ministry of Finance	Use of state budget funds, state aid, public service obligations
Law on Access to Public Information	NACP Ombudsman	Public access to SOE data, including governance and budgetary info
Joint-Stock Company Law	NSSMC/ Ownership entities	Financial statements, shareholder meeting minutes, board composition, corporate events
NSSMC Regulations on Disclosure by Issuers	NSSMC	Reporting of material facts, corporate governance practices, annual and quarterly financials
CMU Resolution No. 1067	Cabinet of Ministers/ Ownership entities	Objectives, financials, board/executive bios and remuneration, use of public finance, risk disclosures
State Ownership Policy	Ministry of Economy	Standardised templates for letters of expectations, strategy documents, governance practices
Law No. 4149	Verkhovna Rada/ Ministry of Economy	Updated disclosure requirements for SOEs replacing Commercial Code

Source: Verkhovna Rada of Ukraine (1991–2024), relevant laws; Cabinet of Ministers of Ukraine (2024[9]), Resolution No. 1067, https://cis-legislation.com/document.fwx?rgn=161669; OECD Secretariat compilation.

II.F.5. Developing a disclosure policy for SOEs that identifies what information should be publicly disclosed, the appropriate channels for disclosure, and mechanisms for ensuring quality of information.

Ukraine’s framework for SOE disclosure has evolved substantially, especially with the adoption of the State Ownership Policy and CMU Resolution No. 1067, which together provide detailed guidance on the types of information SOEs are expected to make publicly available. These requirements are underpinned by a broader legal foundation comprising the Law on Access to Public Information, the Law on Transparency in the Use of Public Funds, and the Law on Management of State Property Objects, with specific requirements further defined depending on the legal form of the SOE - particularly for JSCs, which fall under the remit of the NSSMC.

As stipulated in CMU Resolution No. 1067, SOEs must disclose a broad range of information including company objectives, charters, ownership structures, financial statements (quarterly and annual), board member biographies and qualifications, remuneration details, and board decisions. Additionally, SOEs are expected to provide transparency on public service obligations, risk exposures, contractual obligations, and the use of public resources or state aid. This aligns with international best practices in terms of the scope of information disclosed.

However, significant challenges remain in terms of the practical implementation and oversight of disclosure practices across the SOE portfolio. While legal disclosure requirements are comprehensive and set out in multiple laws and regulations - as is common in many jurisdictions - Ukraine currently lacks an aggregated SOE disclosure framework that clearly maps reporting requirements, responsible entities, disclosure channels, and quality assurance arrangements in a coherent manner. Disclosure obligations are therefore dispersed across financial sector regulation, public finance legislation, and sector-specific rules. In practice, this dispersion can contribute to uneven implementation and higher compliance costs, particularly for ownership entities managing multiple SOEs with different legal forms and reporting regimes, suggesting scope for further streamlining and guidance over time.

II.F.6. When appropriate and permitted by the legal system and the state’s level of ownership, maintaining continuous dialogue with external auditors and specific state control organs.

Ukraine’s legal framework provides a sound basis for facilitating dialogue between SOEs, external auditors, and state financial control bodies. In practice, however, this dialogue is not always systematic or institutionalised across the SOE portfolio. While bilateral interactions between SOEs and auditors generally take place as part of statutory audit processes, there is limited evidence of structured, portfolio-wide exchanges or consistent feedback loops linking audit findings to ownership oversight and follow-up actions, particularly under the constraints introduced by martial law. As a result, opportunities to fully leverage audit findings for strengthening financial discipline and ownership monitoring may not always be realised.

Under Article 29 of the Law on the Audit of Financial Statements and Auditing Activities, the supervisory board of an SOE - where established - is empowered to initiate the auditor selection process, typically via competitive procedures on the Prozorro procurement platform. While the final decision on auditor appointment rests with the general meeting or ownership entity, this mechanism grants the supervisory board an active role in shaping the audit relationship. The supervisory board is also tasked with reviewing audit outcomes and making recommendations for follow-up actions, although the extent to which these are acted upon varies in practice.

The legal provisions governing the audit relationship - including requirements for SOEs to co-operate with auditors and provide timely, accurate documentation - are codified in the JSC Law, the SOE Law, and the State Ownership Policy. These collectively establish a framework for audit integrity, yet they do not always guarantee sustained or meaningful engagement beyond the audit reporting cycle.

Importantly, the State Audit Service of Ukraine (SAS), while not an external auditor in the traditional sense, performs a complementary role as a public financial oversight body. It exercises ex post financial control over SOE’s use of public funds, including conducting state financial audits, as per the CMU Resolution No. 43/ 2016. Given its mandate and influence, maintaining structured, transparent, and timely interaction with SAS is critical, particularly for SOEs executing public service obligations or receiving state subsidies. However, these relationships have in the past been seen as reactive and compliance-driven, rather than embedded in a regular, constructive dialogue that supports improvements in internal control and risk management systems.

II.F.7. Ensuring that ownership rights are exercised on a co-ordinated basis when these are allocated to several ownership entities acting in concert.

The SOE Guidelines emphasise the need for state ownership rights to be exercised in a coordinated manner when an SOE has multiple state shareholders - for example, where shares are distributed across a ministry, a sovereign wealth fund, and a state-owned financial institution. In Ukraine, such cases are rare. The vast majority of SOEs are fully state-owned with one ownership entity representing the state’s interests. There are a few exceptions with a couple of SOEs that have more than one state-ownership entity due to fact that were partly state-owned, and then became fully state-owned due to temporary nationalisation during the wartime context.

Beyond those isolated examples, Ukraine’s state ownership system remains fragmentated. Recent reforms, notably the adoption of the State Ownership Policy represents a meaningful step toward greater coordination. Prior to the State Ownership Policy, ownership rights were distributed across various ministries, the State Property Fund, and local governments, each applying different standards, tools, and oversight practices. This decentralised model often led to duplicative efforts, inconsistent governance, and limited strategic oversight.

The adoption of the State Ownership Policy marks an important step towards greater coordination. It introduces a formal mandate for the Ministry of Economy to harmonise ownership practices, including through methodological guidance, coordination of annual letters of expectations, and training for ownership entities. Articles 49-51 of the State Ownership Policy also articulate the government’s intention to move towards a more centralised ownership function, although the provisions remain largely declarative and reflect a consensus-based approach to balancing centralisation efforts with existing institutional arrangements. This system is intended to streamline communication and data exchange between ownership entities, and to support performance monitoring and strategic planning. Once operational, it would allow different actors with ownership responsibilities to access harmonised performance data and apply consistent metrics in evaluating SOE outcomes. However, full institutional coordination is still in progress. Despite the formal coordination role of the Ministry of Economy, many line ministries continue to operate with a degree of autonomy in exercising ownership rights. There is no binding enforcement mechanism to ensure that the State Ownership Policy guidelines are adopted, and coordination depends heavily on informal practices and political will.

II.F.8. Establishing a clear and transparent overarching remuneration policy for SOE boards that fosters the long- and medium-term interest of the enterprise and can attract and motivate qualified professionals.

Ukraine has recently taken significant steps toward establishing a clear and transparent remuneration framework for SOE boards and executives. The adoption of the Remuneration Policy in November 2024, as part of the State Ownership Policy, sets out key principles and its stated aim is to ensure remuneration is fair, transparent, performance-based and able to attract qualified professionals. It applies to all legal forms of SOEs, CEOs of companies with over 50% state ownership, and members of their supervisory boards. The policy mandates that remuneration be determined through civil law contracts and capped according to fixed thresholds, with supervisory board members’ pay limited to 40% of the CEO’s remuneration ceiling. Additional supplements are permitted: 20% for supervisory board chairs and 10% for committee participants reflecting increased responsibilities.

A key objective of the new policy is to balance fiscal prudence with the need to retain professional talent, though its proportionality-based cap model lacks a published rationale or link to market benchmarks. The policy also embeds transparency obligations: SOEs must annually approve a remuneration report, disclosing individual compensation packages and related reimbursements (e.g. for travel, training), and publish this data online and on the Unified State Open Data Portal. These requirements are reinforced by the Law on Access to Public Information, which explicitly prohibits confidentiality of executive compensation data.

However, the broader regulatory framework governing SOE remuneration is still fragmented. In May 2024, the NSSMC issued its own Requirements for the Remuneration Policy and Remuneration Report for JSCs, including state-owned and public-interest companies.3 These require remuneration strategies to support long-term business goals and sustainability, with detailed reporting obligations. Yet, they diverge from the State Ownership Policy, particularly regarding the balance between fixed and variable pay, raising the need for harmonisation. Regulatory alignment between the State Ownership Policy and NSSMC rules is necessary to avoid conflicting expectations and implementation delays.

Overall, the implementation of the Remuneration Policy and the upcoming benchmarking study reflect Ukraine’s ongoing effort to institutionalise consistent, performance-linked compensation practices. However, regulatory fragmentation, the need for clear communication of the policy rationale to stakeholders, a lack of clearly communicated rationale for remuneration caps, and the pending nature of key studies highlight the importance of sustained coordination between the Ministry of Economy, CMU, and NSSMC to deliver a fully coherent remuneration governance framework applicable to SOEs. Notably, the introduction of remuneration caps represents a significant shift from earlier grid-based approaches and is broadly consistent with practices observed in several OECD jurisdictions, while preserving supervisory boards’ role in determining executive pay within established limits.

3.3. State-owned enterprises in the marketplace

Key findings

III. Consistent with the rationale for state ownership, the legal, regulatory and policy framework for SOEs should ensure a level playing field and fair competition in the marketplace when SOEs engage in economic activities.

SOEs in Ukraine continue to operate under uneven competitive conditions. While wartime support measures have been necessary, preferential financing, state guarantees, usufruct arrangements and exemptions from insolvency and state aid rules risk distorting competition and obscuring fiscal risks. Weak enforcement capacity of oversight institutions, including the Antimonopoly Committee of Ukraine, and limited independence of sectoral regulators further undermine competitive neutrality, particularly in energy and transport sectors.

The Review recommends progressively restoring state aid enforcement and market discipline as soon as wartime conditions allow. In the short term, legal exemptions and moratoria should be reviewed and narrowed to cases clearly justified by war-related market failures. Financial transparency should be strengthened through audited reporting, disclosure of guarantees and systematic reporting of PSO costs, supported by accounting separation. Over the medium to long term, preferential arrangements should be phased out where markets can function effectively, while regulators’ independence and enforcement powers should be strengthened to ensure a level playing field consistent with international competitive neutrality standards

Table 3.8. Recommendations on state-owned enterprises in the marketplace

	Short-term recommendation	Long-term recommendation
1	Review legal exemptions granted to SOEs, including moratoria on enforcement/insolvency, unless clearly justified.	Strengthen role of Antimonopoly Committee of Ukraine and other regulatory bodies, including through improved coordination with ownership entities, enhanced data-sharing, and systematic monitoring of implicit subsidies.
2	Lift limitations on the State Aid Law unless clearly justified; replace with targeted carve-outs for war-related market failures.	Institutionalise portfolio-level periodic reviews of state aid and prevent implicit subsidisation (cross-subsidies, price caps).
3	Ensure asset use arrangements involving SOEs are transparent, fair and appropriately compensated.	Ensure independent regulatory oversight and enforcement, with clear mandates and safeguards against conflicts of interest.
4	Implement the PSO Roadmap.

Source: OECD Secretariat compilation.

3.3.1. Separation of functions 

III. A There should be a clear separation between the state’s ownership function and other state functions that may influence the market conditions for state-owned enterprises, particularly with regard to market regulation and policymaking. 

According to the State Ownership Policy, the CMU designates ownership entities in such a way as to avoid concentrating both ownership and policymaking functions within the same public authority. This ensures that the same authority does not simultaneously exercise ownership rights over an SOE while also formulating and implementing state policy in the sector where the enterprise operates. While the State Ownership Policy addresses the separation of ownership and policymaking, it does not explicitly mention regulatory functions. It also remains unclear how the state will address existing cases where certain public authorities combine ownership and policy or regulatory functions towards SOEs (Verkhovna Rada of Ukraine, 2024_[3]).

Ukraine’s ownership model remains highly decentralised, with nearly 80 public authorities currently exercising ownership functions over SOEs. Many of these also carry sectoral policymaking and/ or regulatory mandates, creating overlaps and potential conflicts of interest. For example, the Ministry of Energy is the primary policymaker for the energy sector and also performs ownership functions for over 100 SOEs in that domain. The Ministry for Development of Communities and Territories of Ukraine is responsible for public policy in the transport sector and performs ownership functions for more than 70 SOEs, including the Ukrainian Sea Ports Authority, several seaport and airport operators, and the national postal operator Ukrposhta.

The CMU also performs ownership functions for a number of economically significant enterprises such as Naftogaz, Energoatom, Ukrhydroenergo, and the national railway company Ukrzaliznytsia, while concurrently exercising high-level policy-setting approval in the energy and transport sectors. In addition, the Ministry for Development of Communities and Territories of Ukraine plays a role in approving railway tariffs for Ukrzaliznytsia, and continues to exercise policymaking responsibilities in the sector.

Additional examples further illustrate the blurred boundaries between policy, regulatory, and ownership functions. In the forestry sector, the State Forest Resources Agency of Ukraine both formulates and implements policy in forest and hunting management and performs ownership functions for State Enterprise Forests of Ukraine. A further example includes the State Agency for Restoration and Infrastructure Development of Ukraine, which performs ownership functions for State Joint Stock Company 'Automobile Roads of Ukraine', a company also involved in road construction and reconstruction. This highlights the need for functional separation where the state, as an owner, also acts as a client procuring services from the same SOE. 

While some degree of coordination between policy and ownership functions may be necessary, current arrangements in several sectors means that in practice, any ministries continue to operate under dual mandates blurring lines between these responsibilities with the potential to shape SOE decisions through a sectoral or political lens rather than based on commercial logic or efficiency consideration. A next iteration of the State Ownership Policy could involve a comprehensive mapping of ownership, policy, and regulatory functions across its portfolio to separate overlapping functions where appropriate.

3.3.2. Stakeholder rights 

III. B. Stakeholders and other interested parties, including competitors, should have access to efficient redress through unbiased legal, mediation or arbitration processes when they consider that their rights have been violated. SOEs’ legal form should allow SOEs to initiate insolvency procedures and for creditors to press their claims. 

As a general rule, SOE stakeholders, including creditors and competitors, have access to the same means of redress, including legal or arbitration processes, as the stakeholders of private companies. Commercial disputes between SOEs can be settled through the court system or, if established via contract between the parties, arbitration, provided that a foreign element is in the contract (e.g. one of the parties is a foreign entity). A number of possible exemptions to the above exist in cases where an SOE’s assets must legally remain in state ownership, and are therefore exempt from bankruptcy, insolvency, fraudulent conveyance, reorganisation, moratoria and other similar laws relating to or affecting creditors’ rights generally and to general principles of equity. 

In Ukraine, the legal framework governing bankruptcy and insolvency procedures applies uniformly to both SOEs and private companies. The primary legislation includes the Code of Ukraine on Bankruptcy Procedures and the Commercial Code, which establish consistent requirements for initiating and conducting bankruptcy proceedings across different types of enterprises.  However, specific provisions introduce distinctions in practice, particularly concerning the enforcement of creditors' claims against SOEs. The Law on the Moratorium on the Forcible Sale of Property imposes restrictions on the enforcement actions against core assets of state enterprises and assets of business entities with a state ownership stake of 25% or more. This moratorium limits creditors' ability to access certain assets in the event of non-payment.  Recent allegations involving the potential misuse of moratorium protections in a high-profile corruption investigation have further underscored the importance of ensuring that such safeguards are not applied in ways that could weaken accountability.

Additionally, Article 34 of the Law on Enforcement Proceedings lists specific circumstances in which enforcement actions against SOEs may be suspended. These include, among others, wholesale electricity suppliers, utilities indebted to major state energy companies (e.g. Naftogaz, Ukrtransgaz, Gas of Ukraine), enterprises located in occupied territories (e.g. railway assets), entities included in privatisation lists or recently privatised, companies of national strategic or defence importance, and state coal mining enterprises, which are all subject to time-limited protections. 

A recent legislative amendment4 introduces temporary restrictions on creditors’ rights in relation to certain enterprises. The measures apply to companies that: (i) operate critical infrastructure; (ii) had their shares transferred to state ownership during martial law; and (iii) are more than 50% owned by the state, directly or indirectly. For these enterprises, enforcement actions - including asset seizures and compulsory execution measures - are suspended. Bankruptcy proceedings cannot be initiated, and any ongoing proceedings must be terminated, regardless of their stage. These restrictions apply for the duration of martial law and for two years following its termination.

While Ukraine’s legal framework formally provides for uniform application of bankruptcy procedures, the existence of such moratoria and enterprise-specific exemptions results in differentiated treatment in practice and limits creditors’ access to legal remedies during the applicable period.

3.3.3. Identifying the costs of public policy objectives 

III.C. Where SOEs carry out public service obligations, they should be transparently and specifically identified, allowing for an accurate attribution of costs and revenue. 

In Ukraine, the identification, costing, and compensation of PSOs performed by SOEs remains at an early stage of implementation. While certain sector-specific frameworks provide partial coverage, there is currently no overarching legal definition of PSOs in Ukrainian legislation. Instead, the term “special obligations” is used in key infrastructure sectors, including electricity and gas, to describe specific service requirements imposed on SOEs. In addition, varying terminology across legislative acts - including references to “special,” “public,” or sector-specific service obligations - contributes to legal ambiguity and inconsistencies in how such mandates are interpreted. This terminological and legal fragmentation contributes to inconsistencies in how public service obligations are implemented, monitored, and accounted for across the SOE landscape.

In the electricity sector, the Law on the Electricity Market defines several categories of special obligations imposed on SOEs, including the promotion of renewable energy (via the Guaranteed Buyer), price regulation for household consumers, and the provision of last-resort electricity supply. In the gas sector, Naftogaz and its subsidiaries are similarly responsible for maintaining uninterrupted supply to households, budgetary institutions, and certain religious organisations, as well as ensuring heat supply in winter months. While these obligations are conceptually aligned with the public interest, they are not always transparently recognised as PSOs and often lack clear designation in the corporate governance frameworks of the responsible enterprises.

Additional implicit PSOs are present in sectors such as rail transport and postal services. For example, Ukrposhta is the de facto provider of universal postal services, although no formal regulatory framework governs this role as a public service obligation. In the rail sector, state-owned Ukrzaliznytsia provides loss-making suburban passenger services that are widely regarded as fulfilling a social function. However, these are not formally identified or costed as public policy mandates but mandated by CMU resolution.

Under the State Ownership Policy, special obligations may be assigned to SOEs in accordance with established procedures. Draft legislative or regulatory acts introducing new special obligations shall contain clear, transparent, and non-discriminatory provisions for: the imposition of special obligations; the conditions and procedures for their fulfilment and cost compensation; and safeguards for economic competition. These shall comply with state aid legislation and be consistent with relevant sectoral laws. At the time of the Review, the design of a Roadmap to address PSO identification and compensation was being prepared.

III.C.1. High standards of transparency and disclosure regarding their costs and revenue must be maintained

Guideline III.C.1 calls for high standards of transparency and disclosure with respect to the costs and revenues associated with PSOs. As noted in Section II.F.5, Ukraine’s disclosure framework is relatively broad: Resolution No. 1067 and the State Ownership Policy require SOEs to publish information on their objectives, charters, ownership structures, financial and non-financial data, and explicitly include transparency on public service obligations. In practice, however, PSO-related reporting remains limited. Currently, there is no systematic obligation for SOEs to maintain separate accounts for commercial and non-commercial activities, nor to clearly disclose the financial impact of PSOs. Most SOEs do not separate these activities in their reporting, which reduces transparency around the costs and compensation associated with fulfilling such obligations. At the time of writing, a Roadmap to improve PSO transparency and accounting is under development, but has yet to be implemented.

Some limited transparency measures have been introduced. For example, as per Resolution No. 1067, SOEs must disclose a broad range of information, including transparency on public service obligations, risk exposures, contractual obligations, and the use of public resources or state aid. However, implementation is not consistent. For example, the SOE Guaranteed Buyer publishes selected information on its obligations in the electricity market - particularly its role in supporting renewable energy producers and maintaining household affordability. However, the disclosure is neither comprehensive nor standardised, and similar reporting is not observed across other sectors or SOEs. The lack of harmonised disclosure standards prevents meaningful oversight of whether PSOs are being implemented efficiently or whether financial flows are being used for their intended purposes.

Moreover, the implementation of letters of expectations by ownership entities - intended as a tool to guide SOE strategic objectives - has not been systematically used to acknowledge or account for public policy obligations. For instance, Ukrhydroenergo's role in contributing to electricity affordability is not explicitly recognised in its owner’s letter, despite being required by sectoral regulation. This omission can make it difficult to hold enterprises accountable for either commercial or public service performance.

III.C.2. Net costs related to carrying out public service obligations should be separately funded, proportionate and disclosed, ensuring that compensation is not used for cross subsidisation. 

Until now, Ukrainian legislation has not explicitly mandated the separation of accounts between special obligation-related and commercial activities, which would enable precise attribution of costs and revenues. Nevertheless, certain information is made available: for example, Guaranteed Buyer publishes selected financial data related to its obligations to support renewable electricity generation and to uphold electricity affordability for household users. No public information is currently available concerning implicit public service obligations. 

While primary legislation stipulates that entities entrusted with special obligations are entitled to compensation, effective mechanisms to ensure the actual disbursement of such payments are largely absent. Moreover, there are no robust procedures to confirm that all eligible costs (i.e. net costs) are reimbursed. 

Pursuant to Ukraine’s Action Plan, the government has committed to adopting a Roadmap outlining the steps required to ensure the mandatory structural separation of activities related to the discharge of special obligations from other activities of SOEs. The finalisation and implementation of the Roadmap would represent a substantial step towards aligning Ukraine’s PSO framework with internationally accepted standards. 

3.3.4. Funding of public policy objectives 

III. D. As a general rule, state-owned enterprises should not be used to subsidise or grant advantages to other commercial undertakings. If SOEs are used to allocate support measures in line with their public policy objectives, care should be taken to ensure that: (i) support measures are consistent with applicable competition and trade rules; (ii) support measures and their funding are clearly defined and publicly disclosed; and (iii) support measures do not cause unfair disadvantages to other commercial undertakings. 

Funding arrangements for the fulfilment of special obligations by SOEs in Ukraine vary significantly by sector and by enterprise and may be provided through direct budget transfers or through indirect mechanisms such as cross-subsidisation or tariff setting. These obligations are not always underpinned by a clear legal or regulatory framework. During the period of martial law, certain provisions of the Law on State Aid (see also assessment under III.E) are suspended, which has further complicated oversight of these arrangements. 

Box 3.5. Examples of funding arrangements

Indirect cross-subsidisation from commercial revenues: A prominent example in Ukraine is the special obligation assigned by the Cabinet of Ministers to Energoatom and Ukrhydroenergo. These SOEs are required to allocate a substantial share of their electricity generation revenues to the Guaranteed Buyer, a mechanism designed to support universal service providers supplying electricity to households at fixed tariffs. While this arrangement ensures affordable electricity for consumers, it effectively diverts commercial profits toward social objectives, potentially limiting the SOEs’ capacity to reinvest in maintenance, infrastructure upgrades, or strategic expansion.

Cross-subsidies through tariff-based mechanisms: Ukrenergo channels a portion of its regulated revenues to finance the Guaranteed Buyer’s obligations to purchase electricity from renewable producers under “green” tariffs. This mechanism compensates for the difference between market prices and the feed-in tariff or feed-in premium rates. While it encourages investment in renewable energy, the reliance on cross-subsidisation raises transparency concerns, as costs and financial flows are embedded within regulated tariffs rather than clearly budgeted or reported. It also exposes the SOE to market and policy risk, since any volatility in electricity prices or changes to tariffs directly affects financial sustainability.

Implicit and uncompensated PSOs in the rail sector: Ukrzaliznytsia continues to operate loss-making suburban passenger rail services without explicit compensation, representing implicit PSOs. Ukraine currently lacks a formal legal or regulatory framework to define or fund PSOs in the rail sector. In practice, freight operations cross-subsidise passenger transport through tariff structures. While this approach allows essential passenger services to continue, it undermines financial transparency and operational efficiency, as it obscures the true costs of public service provision and can reduce incentives for commercial optimisation.

These examples highlight that Ukraine’s SOEs frequently carry social and policy obligations that are not always explicitly funded, relying instead on cross-subsidisation or internal revenue transfers. While such mechanisms can achieve short-term policy goals (e.g. affordable electricity, renewable support, or essential passenger services), they also create financial opacity, reduce investment capacity, and introduce sustainability risks. Strengthening transparency, formalising PSO frameworks, and considering explicit budgetary compensation would improve both accountability and the financial health of SOEs.

Source: Energoatom (2025[10]), Corporate governance and leadership information, https://energoatom.com.ua/en/news/obrano-kerivnictvo-nagliadovoyi-radi-energoatoma; DLF Attorneys-at-Law (2024[11]), Renewable energy in Ukraine: current state of affairs, https://dlf.ua/en/renewable-energy-in-ukraine-current-state-of-affairs/.

According to the State Ownership Policy, the assignment of special obligations to SOEs is subject to two key conditions: (i) the enterprise must be able to operate on at least a break-even (no-loss) basis, and (ii) the full cost of fulfilling such obligations must be compensated. Furthermore, any compensation received by SOEs must be strictly earmarked for the fulfilment of the assigned obligation and may not be used to subsidise other activities.  

3.3.5. General application of laws and regulations 

III. E. The state should not exempt SOEs, when engaging in economic activities, from the application and enforcement of laws, regulations and market-based mechanisms, and should ensure tax, debt and regulatory neutrality to prevent undue discrimination between SOEs and their competitors. 

Ukraine’s legal and policy framework formally upholds the principle of competitive neutrality between SOEs and private undertakings. The Law on Protection of Economic Competition and the Law on State Aid apply uniformly to all entities engaged in economic activity, regardless of ownership form. These laws define “undertakings” broadly, thereby placing SOEs under the same antitrust and subsidy control regimes as private firms. In principle, this legal parity serves as a foundation for neutral market competition.

The country has also taken steps to harmonise corporate forms of SOEs. The adoption of Law No. 4196-IX, mandating the transformation of state unitary enterprises into joint-stock companies or limited liability companies, represents a structural alignment with private sector legal standards. This development strengthens the expectation that SOEs, like private firms, are subject to standard corporate governance, insolvency and accountability rules.

Despite this formal alignment, notable exceptions implemented due to wartime realities are not fully achieved in practice. As outlined in other chapters, particularly in the discussions on stakeholder rights and the enforcement regime, important exemptions are currently in place. For example, SOEs designated as “strategic,” those operating in the defence sector, or those listed for privatisation may benefit from moratoria on enforcement actions or bankruptcy protections (in case a decision on privatisation is adopted) unavailable to private competitors.

The situation is further complicated by the temporary suspension of certain provisions of the Law on State Aid to Undertakings during the period of martial law. While understandable in times of national crisis, this suspension constrains the capacity of authorities to identify and mitigate anti-competitive state support. Nevertheless, the State Ownership Policy explicitly reaffirms Ukraine’s commitment to competitive neutrality, instructing ownership entities and public bodies to avoid unjustified advantages to SOEs, and provides for regulatory review of potential distortions. Notably, any preferential treatment or financial assistance extended to SOEs during wartime must be structured so as not to distort competition - a principle overseen by the Cabinet of Ministers and the Antimonopoly Committee. Thus, while Ukraine’s legal commitments to competitive neutrality are strong - continued efforts are needed to remove exemptions, restore full application of state aid rules post-martial law, and operationalise institutional safeguards to ensure enforcement.

3.3.6. Market consistent financing conditions 

III. F. SOEs’ economic activities should face market consistent conditions including with regard to debt and equity finance. 

III. F.1. All business relations of SOEs, including with financial institutions, should be based on purely commercial grounds. 

In Ukraine, the financial relationships of SOEs are shaped by a financial ecosystem where state-owned financial institutions dominate SOE lending. The vast majority of loans to SOEs are issued by three SOBs - Oschadbank, Ukreximbank, and Ukrgasbank - which together account for over 90% of all SOE loans. As of January 2025, SOE loans represented just 2% of total corporate lending in Ukraine. This concentration indicates that lending from domestic and international private banks are largely absent from the SOE credit landscape. Without transparent benchmarking of loan terms, it is difficult to determine whether these arrangements adhere to market conditions or represent de facto subsidies.

The wartime context has deepened this trend. The destruction of critical infrastructure by Russian attacks has led SOEs - particularly in the energy, transport, and defence sectors - to rely heavily on concessional loans from international financial institutions, often facilitated or guaranteed by the Ukrainian state. While such financing is critical under current circumstances, it also points to the need for increased diversification of sources of credit, which would be accessed on market-consistent terms.

III. F.2. SOEs’ economic activities should not benefit from or provide any direct or indirect financial support, that confers an advantage over private competitors, such as preferential debt or equity financing, guarantees, lenient tax treatment or preferential trade credits. 

Although Ukraine’s legal and fiscal frameworks formally uphold competitive neutrality, SOEs continue to benefit from indirect financial advantages in the form of state guarantees for debt. While the Budget Code allows guarantees to be issued to both public and private sector entities, in practice, the majority of newly issued guarantees in recent years have supported SOEs. Notably, large enterprises such as Ukrenergo and Ukrzaliznytsia have received considerable backing, particularly for projects involving the restoration or protection of strategic infrastructure. The 2025 fiscal risk report confirms that repayment obligations for state-backed loans remain heavily concentrated among major SOEs, reinforcing the notion of persistent soft budget constraints in select sectors.

This reliance on sovereign guarantees provides SOEs with a competitive edge by lowering their borrowing costs and shielding them from full market scrutiny. It may also disincentivise efforts to improve financial discipline or risk management. Compounding the challenge is the temporary suspension of some provisions of the Law on State Aid during the period of martial law. This suspension limits transparency and makes it difficult to monitor the extent and form of preferential support. Although wartime exigencies justify some deviations from normal market rules, there is a risk that these emergency measures become entrenched. The roadmap currently under development to phase out such preferential financial arrangements will be essential to restoring competitive balance in the post-war period.

III. F.3. SOEs’ economic activities should not receive or provide in-kind inputs such as goods, energy, water, real estate, data access, land or labour or arrangements (such as rights-of-way, or concessions) at prices or conditions more favourable than those available to privately owned competitors. 

Historically, Ukrainian SOEs operated under frameworks of economic or operational management, giving them de facto control over state assets without formal ownership. The enactment of Law No. 4196-IX marked a shift towards clearer asset management structures, allowing SOEs to transfer privatisable assets into their share capital. However, for non-privatisable assets, a usufruct arrangement remains in place. This legal mechanism grants SOEs exclusive and cost-free access to a wide range of public resources - including land, infrastructure, and real estate while such terms are not available to private sector entities.

This asymmetry introduces distortions in competitive markets, especially in sectors such as energy, transport, and construction, where access to land and infrastructure can influence pricing, market entry, and investment decisions. The absence of a pricing mechanism or compensation model for usufruct arrangements further amplifies this advantage. While the policy may serve as a practical solution for asset protection during the war, especially for strategic or critical infrastructure, its continuation post-war should aim to align the legal framework for all SOEs, including for non-privatisable assets.

III. F.4. SOEs’ economic activities should be required to earn sustainable rates of return that are comparable to those obtained by competing private enterprises operating under similar conditions, except with respect to the carrying out of public service obligations. 

The profitability and financial performance of SOEs in Ukraine are guided by a mix of fiscal oversight and enterprise-specific financial plans. While SOEs are expected to generate profit and submit financial plans with projected performance indicators in practice, profitability levels vary widely across the SOE sector. The Ministry of Economy encourages inclusion of at least one profitability indicator in letters of expectations, and the Ministry of Finance monitors target financial indicators - particularly for natural monopolies or SOEs with high net profit expectations - but this remains a recommendation rather than a requirement.

The State Dividend Policy does establish a general rule that SOEs should distribute at least 75% of net profit to the state budget, with some flexibility in exceptional circumstances. During martial law, SOEs operating critical infrastructure or in the defence-industrial complex may retain greater shares of profit for asset restoration to ensure fiscal flexibility under current conditions. Without benchmarking SOE performance against private competitors or sectoral norms, it is difficult to assess whether profitability reflects efficient operations or soft support structures.

3.3.7. Public procurement procedures  

III. G. When SOEs engage in public procurement, whether as bidder or procurer, the procedures involved should be open, competitive, based on fair and objective selection criteria, promote supplier diversity and be safeguarded by appropriate standards of integrity and transparency, ensuring that SOEs and their potential suppliers or competitors are not subject to undue advantages or disadvantages 

Ukraine has taken notable steps towards embedding transparency and openness in public procurement, particularly through the development and institutionalisation of the Prozorro electronic platform. Widely praised for increasing accountability and broadening access, Prozorro has become the standard tool for public procurement, including by many SOEs.

State-owned enterprises are subject to the Law on Public Procurement when they:

• Deliver public or community services without engaging in commercial activity.

• Operate under exclusive rights or in regulated markets (energy, transport, postal services, water, natural resources), requiring procurement through Prozorro.

• Receive public budget funding for procurement.

Outside these criteria, SOEs with a commercial orientation are formally exempt from mandatory PPL compliance. However, exemptions apply only if they do not meet at least one of the following: state or local authority ownership above 50%, control by a public body, or receipt of public funding. Ambiguity remains regarding what constitutes “industrial or commercial” activity, and some commercially oriented SOEs argue that they are exempt even with majority public ownership. Major financial institutions such as Oschadbank and Ukreximbank remain formally exempt, though some voluntarily use Prozorro.

During martial law, temporary rules allowed direct contracting, bypassing standard procedures. Following adoption of CMU Resolution No. 1178/2022, transparency requirements were reinstated, including mandatory publication of contracts and amendments within 90 days. Amendments in February 2023 further narrowed exceptions, reinforcing the government’s commitment to open and accountable procurement.

Prozorro’s emphasis on price as the primary evaluation criterion promotes competition but can reduce quality, limit supplier diversity, and complicate procurement of complex goods or services. This is particularly relevant for SOEs in infrastructure, utilities, and technical sectors, where innovation and long-term performance are critical.

Integrity and fairness in public procurement remain areas for improvement. The 2024 AMCU Annual Report notes that several SOEs generated high numbers of complaints, suggesting gaps in procedural compliance, internal capacity, and dispute resolution. While Prozorro ensures structural transparency, many SOEs still need stronger internal controls, enhanced evaluation criteria beyond price, and clearer reporting of procurement roles and responsibilities.

When competing as suppliers, SOEs face no formal legal preference. However, they may enjoy implicit advantages from access to state guarantees, concessional financing, tax deferrals, or preferential access to resources. These advantages can distort competition, especially in sectors like infrastructure, defence, and engineering services. Evidence remains limited due to data gaps on SOE participation as bidders, which complicates assessment of overrepresentation or anti-competitive practices. Past enforcement actions indicate that authorities can act where risks are identified, but comprehensive oversight is still evolving.

Table 3.9. Complaints on state-owned enterprises as procurement entities

Procuring entity	Number of complaints
Ukrgasvydobuvannya	175
Ukrnafta	114
"Production Support Centre" Branch of Ukrzaliznytsia	67
Lisy Ukrainy	65
Medical Procurement of Ukraine	63

Source: Antimonopoly Committee of Ukraine (2025[12]), Annual Report 2024, https://amcu.gov.ua/static-objects/amcu/sites/1/2025/дд/2024%20State%20Aid%20Report%20ENG.pdf.

Box 3.6. Selected cases of violations in procurement procedures by SOEs

Ukrzaliznytsia 

The Antimonopoly Committee of Ukraine identified possible competition concerns in Ukrzaliznytsia’s procurement of catering services for Intercity and Intercity+ trains. The company had repeatedly extended a contract with a single supplier without using competitive procedures, limiting access for other providers. In response to AMCU recommendations issued on 6 July 2023, Ukrzaliznytsia launched an open and competitive selection process. The AMCU also identified potential competition violations in Ukrzaliznytsia’s tender documentation for public procurement, which imposed restrictive and unjustified requirements on financial guarantees. Only banks were eligible to issue guarantees, with additional conditions favouring a narrow group of institutions. This created barriers to entry and undermined the principle of equal treatment. Following AMCU recommendations on 1 August 2024, Ukrzaliznytsia removed these restrictive provisions. The AMCU also addressed recommendations to the Ministry of Economy to help prevent similar practices more broadly.

PK Ukraina 

An international investigation involving Ukrainian, Estonian, and French authorities under the auspices of Eurojust and facilitated via the OECD Global Law Enforcement Network platform uncovered a fraudulent scheme that resulted in the misappropriation of over UAH 450 million from the state-owned Polygraph Combine “Ukraina” between 2013 and 2016. The CEO used an affiliated Estonian intermediary to sell raw materials to the SOE at highly inflated prices. The intermediary also registered intellectual property rights to design elements of official documents, generating further illicit gains through royalties. In 2022, following an initiative by the National Anti-Corruption Bureau of Ukraine, the government updated the technical and graphical features of these documents, ending reliance on the former CEO’s intellectual property claims. On 21 July 2023, Ukrainian authorities issued suspicions against the former CEO, a former department head, and an accomplice. Estonian authorities received related documents regarding two nationals connected to the intermediary. As a result of an agreement concluded by the French National Financial Prosecutor’s Office on 8 July and approved by a Paris court on 3 September EUR 3.377 million will be transferred to the state budget from the French company implicated in this NABU and SAPO case. This will be the first-ever compensation paid by a foreign entity in the history of Ukraine’s anti-corruption bodies.

Source: National Anti-Corruption Bureau of Ukraine (2025[13]), Case on Polygraph Plant Ukraine: recovery of EUR 3.3 million, https://nabu.gov.ua/en/news/sprava-poligrafkombinatu-ukra-na-vpershe-povernula-z-za-kordonu-koshty-vkradeni-vnaslidok-koruptciyino-skhemy-3-3-mln-yevro/.

3.3.8. Commercial considerations

III.H. When SOEs' economic activities affect trade, investment or competition they should conduct all business, other than carrying out public service obligations, in accordance with commercial considerations. They should conduct all business according to responsible business conduct and high standards of integrity.  

The State Ownership Policy places a significant emphasis on preventing SOEs from distorting market conditions. It explicitly states that decisions and actions by state ownership entities must avoid granting unjustified competitive advantages to SOEs relative to private competitors, thereby embedding the principle of competitive neutrality within the core responsibilities of state ownership management. Furthermore, the State Ownership Policy outlines a mandatory obligation for state ownership entities to regularly assess SOE compliance with the established commercial and integrity principles, thereby promoting accountability and transparency.  As noted earlier, Ukraine is working towards a number of important reforms that aim to reinforce SOEs’ orientation with commercial considerations. This includes:

• Owners’ expectations for SOEs based on key financial and non- financial performance indicators, including at least one profitability indicator, which are reviewed by the Ministry of Finance to ensure alignment with commercial principles.

• A Roadmap for identification and compensation of PSOs, to ensure SOEs are not privy to illegal state aids.

• Expectations for SOEs on capital structure, including rate of return expectations and a new dividend policy.

• Subjecting SOEs to regulatory oversight, including competition enforcement.

In terms of practical implementation, the policy explicitly identifies measures to safeguard competition, highlighting the involvement of Ukraine's Antimonopoly Committee in monitoring compliance and addressing potential breaches of competitive neutrality. Additionally, it mandates SOEs to adopt and maintain comprehensive internal control systems, including compliance, risk management, and internal audit functions, which collectively strengthen adherence to integrity standards and reduce corruption risks. 

Additionally, the State Ownership Policy explicitly mandates that SOEs conduct their operations according to high standards of responsible business conduct and integrity. It references specific international benchmarks, including the OECD Guidelines for Multinational Enterprises for Responsible Business Conduct and the UN Guiding Principles on Business and Human Rights. It should be noted, however, that the State Ownership Policy does not cover state-owned banks, which are regulated separately under the Law on Banks and Banking and by the NBU. This section shall be read together with section 3.7 of this Review, which provides a more detailed analysis of sustainability issues in SOEs, including RBC considerations in line with the SOE Guidelines.

3.4. Equitable treatment of shareholders and other investors

Key findings

IV. Where SOEs are listed or otherwise include non-state investors among their owners, the state and the enterprises should recognise the rights of all shareholders and ensure shareholders’ equitable treatment and equal access to corporate information.

Although Ukraine’s company law formally protects minority shareholders, enforcement remains weak in practice. This creates risks for investor confidence, particularly in light of future plans for partial privatisations, recapitalisations or private co-investment in SOEs. Ensuring equitable treatment of shareholders is therefore essential to attract private capital and align governance practices with international standards.

In the short term, Ukraine should strengthen operational safeguards for minority shareholders by aligning dividend policies, disclosure practices and general meeting procedures with those applicable to listed companies. Over the longer term, robust monitoring and enforcement mechanisms should be institutionalised to ensure predictable and enforceable shareholder rights. Improved compliance with reporting obligations and closer alignment with international corporate governance practices will be critical to supporting private investment in SOEs.

Table 3.10. Recommendations on equitable treatment of shareholders and other investors

	Short-term recommendation	Long-term recommendation
1	Align dividend policies, disclosure standards, and general shareholder meeting procedures with core principles applicable to listed companies, including predictable dividend-setting frameworks, transparent AGM procedures, timely disclosure and fair treatment of minority shareholders.	Ensue minority shareholder protections are respected and enforced, particularly in anticipation of privatisations or listings.
2	Clarify rules on dividend collection and governance within group companies.

Source: OECD Secretariat compilation.

3.4.1. Ensuring equitable treatment of shareholders

IV. A. The state should strive toward full implementation of the G20/OECD Principles of Corporate Governance when it is not the sole owner of SOEs, and of all relevant sections when it is the sole owner of SOEs. Concerning shareholder protection this includes:

IV. A.1. The state and SOEs should ensure that all shareholders are treated equitably.

Partially-owned SOEs in Ukraine represent a small share of the overall portfolio. The vast majority of SOEs are fully state-owned, with only a limited number of corporatised or mixed-ownership SOEs in which the government holds minority stakes. As a result, the legal and governance safeguards for minority shareholders, while important, apply to a relatively small subset of the sector.

Ukraine has nonetheless made important progress towards ensuring equitable treatment of all shareholders in SOEs, particularly in the context of recent legislative reforms. Equal treatment of shareholders is now formally embedded in the legal and policy framework, including in the updated SOE Law, the JSC Law, the LLC Law, and the State Ownership Policy.5 The Policy explicitly defines equitable treatment as a guiding principle for ownership entities when exercising shareholder rights and managing state-owned assets. This includes a duty to consider the rights and interests of all shareholders - not just the state - and to avoid decisions that may infringe upon these rights.

The updated legal framework also promotes the long-term strategic goals of SOEs, instructing ownership entities to prioritise sustainable enterprise development even when this may conflict with short-term fiscal interests, such as dividend distribution. This principle, which is aligned with the State Dividend Policy, represents a step towards a more balanced and investor-sensitive governance approach. Further strengthening this framework, the adoption of Law No. 4196-IX is expected to bring greater consistency in how these principles are applied by standardising the legal forms of SOEs through mandatory corporatisation. This will simplify oversight and improve the application of uniform rules governing shareholder treatment.

In practice, the legal structure provides a number of safeguards for minority shareholders, particularly for corporatised and partially-owned SOEs. The JSC Law6 guarantees one vote per ordinary share and equal rights to dividends and information. Shareholders with 5% or more of voting shares (lowered from 10% in 2022) can exercise significant rights, including calling general meetings, proposing agenda items, demanding independent audits, and accessing financial documentation. Moreover, cumulative voting is used to allow minority shareholders to elect supervisory board members, and protective provisions exist for related party transactions and major asset disposals.7

Additional vulnerabilities stem from the still-developing mechanisms to protect minority shareholder rights through judicial means. Although derivative suits were reintroduced in 2016, they remain infrequent and largely ineffective due to legal complexity, evidentiary thresholds, and the lack of procedural clarity. Draft Law No. 2493 aims to address some of these issues by reducing the shareholding threshold for filing from 10% to 5% and enabling class actions. This reform, if adopted, would significantly strengthen investor protections and access to remedy.

Table 3.11. Parties responsible for granting consent based on the value of goods and services of transactions

	10%-25%	25%	25%-50%	50%+
Supervisory board	X
Supervisory board (with at least 1/3 independent directors)	X	X	X	X**
General meeting (on the proposal of SB), based on over 50% of the votes*		(X)	(X)	(X)

Note: transaction depends on the market value of goods or service as a share of value of company’s assets based on the latest annual financial statement. (X) means that the general meeting may decide if there is no independent supervisory board (or if the charter does not contain a respective provision). *While an independent board can be present, general shareholders’ meeting is not deprived of its right to decide on the same matters not included into the exclusive competence of the supervisory board. De facto, two bodies may be able to take these decisions. **Supervisory board of a public JSC and banks can decide on 50%+ transactions. However, supervisory board of a private JSC can take decisions regarding 50% or more in case where it has at least 1/3 independent directors (50 % of independent directors for SOEs) and the charter empowers them to do so.

Source: OECD compilation is based on the responses from the questionnaire and JSC Law.

IV.A.2. [Concerning shareholder protection this includes:] SOEs should observe a high degree of transparency, including as a general rule equal and simultaneous disclosure of information, towards all shareholders.

Ukraine’s legal and policy frameworks establish relatively robust requirements for transparency and equal access to information for shareholders of SOEs. The JSC Law guarantees a broad right of access to key corporate documents, including charters, internal regulations, corporate governance codes, meeting minutes, financial statements, audit reports, and remuneration policies. Shareholders holding 5% or more of voting shares are entitled to request any additional documentation relating to the company’s financial and economic activities, subject to restrictions on classified or sensitive information. Shareholders may request access electronically or in person and must be provided with the requested information within 10 days. Access to general meeting materials is ensured for up to six months following the meeting. Shareholders are also entitled to participate in general meetings with timely notice and draft agenda items disclosed no later than 30 days prior, supporting the principle of equal and simultaneous information access.

Beyond legal entitlements under the JSC Law, SOEs are subject to additional disclosure obligations under the State Ownership Policy and sectoral regulations issued by the NCSSM. The State Ownership Policy mandates that all SOEs, regardless of organisational form, publish a range of detailed disclosures on their own websites (or that of the ownership entity), including but not limited to letters of expectations, strategic development plans, board resolutions, ownership structures, internal governance rules, and sustainability and integrity reports. Specific emphasis is placed on disclosing information relevant to public interest, such as the imposition and financing of public service obligations, and affiliated party transactions. Ownership entities are also obliged to publish and regularly update the rationale for state ownership of each SOE on their own websites. In line with good practice, SOEs are required to maintain the public availability of this information for a minimum of 10 years and to ensure timely updates following material changes. Moreover, subsidiaries of SOEs are expected to mirror these disclosure obligations in full.

While disclosure obligations are generally extensive, several limitations exist. First, SOEs have the ability to restrict disclosure of information deemed commercially sensitive, a trade secret, or classified in the interest of national security - an exemption which has become significantly broader under martial law. Critical infrastructure operators and defence enterprises are specifically authorised to withhold a wide range of information, and there is a lack of standardised guidance on what qualifies as "sensitive". Furthermore, while required information is to be made available on company websites, monitoring of actual compliance - particularly in terms of timeliness, completeness, and ease of access - is limited. Some SOEs lack functioning or regularly updated websites, and enforcement mechanisms remain underdeveloped. In practice, stakeholders have noted inconsistencies in what SOEs choose to publish, with some enterprises disclosing only minimal information or outdated materials.

The combination of company law, State Ownership Policy provisions, and shareholder rights guarantees a comprehensive right to information. However, the uneven implementation of these standards across different legal forms of SOEs, insufficient enforcement, and wartime exemptions limit their effectiveness in practice.

IV.A.3. [Concerning shareholder protection this includes:] SOEs should develop an active policy of communication and consultation with all shareholders.

Ukraine’s legal and regulatory framework provides several mechanisms through which shareholders may access information and engage with SOEs. While provisions exist for information disclosure, the development and implementation of a proactive policy for shareholder communication and consultation - particularly with non-state shareholders - remains underdeveloped and inconsistent across SOEs.

The Regulation on Disclosure of Information by Issuers of Securities requires JSCs to disclose in their sustainability reports the main provisions of the company’s policy on interaction with stakeholders, including shareholders. Nonetheless, this requirement is applicable primarily to SOEs operating as JSCs and not to all forms of SOEs. There is currently no overarching legal requirement mandating all SOEs to establish a structured shareholder engagement policy. Instead, relevant guidance is found in voluntary instruments, such as the Corporate Governance Code and NCSSM recommendations, which are not uniformly enforced.

Corporate secretaries, whose responsibilities typically include ensuring communication with shareholders, are mandatory only for a subset of SOEs, including listed JSCs, public interest entities, and certain financial institutions. Other SOEs may appoint a corporate secretary at the discretion of the supervisory board, but this practice is not consistently applied. Thus, while transparency provisions help ensure basic shareholder rights, Ukraine has not yet institutionalised a consistent and proactive policy of shareholder consultation across all SOEs.

IV.A.4. [Concerning shareholder protection this includes:] The participation of minority shareholders in shareholder meetings should be facilitated so they can take part in fundamental corporate decisions such as board election.

Ukraine’s JSC Law provides a comprehensive legal basis for minority shareholder participation in general meetings and fundamental corporate decisions, applicable to SOEs organised in this form. Shareholders may vote through in-person, electronic, or remote meetings, facilitated by an authorised electronic voting system regulated by the NCSSM. Cumulative voting - a mechanism designed to protect minority shareholder interests - is mandatory in elections to governing bodies when specified by law or the company charter. This offers minority shareholders a meaningful opportunity to influence board composition and aligns well with good governance standards. Furthermore, decisions on key corporate matters (e.g. charter amendments, governance structure changes, large transactions) require a qualified majority, while shareholders with preferred shares are guaranteed voting rights on critical matters affecting their class interests.

However, the practical application of these rights within Ukrainian SOEs remains limited, primarily due to the high concentration of state ownership. In partially state-owned JSCs, non-state shareholders tend to hold small stakes, limiting their influence even when cumulative voting is applied. Moreover, there is no widespread practice of issuing preferred shares in SOEs, although it is legally permitted.

The general meeting framework is procedurally robust, including advance circulation of agendas, guaranteed participation rights, and strict quorum requirements. Ukraine’s legislative framework ensures that minority shareholders have access to meetings and voting processes and contains formal safeguards such as cumulative voting. Nonetheless, their use remain limited due do to the high concentration of state ownership.

IV.A.5. [Concerning shareholder protection this includes:] Transactions between the state and SOEs, and between SOEs, should take place on market consistent terms.

As noted earlier, Ukraine has introduced several legal and policy safeguards, including in the State Ownership Policy, aimed at ensuring that transactions involving SOEs - whether with the state, other SOEs, or private entities - are carried out under market-consistent and competitively neutral conditions. The Cabinet of Ministers, with input from the Antimonopoly Committee, is tasked with overseeing the application of this principle, including reviewing and adapting legislation where necessary to ensure compliance.

In terms of related-party and interest-bearing transactions, Ukraine's legal architecture provides differentiated but generally comprehensive rules for various SOE forms. The JSC Law governs corporatised SOEs, while the broader Law No. 4196 applies to unitary enterprises and other forms of SOEs. These laws include provisions that require disclosure and oversight of significant transactions and related-party dealings, aiming to prevent misuse of public resources and conflicts of interest.

A key safeguard is the requirement that SOE supervisory boards approve and monitor related-party transactions, which in most cases must be subject to independent audit verification to confirm that terms are consistent with market conditions. This requirement is not universally applied, however: for instance, private JSCs are exempt unless their charter explicitly mandates such oversight, which may limit uniformity in enforcement. The related-party transaction landscape in Ukraine is nonetheless complex, particularly in cases involving overlapping state ownership structures - for example where Naftogaz and the Ministry of Defence hold interests in both Ukrnafta and Ukrtatnafta - and the legislative framework remains relatively high-level, placing greater importance on robust governance safeguards in practice.

In terms of public procurement, Ukrainian SOEs are generally subject to the same rules and conditions as private firms, promoting a level playing field in state-funded tenders. Moreover, SOEs are required to publicly disclose information on significant transactions, particularly those exceeding UAH 1 million. This includes contractual obligations and financial transactions with state or municipal entities, thereby enhancing transparency around financial flows across the public sector.

Despite the strong legal underpinnings, the effectiveness of enforcement mechanisms remains a challenge. Limited audit capacity, inconsistent supervisory board performance, and undue political influence can also potentially weaken the effectiveness of such measures. In particular, while the framework requires that SOE to SOE transactions also take place on market-consistent terms, effective oversight of such dealings remains uneven. Risks of preferential arrangements persist in practice, including through financing mechanisms such as sovereign guarantees, which continue to provide large SOEs with indirect advantages. These structural issues underscore the need for more robust enforcement and monitoring to ensure that the principle of competitive neutrality is upheld across all types of SOE transactions.

Box 3.7. Provisions regarding interested party transactions

JSC Law and Law No. 4196 contain provisions regarding interested party transactions worth over 1% of the asset value of the company. The executive body of a JSC should submit draft transactions and explanation of interest to the supervisory board (or, in case of absence, to each shareholder) within five working days.

Supervisory board must involve an independent auditor to evaluate the transaction (except in private JSCs, unless otherwise stated in the charter). Consent is determined by majority vote of the supervisory board members (those involved in the transaction are not eligible to vote). The general meeting decides on the transaction if (i) there is no supervisory board; (ii) if all board members are parties to the transaction; (iii) if the market value of the transaction exceeds 10% of asset value of the company; or (iv) if the supervisory board rejects to decide or does not decide within 30 days.

The information regarding interested party transactions is subject to disclosure (except in private JSCs if they are not enterprises with public interest, unless otherwise stated in the charter). In some cases, these procedures may not be applicable, such as in repurchasing shares, liquidation of a JSC, or banking transactions that are regulated by the Law on Banks and Banking.

In case of violations, liabilities may be imposed for damages, and losses are expected to be reimbursed, while transactions carried out at below market levels may be considered invalid. In 2022 the JSC Law made the approval procedure of interested party transactions not mandatory for JSCs with a sole shareholder (including 100 % of shares owned by the state). However, this gap was remedied by Law No. 4196 introducing the same approval procedure as mandatory for SOEs.

Source: Verkhovna Rada of Ukraine (2008[14]), Law on Joint-Stock Companies, https://zakon.rada.gov.ua/laws/show/514-17.

3.4.2. Adherence to the corporate governance code

IV.B. National corporate governance codes should be adhered to by all listed and, where practical, unlisted SOEs.

A comprehensive voluntary Corporate Governance Code (CGC) was first introduced in 2003 and updated in March 2020. The CGC provides a broad framework for corporate governance, drawing on international instruments such as the G20/OECD Principles of Corporate Governance. It covers key areas such as shareholder rights, board responsibilities, stakeholder engagement, disclosure and transparency, ethical standards, and internal controls (CMU, 2020[15]; OECD, 2021[2]). The Code was introduced ahead of significant legislative reforms and is now widely seen as outdated in light of more recent corporate governance legislation.

The CGC is voluntary in nature and functions as a best-practice benchmark, particularly for joint-stock companies. While not legally binding, listed companies are subject to a comply-or-explain regime, requiring them to disclose how they adhere to the CGC’s principles, identify deviations, and justify alternative governance practices. This approach contributes to transparency and can act as a soft enforcement mechanism. It should also be noted that SOEs are subject to more robust and binding corporate governance requirements than listed companies further to the revision of the SOE Law.

At the same time, the interaction between the Joint-Stock Company Law and corporate governance codes has created practical complexities. The JSC Law allows shareholders to determine which corporate governance code a company should follow - whether the national code issued by the NSSMC, another recognised code, or a company-specific framework. In practice, this flexibility has resulted in heterogeneous approaches. In some cases, shareholder approval effectively elevates the selected code within the company’s internal hierarchy of acts, even where provisions may be declarative or no longer fully aligned with recent legislative reforms. In others, shareholders have adopted company-specific governance codes, occasionally with limited board involvement, thereby reshaping internal governance arrangements through instruments operating alongside the company charter. These developments underscore the importance of clarifying the role of voluntary codes within Ukraine’s broader governance architecture and ensuring that “comply-or-explain” mechanisms function as intended - namely, as flexible soft-law tools that complement, rather than substitute for, binding governance requirements.

The State Ownership Policy also introduces sector-specific expectations for corporate governance. These include provisions for the structure of governing bodies, internal control systems, financial reporting, audit requirements, and disclosure standards. Although the State Ownership Policy does not explicitly mandate compliance with the CGC, it complements and reinforces its key elements, thus partially operationalising its principles within the broader SOE community, including unitary enterprises and other non-corporatised legal forms.

In parallel, state-owned banks are subject to sector-specific governance guidance developed by the NBU. The NBU’s Methodological Recommendations draw on the Basel Committee’s standards and offer tailored advice on governance in the banking sector. While these recommendations are formally non-binding, the NBU enforces compliance indirectly through its supervisory powers, including through annual inspections and mandatory follow-up on identified governance gaps. Ukraine is also progressing on a new national Corporate Governance Code. In March 2025, the NSSMC approved a revised National Corporate Governance Code, intended to become the national standard for corporate governance and to serve as a foundation for future extensions, including versions for state‑owned companies, financial market participants and unlisted firms. Given recent legislative updates related to SOE corporate governance, there is a strong case for a revision of the CGC to reflect new requirements, clarify expectations for SOEs, and enhance coherence between the Code and binding obligations under the State Ownership Policy, JSC Law, and sectoral legislation. Although the 2020 Code remains in force, the latest national code initiative reflects a policy direction towards updating the standard and eventually integrating it with more specific governance frameworks, including for SOEs (OECD, 2025[15]).

3.4.3. Disclosure of public policy objectives

IV.C. Where SOEs are required to pursue public policy objectives, adequate information about these should be available to non-state shareholders at all times.

In Ukraine, SOEs are often assigned a wide array of public policy objectives (PPOs) spanning key strategic areas such as environmental protection, energy efficiency, national security, digitalisation, accessibility, and anti-corruption.

The State Ownership Policy provides a formal basis for assigning and monitoring such objectives. According to State Ownership Policy provisions, SOEs may be required to carry out “special obligations” - activities undertaken in the public interest that would not ordinarily be performed under market conditions. These obligations must be grounded in law and are subject to ex ante justification based on the rationale for continued state ownership. To ensure transparency and accountability, the mechanism of the letters of expectations serves as the key disclosure tool. Ownership entities are required to articulate the state’s expectations, including PPOs, in these letters, which must be published on the SOE’s website. The State Ownership Policy also mandates that such expectations be linked to clearly defined outcomes, with reporting obligations to monitor progress. As noted earlier, widescale implementation is still in progress, implementation could strengthen transparency for non-state shareholders, including minority investors in corporatised SOEs, by providing insight into the potential trade-offs between public objectives and commercial performance. The JSC Law further requires that shareholders be informed of material developments, financial statements, and reports submitted to state authorities - potentially including updates on PPOs and special obligations. This legal obligation reinforces shareholder rights to access timely and relevant information, though the extent to which disclosures effectively distinguish between commercial and policy-driven activities varies in practice.

Where SOEs perform public policy tasks with direct market implications, such as supplying electricity or gas below market rates, CMU resolutions serve as the legal vehicle for imposing such obligations. Importantly, the State Ownership Policy stipulates that any public service obligation must be accompanied by adequate compensation, in compliance with EU state aid rules, and that such funds must be ring-fenced, i.e. not used to subsidise unrelated commercial activities. This requirement aims to preserve competitive neutrality, reduce market distortions, and safeguard the financial sustainability of the SOE.

However, the system for disclosing the financial implications of public policy objectives to shareholders remains underdeveloped. While letters of expectations and statutory filings provide general information, Ukraine is still working towards a Roadmap to develop a standardised reporting mechanism that delineates the cost, impact, and funding sources of PSO on a consistent basis across SOEs.

Ukraine has made meaningful progress in institutionalising the assignment and disclosure of public policy objectives for SOEs. The use of letters of expectations, legislative mandates, and State Ownership Policy provisions establishes a baseline for transparency and shareholder information. Nevertheless, the quality and consistency of disclosures could be strengthened, particularly regarding the financial implications of PSOs. Greater standardisation in reporting, clearer delineation between commercial and public-interest activities, and more rigorous cost-compensation frameworks which are planned, would further align Ukraine’s practices with best practice standards and better protect the interests of non-state shareholders.

Table 3.12. Financial and PSO reporting requirements by state-owned enterprise type

SOE Type	Annual Financial Statements	Separation of PSO Accounts	PSO Cost Disclosure	Audit Requirement
JSC	Mandatory	In progress	Partial	Mandatory
LLC	Mandatory	In progress	Variable	Mandatory
Unitary	Mandatory	Rare	Often absent	Mandatory (scope and quality vary)

Source: OECD Secretariat compilation.

3.4.4. Joint ventures and public private partnerships

IV.D. When SOEs engage in co-operative projects such as joint ventures and public-private partnerships, the contracting party should ensure that contractual rights are upheld and that disputes are addressed in a timely and objective manner.

Ukraine has made strides in enabling SOEs to participate in public-private partnerships (PPPs) and joint ventures, particularly as part of its broader effort to mobilise private capital for post-war reconstruction. Until 2019, SOEs were largely excluded from such arrangements. However, subsequent legislative changes have removed these restrictions, granting SOEs the ability to enter into PPP contracts, either directly or with the approval of their ownership entity or the CMU.

The Law on Public-Private Partnerships now provides a legal framework for SOE participation in PPPs. It establishes core principles of private partner engagement, dispute resolution, and protection of contractual rights, and outlines the procedural steps for competitive selection and project implementation. The law also includes safeguards for private investors and addresses state support mechanisms. Nevertheless, practical implementation remains uneven, in part due to the lack of fully developed secondary legislation, particularly in sectors such as large-scale infrastructure and concessions (OECD, 2025[16]).

To address remaining legal gaps and facilitate private investment, Law No. 7508 was introduced to simplify PPP procedures and improve regulatory clarity, including with respect to dispute resolution mechanisms. The slow pace of legislative reform has had tangible effects: while 200 PPP contracts were reported as of 1 January 2025, only 22 are currently active, comprising 9 concessions, 6 joint ventures, and 7 other forms of partnership. The remaining contracts have either been terminated or postponed, with at least 11 directly impacted by the ongoing conflict (OECD, 2025[16]).

The high attrition rate of PPP projects highlights a number of structural and operational challenges. These include regulatory uncertainty, difficulty in upholding contractual rights, and delays in resolving disputes. In many cases, SOEs lack the institutional capacity or experience to manage complex PPP arrangements, particularly when faced with legal ambiguity or conflict-related disruptions. Furthermore, while the legislative framework nominally addresses dispute resolution, practical enforcement remains weak, and mechanisms for arbitration or legal recourse are underutilised or poorly coordinated between relevant state actors (OECD, 2025[16]).

Despite these challenges, there is emerging evidence that SOEs are beginning to play a more proactive role in PPPs, particularly in priority areas such as defence, infrastructure, and energy. The planned adoption of the pending draft law and completion of secondary legislation, as well as targeted training and legal support for SOE management, can support these efforts (OECD, 2025[16]).

3.5. Disclosure, transparency and accountability

Key findings

V. State-owned enterprises should observe high standards of transparency and be subject to the same high-quality accounting, disclosure, compliance and auditing standards as listed companies.

While Ukraine has strengthened formal disclosure requirements, implementation remains uneven across the SOE portfolio. Reporting to ownership entities is inconsistent, particularly regarding financial performance, PSO costs and sustainability-related information. Accounting separation between commercial and non-commercial activities remains rare, limiting transparency on fiscal risks and public policy costs. Martial law exemptions have further constrained public disclosure, reducing the availability of information for oversight and accountability.

The Review recommends resuming consistent disclosure of financial statements and corporate governance reports in the short term, including partial aggregate reporting where full disclosure is not yet feasible. Over the medium term, all SOEs should publish annual audited financial statements, systematically report on PSO delivery, and disclose material risks, guarantees and liabilities. Portfolio-wide aggregate reporting should be fully reinstated, with the first comprehensive Annual Aggregate SOE Report due by July 2026, aligned with international accounting and disclosure standards.

Table 3.13. Recommendations on disclosure, transparency and accountability

	Short-term recommendation	Long-term recommendation
1	Ensure consistent disclosure of financial statements and governance reports, to the maximum extent possible within the legal framework of martial law, including through electronic reporting to the Ministry of Economy.	Publish an annual aggregate report covering the SOE portfolio, with financial and non-financial disclosures. Transition fully to international accounting standards (IFRS) for comparability.
2	Introduce partial portfolio-level (aggregated or selected) reporting for the first time, even if initially limited in scope.
3	Maintain and modernise public digital platforms (ProZvit/ SPFU registry) for portfolio-wide transparency.

Source: OECD Secretariat compilation.

3.5.1. Disclosure standards and practices

V.A. SOEs should report and disclose all material matters regarding the enterprise in line with high quality internationally recognised accounting and disclosure standards which may include areas of significant concern for the state as an owner and the general public. Channels for disseminating information should provide for free and timely public access. With due regard to enterprise capacity and size, examples of such information include:

Reporting and information disclosure by SOEs in Ukraine is governed by a comprehensive, though fragmented, legislative and regulatory framework.8 SOEs, particularly those corporatised as JSCs, are required to disclose a broad range of financial and non-financial information through their websites and/or those of their ownership entities. CMU Resolution No. 1067 outlines a baseline for mandatory disclosure, including company objectives, quarterly and annual financial statements, the enterprise charter (including previous versions), and ownership structure. Disclosure requirements further extend to biographical and professional information of supervisory and executive board members, annual reports of governing bodies, risk factors affecting operations, information on PPP obligations, and remuneration data. Reporting must also include expenditures on non-commercial objectives (e.g. public service obligations), information on contractual obligations, and any decisions of the ownership entity or general meeting of shareholders.

During martial law, administrative and criminal liability for non-disclosure is suspended. The NSSMC temporarily lifted mandatory disclosure obligations for securities issuers but reinstated them in 2025. Further, legislation adopted in 2024-2025 has reintroduced and tightened enforcement mechanisms for disclosure compliance: the State Ownership Policy codifies disclosure obligations for all types of SOEs, requiring the publication of a standardised set of information. It also strengthens provisions for transparency concerning the planning and execution of budgets, including procurement, public fund usage, and defense spending, unless such data is classified as a state secret.

Specific prohibitions are in place against limiting access to information on the remuneration structures of top executives and supervisory board members of SOEs and other entities governed by public law. SOEs and their ownership entities bear the responsibility of publicly disclosing such remuneration data, including compensation packages and benefits.

Disclosure requirements vary by the legal form and sector of the SOE. Public joint-stock companies, entities of public interest, natural monopolies, and enterprises in the extractive industries must publish annual financial and consolidated statements with auditor’s reports by 30 April. Large non-issuer enterprises, financial institutions categorised as micro or small entities, and medium-sized companies must meet the same requirements by June 1 of the year following the reporting period. Additional requirements for JSCs include disclosures related to general meetings, draft agendas, derivative transactions, share classes, dividends, and other material items as determined by the NSSMC.

SOEs operating in the extractives sector are also subject to transparency requirements under the Extractive Industries Transparency Initiative (EITI), including audited reports, lists of permits, and data on extracted and sold products. Compliance is especially rigorous for Naftogaz and state-owned coal enterprises. However, implementation has been uneven. Reports are often delayed, and some information remains inaccessible, partly due to exemptions invoked under martial law for national security purposes. Post-war legislative reforms are expected to fully enforce enhanced reporting and disclosure obligations under the amended corporate governance framework. A key challenge is the dispersion, overlap, and occasional contradiction across disclosure obligations, which are spread across multiple laws and regulatory instruments.

Table 3.14. Disclosure requirements in Ukrainian SOEs

Information	Frequency of publication	Deadline
SOE objectives and the state of their achievement	Annual	Simultaneously with annual financial statements
Quarterly financial statements, including expenditures for non-commercial purposes and sources of funding	Quarterly	No later than last day of the month following the reporting quarter
Annual financial statements of the enterprise (for the previous 3 years), including any expenditures for non-commercial purposes and sources of funding	Annual	April 30 or June 1 following the reporting year
Audited financial statements (for previous 3 years)	Annual	April 30 or June 1 following the reporting year
Charter of the enterprise	Upon registration	Within 10 calendar days (5 in public JSCs) from the date of registration
Ownership structure	Annual	Simultaneously with annual financial statements
Biographical information and professional qualifications of management board members	Annual	Simultaneously with the annual financial statement and if information is to be updated
Biographical information and professional qualifications of supervisory board members, including principles of their selection and information regarding their membership on boards of other entities if they are independent members	Annual	Simultaneously with the annual financial statement and if information is to be updated
Annual reports of the supervisory board and the executive body	Annual	Simultaneously with annual financial statements
Structure, principles of formation and the amount of remuneration for the members of the management and supervisory boards, including any compensation packages and benefits	Annual	Simultaneously with annual financial statements
Decisions of the ownership entity regarding the enterprise, business partnership, and decisions of the general meeting of the shareholders	After the decision is issued	Within 10 calendar days of the decision
Description of significant anticipated risk factors that may affect SOE operations and measures to manage such risks	Annual	Simultaneously with annual financial statements
Information on agreements and contracts subject to disclosure	After contract is concluded	Within 10 calendar days from the date of concluding the contract
Information on SOE operations and obligations arising as a result of public-private partnership	After the transaction	Within 10 calendar days from the date of concluding the contract

Notes: This table illustrates the legal disclosure requirements for SOEs (regardless of their legal form). The main source of these requirements is the State Ownership Policy, but the table also shows other legal acts that impose disclosure obligations on SOEs. In addition, it specifies who is responsible for fulfilling each obligation (the ownership entity, the SOE itself, or both). The only exceptions not covered in this table are disclosure obligations under JSC rules - which are not relevant to all SOEs - as well as those specific to banks and other sectoral regulations.

Source: Cabinet of Ministers of Ukraine (2017[17]), Resolution No. 1067 on disclosure of information by state-owned enterprises, https://zakon.rada.gov.ua/laws/show/1067-2016-%D0%BF; Verkhovna Rada of Ukraine (2003[18]), Commercial Code of Ukraine, https://zakon.rada.gov.ua/laws/show/436-15.

Financial Reporting Standards

The overarching framework for financial reporting is governed by the Law on Accounting and Financial Reporting and regulatory orders issued by the Ministry of Finance. All SOEs are required to prepare financial statements, with certain enterprises mandated to do so under IFRS. These include:

• Enterprises of public interest

• Public JSCs and listed issuers

• Large enterprises

• Banks and insurers

• Extractives sector entities

• Financial service providers (excluding some small entities and pension-related services).

The State Ownership Policy further mandates that SOEs of all types prepare and publish IFRS-based financial statements in Ukrainian on the Ministry of Finance’s website. However, a legislative inconsistency exists: Law on Accounting and Financial Reporting still permits some SOEs to choose between IFRS and national standards. In practice, this results in a fragmented application of reporting standards. The State Ownership Policy also prescribes principles of harmonisation with EU norms, efficiency (to prevent redundant disclosure across various reports), and completeness and reliability of published data. It calls for automated information exchange between public authorities, aiming to reduce administrative burdens and enhance data coherence.

To streamline reporting under IFRS, financial statements must be submitted electronically in XBRL format via the System of Financial Statements Portal, operated by the NSSMC. While a unified digital reporting window is under development, taxonomy frameworks (especially for banking and insurance) have already been established with EU support. SOEs subject to IFRS must also undergo annual independent audits. These audited financial statements, once finalised, must be published on the SOE’s own website or that of its ownership entity. However, under Law No. 4196-IX, a transitional provision delays mandatory online publication by three years. Consequently, while some key SOEs (e.g. Naftogaz) comply with these standards and publish consolidated reports, others do so irregularly or not at all. Disclosures among subsidiaries of state-owned groups are uneven.

Overall, while Ukraine has worked towards aligning its SOE financial reporting practices with international standards, practical implementation remains varied across sectors and enterprise types. Disclosure is inconsistent and sometimes incomplete, particularly for SOEs operating in sensitive sectors such as defence. Data in public registers is often self-reported and quality varies, depending on the extent of corporate governance reforms adopted by individual SOEs.

Table 3.15. Summary of financial reporting requirements in state-owned enterprises by type

Enterprise type	Financial statements	Mandatory IFRS reporting	Auditor’s report	Disclosure	Reporting deadline2
Enterprises of public interest 6	Yes	Yes	Yes	Yes	30 April
Public joint stock companies	Yes	Yes	Yes	Yes	30 April
Natural monopolies (SOEs)	Yes	Yes	Yes	Yes	30 April
Companies operating in the extractives sector	Yes	Yes	Yes	Yes	30 April
Large enterprises (non-issuers of securities) 3	Yes	Yes	Yes 4	Yes	1 June
Holding companies 1	Yes	No	Yes	Yes	30 April
State-owned banks	Yes	Yes	Yes	Yes	30 April
Financial institutions belonging to SMEs	Yes	No	Yes	Yes	1 June
Other SOEs (including medium-sized enterprises).	Yes	Yes 5	Yes 4	Yes	1 June

Notes: 1 Consolidated statements to be submitted by holding companies where two of the following conditions are met: book value is below EUR 4 million, net income is below EUR 8 million, and number of employees is below 50 individuals. They are required to prepare and submit consolidated financial statements in accordance with national accounting standards or IFRS.

2 Deadlines for audited statements are the same as for financial statements

3 Large enterprises are entities that meet at least two of the following criteria: (i) employ over 250 individuals, (ii) have a book value of over EUR 20 million, or (iii) have a net income of EUR 40 million.

4 Applicable only if determined by the CMU based on the company’s book value of assets.

5 Applicable to enterprises engaged in certain economic activities as determined by the Cabinet of Ministers of Ukraine

6 Enterprises of public interest include issuers of securities admitted to trading on stock market (or if a public offer has been made), banks, insurers, private pension funds, other financial institutions (except other financial institutions and non-governmental pension funds belonging to micro-enterprises and small enterprises) and large enterprises, as defined above.

Source: Cabinet of Ministers of Ukraine (2000[19]), Resolution No. 419 on financial reporting requirements, https://zakon.rada.gov.ua/laws/show/419-2000-%D0%BF.

V.A.1. A clear statement to the public of enterprise objectives and their fulfilment, including any mandate expected by the state ownership entity.

The Ukrainian legal and regulatory framework establishes a structured process for setting, communicating, and evaluating the objectives of SOEs. These objectives serve a dual purpose: to align enterprise operations with the state’s policy priorities, and to ensure effective monitoring of performance across financial, operational, and public policy domains.

According to the State Ownership Policy, SOE objectives must be grounded in several foundational elements, including legal justifications for state ownership, the enterprise’s founding purpose as defined in its charter, and any specific obligations for delivering services of general economic interest. In addition, objectives reflect the performance of special duties - where SOEs are mandated to fulfil certain public interest roles - and must align with broader national policy goals.

Table 3.16. Overview of SOE objectives

Financial goals	Operational goals	Non-financial goals
Aimed at ensuring the financial stability of SOE, effective use of capital, the ability to fulfil its obligations at the expense of its own property, the increase in profitability and the amount of dividends (part of the net profit deducted to the state budget).	Aimed at improving the efficiency and effectiveness of SOE operations, optimising its production processes, stimulating the effective use of its property, making capital investments, reducing operating costs, expanding activities, achieving a certain level of consumer satisfaction, carrying out activities within the approved risk limits.	Aimed at areas of activity such as the implementation of certain public policy goals, the satisfaction of public interests (including national security, environmental protection), the performance of special duties, corporate social responsibility, sustainable development, development of employees.

Source: Cabinet of Ministers of Ukraine (2024[3]), State Ownership Policy, https://zakon.rada.gov.ua/laws/show/1369-2024-%D0%BF.

To ensure accountability and transparency, SOEs must prepare annual and quarterly reports on their performance against the objectives defined in the letters of expectations. These reports, along with the letters themselves, are required to be published on the SOE’s website. However, this obligation is in transition. Under Law No. 4196-IX, SOEs are granted a three-year transition period starting from August 2025 during which only the ownership entity is required to publish this information.

In addition to enterprise-specific objectives, the State Ownership Policy also requires that public policy goals and special obligations imposed on SOEs be clearly articulated in the letters of expectations. These include mandates related to environmental protection, energy efficiency, digitalisation, cybersecurity, accessibility, and gender equality, among others. Each of these objectives is meant to be measurable, regularly reported on, and evaluated through independent performance monitoring systems.

Management reports submitted alongside annual financial statements also serve to communicate progress towards these objectives. As per the Law on Accounting and Financial Reporting, these reports must include non-financial disclosures covering environmental impacts, social protection policies and anti-corruption efforts.

V.A.2. Enterprise financial and operating results, including where relevant the costs and funding arrangements pertaining to public service obligations.

Ukrainian SOEs, particularly those organised as JSCs and LLCs, are legally required to submit and disclose their annual financial and operating results. These disclosures, which include the audited financial statements, are approved by the general shareholders’ meeting (the ownership entity in the case of wholly state-owned enterprises). In accordance with applicable legislation and the State Ownership Policy, the resolutions of the shareholders’ meeting must be published on both the SOE’s website and that of the ownership entity.

In addition to standard financial reporting, Ukrainian SOEs are obligated to disclose the costs and funding arrangements associated with their public service obligations or other non-commercial mandates. These are expected to be reflected in quarterly and annual financial statements and reported to regulatory authorities including the ownership entity and the authorised state aid body.

As noted earlier, the Ukrainian government has launched the “Structural Separation of Accounts” initiative. The programme, a component of the broader Ukraine Plan, seeks to improve transparency and competitive neutrality by requiring SOEs to clearly delineate commercial and PSO-related financial flows. The reform aims to prevent the cross-subsidisation of commercial activities through state aid intended for PSOs, thereby ensuring compliance with EU state aid rules and reinforcing a level playing field between SOEs and private market actors.

V.A.3. The governance, ownership, and legal and voting structure of the enterprise or group as well as any significant subsidiaries, including the content of any corporate governance code or policy and implementation processes.

Ukrainian SOEs are required to disclose their governance, ownership, and legal structure through multiple regulatory channels. These include statutory requirements under the now defunct Commercial Code and JSC Law, as well as more recent provisions under the State Ownership Policy. Each SOE’s charter must provide a detailed description of its corporate governance framework, including its organisational purpose, capital structure, profit distribution mechanisms, management bodies, and rules on liquidation or reorganisation. For JSCs, charters must additionally include information on shareholding structure (e.g. nominal value and classes of shares), dividend policy, and shareholder rights. These charters, including historical versions, must be published on the SOE’s and ownership entity’s websites.

Under Article 153 of the State Ownership Policy, SOEs are also required to disclose:

1. their full organisational structure, including ownership information, subsidiaries, and any equity holdings in other legal entities;

2. internal corporate regulations, including governance procedures, internal control frameworks, risk management, compliance systems, and anti-corruption measures;

3. a list of supervisory board committees and the identity of their members and chairpersons.

In line with corporate governance best practices, SOEs must also disclose whether they apply the National Corporate Governance Code, as approved by the NSSMC, or another equivalent code. This decision must be adopted by the general shareholders’ meeting and disclosed publicly. While progress has been observed among large, corporatised SOEs - particularly JSCs - in aligning with disclosure requirements, compliance is not consistent across the broader SOE landscape. Many enterprises either delay updates or underreport key governance information, and enforcement remains a challenge.

V.A.4. The remuneration of board members and key executives

The regulatory framework governing remuneration transparency for SOE executives and board members has significantly strengthened in recent years. Law No. 1723-IX/ 2021 stipulates that information related to compensation funded by the state - including salaries, benefits, and performance bonuses - is not protected as confidential and must be publicly disclosed. This applies to CEOs, deputy CEOs, supervisory board members, and executives across SOEs and MOEs, including their subsidiaries.

The CMU Resolution No. 1067 requires majority-owned SOEs and unitary enterprises to publish detailed information on the structure, methodology, and components of remuneration, including base salary, incentive pay, dismissal payments, and in-kind benefits. These disclosures should be included in the annual financial report and published on the enterprise’s and ownership entity’s websites. The Remuneration framework adopted in November 2024 as part of the State Ownership Policy also embeds transparency obligations relating to board and executive remuneration.

The JSC Law further reinforces transparency by mandating that all JSCs - regardless of ownership - develop internal regulations on executive and board remuneration. These regulations must be approved by the general shareholders’ meeting (ownership entity) and reviewed annually by the supervisory board’s remuneration committee. If necessary, amendments must be proposed based on performance reviews or legal changes. Additionally, the supervisory board of each SOE must submit an annual remuneration report detailing compensation packages for the executive and board, in line with the NSSMC’s latest guidance. The NSSMC updated its requirements in 2025 to align with international standards and promote more granular disclosure.

Complementing this, the 2024 Remuneration Policy sets out key principles to ensure remuneration is fair, transparent, and performance-based. SOEs are required to prepare annual remuneration reports detailing compensation packages for executives and board members, including reimbursements for travel or training. These reports must be approved by the supervisory board and published publicly, including on the Unified State Open Data Portal.

Disclosure obligations are reinforced by the Law on Access to Public Information and the Law on Capital Markets and Organised Commodity Markets (No. 3480-IV/ 2021), which mandate that management, corporate governance, sustainability, and remuneration information be disclosed annually. The National Securities and Stock Market Commission’s 2025 guidance further aligns these reporting requirements with international standards, promoting granular transparency and accountability.

While legal and regulatory frameworks have improved, actual disclosure practices remain uneven - especially in the context of martial law, which has prompted some SOEs to limit the availability of remuneration data. Although legal obligations to disclose this information remain in force, enforcement is uneven. For corporatised SOEs, the NSSMC has formal oversight authority, but for other legal forms there is no systematic enforcement mechanism. Stricter application of fines or administrative measures could help improve compliance.

V.A.5. Composition of the board and its members, including board member qualifications, selection process, board diversity policies, roles on other company boards or in the state and, if applicable, classification as independent

Ukrainian SOEs are subject to legal requirements concerning the establishment and composition of supervisory boards, which serve as the primary governing body in corporatised SOEs. A supervisory board is mandatory where required by sectoral legislation (e.g. for banks or publicly listed companies) and for SOEs meeting the criteria set out in the State Ownership Policy, including enterprises designated as particularly important to the economy or national security. The composition of supervisory boards is defined by the SOE’s charter, with the number of members ranging from five to nine. A majority of members must qualify as independent and the nomination processes, which differ according to the type of SOE, are regulated by the CMU and must reflect collective suitability, professionalism, transparency and diversity.

Qualification criteria for supervisory board members are defined in CMU regulation, with room for additional requirements through SOE charters or internal rules. Members are appointed for three-year terms and may be reappointed if eligibility criteria continue to be met. Transparency obligations require disclosure of board member biographies, qualifications, other board memberships, and the assessment of independence.

In accordance with the JSC Law, supervisory boards are required to issue annual reports detailing their activities, which must form part of the company’s annual report. The report must provide:

• Self-assessments and (if available) external evaluations of board performance

• Evaluation of individual board members and committees

• Assessment of diversity, independence, and strategic effectiveness

• Overview of board decision-making structures and processes.

In January 2025, the CMU introduced a new standard for SOE board reporting, which mandates reports on performance against state expectations, including strategic development plans and achievement of short- and medium-term objectives.9 Reports must be submitted to the ownership entity and disclosed on SOE websites. In practice, leading SOEs such as Naftogaz, Ukrenergo, Ukrzaliznytsia, and USPA publish detailed board-related information, yet overall compliance among SOEs remains uneven. Moreover, diversity policies, including gender or professional background considerations, remain underdeveloped in implementation.

V.A.6. Any material foreseeable risk factors and measures taken to manage such risks.

Ukrainian legislation requires SOEs to disclose material foreseeable risk factors and the measures in place to manage them. These provisions are outlined in the CMU Resolution No. 1067, and are reinforced by the SOE Law and State Ownership Policy. However, actual implementation remains inconsistent. While leading SOEs may include limited risk assessments in their annual reports, most companies do not meet international standards in this area. Risk disclosures are often generic and do not clearly link risk assessments to strategic or financial decisions. The presence of dedicated risk management functions at board level - such as risk committees - is rare.

The updated legislative framework introduces an obligation to establish internal control systems, covering compliance, risk management, internal audit, and whistleblowing mechanisms. These systems must be tailored to the SOE’s operational context, risk exposure, and complexity. Supervisory boards are responsible for overseeing risk governance, including developing risk appetite statements and embedding a risk-based approach to decision-making. Despite these formal advances, comprehensive adoption of risk management systems across the SOE sector remains a work in progress.

V.A.7. Any direct or indirect financial assistance, including guarantees, received from the state and commitments made on behalf of the SOE, including contractual commitments and liabilities arising from public-private partnerships or participation in joint ventures.

SOEs in Ukraine may benefit from direct or indirect financial support from the state in the form of subsidies, guarantees, debt service support, or targeted financing. Such aid must be disclosed and is subject to review by the Anti-Monopoly Committee of Ukraine, which assesses compatibility with state aid regulations and maintains a registry of approved support measures. However, monitoring functions of the AMCU and Treasury have been suspended under martial law,10 reducing transparency over new state aid decisions. Where state aid remains active, disclosures should be made through AMCU and Treasury websites, and included in the SOE’s financial statements. SOEs engaged in public-private partnerships or joint ventures are also required to disclose financial and contractual commitments, including contingent liabilities. The State Ownership Policy mandates disclosure within 10 days of material transactions,11 though compliance varies. Top-tier SOEs tend to disclose material information more consistently, particularly when under international scrutiny or financing arrangements.

V.A.8. Any material transactions with the state and other related entities.

Ukrainian SOEs are subject to detailed disclosure obligations regarding material transactions with the state and other related parties. These are set forth in the Law No. 4196-IX, and the State Ownership Policy. Requirements include disclosure of:

• Transactions with budget institutions and other SOEs

• Financial and non-financial contractual obligations, including PPPs

• Interested party transactions, including counterparties, value, and terms.

The Law on Transparency of Use of Public Funds requires SOEs to disclose all contractual obligations, which should be published on their websites or the site of the ownership entity. In practice, however, disclosures remain incomplete - particularly regarding related party transactions involving politically exposed persons or inter-SOE transfers. Ukraine has adopted accounting standards defining related parties in line with international practices. These include individuals and entities with control or significant influence over the SOE, close family members, board members, and affiliated entities. Financial statements must detail the nature of related party relationships, transaction values, outstanding balances, and valuation methodologies.12

In IFRS-compliant SOEs, additional disclosure standards apply. Despite legal requirements, enforcement remains weak. For example, while Naftogaz’s 2019 consolidated report includes detailed disclosures on its dealings with state-owned banks and other SOEs, many enterprises fail to publish similar information.

V.A.9. Information on material liabilities such as debt contracts, including the risk of non-compliance with covenants.

While Ukrainian legislation does not explicitly require SOEs to disclose detailed information on material liabilities such as debt contracts or compliance with debt covenants, relevant elements of such disclosure are indirectly addressed through existing financial reporting obligations and broader transparency requirements. As previously discussed in the context of financial and operating disclosures (Section V.A.2), all SOEs - particularly those incorporated as JSCs - are subject to mandatory annual audits conducted in accordance with international accounting standards. Audited financial statements must be published on SOE and ownership entity websites, and these typically contain data on long-term liabilities, debt instruments, and key financial ratios that can serve as proxies for assessing covenant compliance.

Beyond financial statements, SOEs are also required to disclose significant economic obligations and transactions, including information on parties, transaction value, and contractual terms. This includes any material commitments that may pose financial risk. In addition, SOEs must report on performance against financial indicators such as profitability, liquidity, and solvency as part of the annual review of their letters of expectations, although these reports are not always made public. Importantly, as noted earlier in the report, there is no specific requirement to disclose breaches or risks of breach of financial covenants unless the SOE is a bond issuer or otherwise falls under the Law on Capital Markets and Organised Commodity Markets. Under this law, issuers of securities - regardless of ownership structure - must report defaults or delays in servicing obligations to the public.

Despite these layered requirements, disclosures related to debt structure and covenant compliance remain largely unsystematic and often insufficient for enabling proper oversight of financial risks. Many SOEs do not explicitly publish information on the nature of their debt obligations or the existence of loan covenants, and there is no centralised or standardised format for such reporting. This gap may be of particular concern for SOEs with extensive borrowing or exposure to international financial institutions as lenders, where lack of transparency may affect creditworthiness and distort the level playing field in markets.

V.A.10. Sustainability-related information

Disclosure of sustainability-related information has emerged as an increasingly important policy priority for Ukraine, particularly in the context of its European integration agenda and efforts to modernise SOE governance frameworks. Building on the general disclosure obligations outlined in Article 139 of the State Ownership Policy and discussed across several sections in the report (Section V.A.3 and VII), all SOEs are required to compile a management report that includes non-financial information. This includes, at a minimum, disclosure of the environmental and social impact of SOE activities, anti-corruption measures, compliance with the SOE Guidelines, and contributions to broader sustainable development goals.

In parallel, important progress has been made in aligning Ukraine’s corporate disclosure regime with EU best practices. A key milestone was the adoption in June 2023 of a new regulation by the NSSMC, which introduced enhanced disclosure standards for public interest entities, including state‑owned JSCs. Effective from 2024, the regulation requires covered entities to publish comprehensive annual reports that include both corporate governance and sustainability components. The sustainability disclosure obligations are structured on a “comply or explain” basis and are aimed at formalising ESG (Environmental, Social and Governance) reporting as a key pillar of SOE transparency.

Since then, Ukraine has gone further in its domestic regulatory agenda. In October 2024, the government adopted the Strategy for the Implementation of Sustainability Reporting by Enterprises, which anticipates a phased introduction of sustainability reporting obligations aligned with the European Sustainability Reporting Standards (ESRS). Under this Strategy, companies will be required to prepare and disclose sustainability reports in accordance with ESRS beginning in 2026, with broader implementation planned through 2030.

However, implementation of this framework has been delayed by exemptions introduced during martial law, which allowed SOEs and other JSCs to defer the publication of financial and non‑financial reports. These exemptions were lifted in early 2025, and companies are now required to submit all delayed disclosures by 30 September 2025. This step is expected to catalyse broader compliance with sustainability reporting requirements. Still, the overall maturity of sustainability disclosure remains limited: only a few SOEs - mainly those engaged with international partners or capital markets - have published detailed sustainability reports to date.

Ukraine has taken initial steps to implement the EU Corporate Sustainability Reporting Directive (CSRD) and align with the European Sustainability Reporting Standards, which are necessary to fulfil EU accession commitments. Ukraine’s strategy for the implementation of sustainability reporting requirements in line with the EU acquis sets out a phased legislative agenda and capacity‑building measures through 2030, with the first stage of sustainability reporting (ESRS) expected by 2026 and further stages covering audit and broader disclosure obligations by 2030, as outlined in the draft law and the Strategy’s roadmap.

3.5.2. External audit of financial statements

V.B. SOEs’ annual financial statements should be subject to an independent external audit based on high-quality standards. Specific state control procedures do not substitute for an independent external audit.

Independent external audits are a core pillar of financial oversight in Ukraine’s state-owned enterprise sector, and aim to enhance transparency, promote financial discipline, and support investor confidence. According to Article 141 of the State Ownership Policy, all SOEs are required to undergo annual independent external audits of their financial and economic activities, regardless of their legal form. The selection of external auditors is conducted through competitive procurement processes, typically following public procurement rules, and is finalised alongside approval of the annual financial statements. Where a supervisory board exists, it is responsible for selecting the auditor, subject to ownership entity approval; in SOEs without a board, the ownership entity directly commissions the audit.

While the Law on Accounting and Financial Reporting currently mandates audits only for a subset of SOEs, the SOE Law provides the primary legal basis for audits across the sector, resolving prior ambiguities.

Box 3.8. Audit standards in Ukraine

International Audit Standards are applicable to Ukrainian SOEs, and the Law on Audit of Financial Reporting and Audit Activities outlines the requirements to avoid conflicts of interest and ensure independence of auditors. Auditors (and their family members and close relatives) are not allowed to be officials of audited entities two years following an audit, and restrictions are applied regarding their ownership and disposal of securities. Managers and shareholders of the company are also prohibited from interfering with the auditor or any activities pertaining to external audit. Notably, the auditor would have no rights to provide the enterprise with other services, such as tax reporting, consulting, management, legal assistance, assessment, or other services related to attracting financing, distributing profits, and developing an investment strategy.

Prior to engaging their services, companies are expected to ensure that auditors meet relevant requirements to avoid conflicts of interest, carry out due diligence and risk assessment, assess the adequacy of staff and compliance with relevant tasks, and meet legal and transparency requirements. Statements on the independence of external experts are subject to disclosure, along with issuing a transparency report and information regarding independent practices. Quality checks are carried out by the quality assurance inspectorate and Ukraine’s audit chamber. Violations may lead to excluding the auditor from the registry and losing rights to conduct audits, with up to a 7-year statute of limitations for misdemeanours.

Source: Verkhovna Rada of Ukraine (2017[17]), Law on Audit of Financial Statements and Auditing Activity, https://zakon.rada.gov.ua/laws/show/2258-19

In addition to external independent audits, Ukraine has instituted state audit mechanisms to monitor the use of public resources in SOEs. The State Audit Service (SAS) operates under the Cabinet of Ministers and the Ministry of Finance, and is tasked with financial control and efficiency monitoring across state institutions, including SOEs. Originally established in the early 2000s, reorganised several times, and formalised in its current structure in 2015, the SAS conducts financial audits, compliance reviews, and assessments of procurement practices in entities receiving state funds.

SAS exercises significant legal and remedial powers, including the ability to impose penalties, initiate investigations, and make recommendations for legislative or procedural reforms. It plays a complementary role to independent audit processes by offering a government-initiated mechanism for identifying inefficiencies, irregularities, or systemic risks within the SOE sector. Moreover, the Accounting Chamber of Ukraine has the constitutional mandate to audit the receipt and use of public funds, including those related to SOEs. Operating independently under the supervision of the Verkhovna Rada, the Chamber is authorised to conduct performance audits, evaluate fiscal risks, and provide comprehensive assessments of the economic use of state property. Its findings are published in quarterly and annual reports and may lead to recommendations to the legislature and executive bodies.

The dual-track oversight structure - combining external audit, state financial inspection, and supreme audit institution reviews - represents a multi-layered approach to ensuring financial probity and public accountability of SOEs.

3.5.3. Aggregate annual reporting

V.C. The ownership entity should develop consistent reporting on SOEs and publish annually an aggregate report on SOEs. Good practice calls for the use of web-based communications to facilitate access by the general public.

In Ukraine, ownership entities are legally obliged to disclose information on SOE economic and financial performance to the Ministry of Economy and to make this information publicly available. Between 2015 and 2021, the Ministry of Economy, in cooperation with Transparency International Ukraine, developed ProZvit, an online analytics portal aggregating financial statements for over 3 500 state enterprises. The portal, now administered by JSC “Prozorro.Sale,” has been offline since early 2022 due to security concerns under martial law, and no regular public updates have been issued since then. As discussed in Section II.F.4, limited resources and lack of technical capacity have constrained efforts to modernise or relaunch the platform, resulting in a continued gap in publicly available SOE data. Internal systems such as Best Zvit reportedly aggregate performance information but remain inaccessible to the public.

There have been no confirmed public announcements of a formal relaunch or replacement of the ProZvit portal during 2025; however, data on the ownership and performance of SOEs continues to be partially accessible through alternative open sources (e.g. data.gov.ua), civil society monitoring, and private platforms.

The State Ownership Policy introduces a new aggregate reporting mechanism designed to compensate for these transparency gaps. It requires ownership entities to contribute to an Aggregate Report on the Effectiveness of SOE Management, coordinated by the Ministry of Economy. This report will draw on submissions from ownership entities (covering performance, structure, and governance), the Ministry of Finance (budget financing and fiscal risks), and company-level financial statements to provide a comprehensive view of the SOE portfolio, including financial performance, governance practices, and progress towards policy objectives. According to the State Ownership Policy, the first aggregate report, covering the 2025 reporting year, is due to be submitted to the Cabinet of Ministers by 1 July 2026.

It should be noted, however, that certain reporting obligations for ownership entities predate the State Ownership Policy, although compliance has historically been uneven. In addition, existing aggregate reporting practices generally do not capture enterprises where the state holds minority shareholdings, pointing to residual legislative and methodological gaps in achieving a fully comprehensive overview of the state’s commercial portfolio.

In parallel, ownership data consolidation efforts are ongoing. A joint SOE registry under development with the State Property Fund aims to consolidate enterprise‑level data and could eventually complement or supersede ProZvit as the main digital disclosure platform, though no full public launch date has been announced as of early 2026.

Overall, Ukraine has created a solid legal and institutional basis for aggregate SOE reporting. The priority now is to restore and modernise public disclosure mechanisms - including digital platforms like ProZvit and the future SPFU registry - to improve data availability, comparability, and accountability across the SOE sector.

3.6. Composition and responsibilities of the boards of state-owned enterprises

Key findings

VI. The state should ensure that boards of SOEs have the necessary authority, competencies and objectivity to carry out their functions of strategic guidance, risk management oversight and monitoring of management. They should act with and promote integrity, and be held accountable for their actions.

The adoption of Law No. 3587-IX represents a major step forward in strengthening supervisory board independence, responsibilities and professionalism. Legal provisions now align more closely with OECD standards, particularly for large SOEs subject to competitive nomination processes. However, implementation remains uneven, with delays in appointments, incomplete boards, weak committee structures, and persistent disparities between independent directors and state representatives. Temporary wartime powers have further constrained board autonomy in practice.

The Review recommends ensuring timely appointment of independent board members and CEOs to maintain quorum and effective oversight. Competitive, merit-based selection procedures should be consistently applied, interim arrangements kept strictly temporary, and SOE charters aligned with governance reforms. Over the medium term, Ukraine should fully implement board evaluation requirements, strengthen audit and risk committees, and professionalise recruitment across the SOE sector. Clear and standardised nomination procedures and depoliticised appointment practices will be essential to consolidate reform gains.

Table 3.18. Recommendations on the composition and responsibilities of state-owned enterprises

	Short-term recommendation	Long-term recommendation
1	Fill board and CEO vacancies with independent members through competitive, merit-based selection.	Institutionalise independent board evaluations, linked to nominations/reappointments (beyond strategically important SOEs).
2	Insulate appointment and reappointment processes from political influence, using clear criteria and structured nomination procedures.	Establish functionally depoliticised nomination arrangements, focused on transparent procedures, professional criteria and insulation from ad hoc political influence, without necessarily creating a new standalone body.
3	Establish board profiles to guide composition (skills, expertise, diversity) and support candidate assessment.	Establish uniform guidelines and merit-based criteria for board member appointments across all SOEs, which also ensure board diversity.
4	Strengthen board-level audit oversight and ensure functioning audit committees.	Establish a consolidated, professionalised HR/ recruitment function across the SOE sector
5	Enhance transparency by disclosing Nomination Committee decisions and maintaining a centralised candidate database.

Source: OECD Secretariat compilation.

3.6.1. Board mandate and responsibility for enterprise performance

VI.A. The boards of SOEs should be assigned a clear mandate and ultimate responsibility for the enterprise’s performance. The role and duties of SOE boards should be clearly defined in legislation, preferably according to company law. Board members should act on a fully informed basis, in good faith, with due diligence and care, and act in the best interest of the enterprise and the shareholders, taking into account the interests of stakeholders.

Ukrainian legislation, particularly with the adoption of Law No. 3587-IX, has significantly advanced in aligning with the SOE Guidelines in terms of defining the mandate and responsibilities of SOE supervisory boards. The law provides a clear legal basis for assigning ultimate responsibility for the enterprise’s performance to its board. These provisions are enshrined primarily in the SOE Law and the JSC Law, both of which lay out the duties of supervisory board members and provide that SOEs must establish supervisory boards that act in the best interests of the enterprise and its shareholder.

Law No. 3587-IX provides an explicit mandate for SOE supervisory boards, empowering them to exercise strategic oversight and control functions over the company. Their duties are no longer confined to procedural or compliance matters but now include approval and monitoring of strategic, financial, and investment plans, risk management and internal control frameworks, and CEO appointment and dismissal.

The supervisory board is entrusted with the exclusive authority to approve a range of strategic and operational documents, including the enterprise's strategic development plan, annual financial and investment plans, and medium-term investment plans. These plans are aligned with the shareholder’s expectations as defined in the letters of expectations, which is issued annually by the ownership entity or general shareholders meeting. Importantly, the board is also responsible for monitoring implementation and reporting on progress towards these goals. Strategic and financial planning has become more structured through the introduction of unified procedures and documentation, reducing discretion and reinforcing accountability.

Board duties are further operationalised through the powers of approval and oversight of risk appetite declarations, approval of significant transactions, and monitoring of internal control systems. The reform also institutionalises the board’s role in managing performance through approval of strategic performance indicators and the evaluation of results. This greater breadth of responsibility ensures that SOE boards are not only reactive to shareholder mandates but are actively shaping the direction and long-term sustainability of the enterprise.

Nonetheless, some internal control and integrity functions remain operationally dependent on executive management in certain SOEs. For example, positions such as anti-corruption or risk officers may be appointed by - and report to - the executive body, which can weaken direct board visibility over key risk and compliance functions. Strengthening reporting lines to supervisory boards would further align practice with international good standards on board oversight of internal controls.

Crucially, the amended legislation provides for the board’s accountability through mandatory self-assessments and external evaluations. Supervisory boards are now also a formal party to structured dialogue with the ownership entity, helping to shield SOEs from undue political interference. These reporting and evaluation mechanisms represent an important step toward ensuring that boards act in a fully informed, diligent, and independent manner. The State Ownership Policy reinforces these provisions by emphasising long-term value creation and continuity of operations, even where this may conflict with short-term fiscal goals such as dividend extraction.

Moreover, the law clarifies that the supervisory board is responsible for appointing and dismissing the CEO and executive body members, as well as approving the terms and structure of their remuneration. This enables the board to ensure alignment between executive incentives and the company’s long-term objectives, sustainability and financial viability. The introduction of the CEO Remuneration Policy, though not yet fully in effect, aims to reinforce this alignment through structured market-based benchmarks and performance metrics. The recent introduction of qualified majority requirements for certain corporate decisions, including CEO appointments and approval of strategic plans, is viewed by many to undermine the supervisory board’s autonomy and allow for undue political interference. Although the SOE Guidelines do not specify voting thresholds, they stress the need for independent and accountable boards operating without political interference. They also emphasise that supervisory board members should carry equal responsibilities and accountability, and act solely in the interests of the company and its shareholders. Provisions that effectively give state representatives veto power - often exercised through informal voting instructions – have been viewed by many international partners as undermining the intent of Ukraine’s recent SOE Law.

Overall, Ukraine’s legal and institutional framework now assigns SOE boards a clear and substantive mandate, supported by well-defined duties, strong legal authority, and growing procedural discipline. Continued efforts are needed, however, to ensure these provisions are consistently applied in practice, and that supervisory boards are equipped with the necessary expertise, independence, and information to fulfil their responsibilities effectively.

Table 3.19. Supervisory board duties

Based on the law, members of supervisory board have fiduciary duties and are obliged to act:

According to the JSC Law, members of the supervisory board and other officers of JSC are obliged to:

Exclusively in the interests of the company. Within powers granted by charter and legislation. In a way that, in his/her conscientious belief, will contribute to achieving goals of the company and all its owners, avoiding conflicts of interest.

Act in the interests of a company, in good faith and reasonably within powers granted to them by the charter of the JSC and legislation. Not disclose trade secrets and confidential information about the company's activities, except as provided by law. Provide documents on the financial and economic activities of the company at the request of SB, chief of internal auditor or external auditor. Contribute to the achievement of successful results by the company in favour of all its shareholders. Make independent decisions. Act with a reasonable degree of care, professionalism and diligence. Avoid conflicts of interest. Refrain from accepting benefits from third parties, and report related party transactions.

Source: Verkhovna Rada of Ukraine (2003[18]), Commercial Code of Ukraine, https://zakon.rada.gov.ua/laws/show/436-15#Text ; Verkhovna Rada of Ukraine (2008[14]), Law on Joint-Stock Companies, https://zakon.rada.gov.ua.

3.6.2. Setting strategy and supervising management

VI.B. SOE boards should effectively carry out their functions of reviewing and guiding corporate strategy and supervising management based on broad mandates and expectations set by the shareholders. They should have the power to appoint and remove the CEO. They should align executive remuneration levels with the longer-term interests of the enterprise and its shareholders.

As noted earlier, the recent adoption of Law No. 3587-IX grants SOE boards a more comprehensive and formalised mandate to guide corporate strategy, monitor performance, and oversee management without the direct influence of the ownership entity. Boards have the authority to appoint and dismiss CEOs and members of the executive body. These functions are now embedded in the SOE Law and the State Ownership Policy, ensuring consistency across SOEs of different legal forms. At the same time, some legal inconsistencies remain. Notably, provisions in the JSC Law indicate that the CEO is accountable to both the shareholder and the supervisory board, whereas the SOE Law emphasises reporting to the board. Clarifying this hierarchy would help avoid interpretative uncertainty and support the effective functioning of the two-tier governance model.

However, implementation of some governance provisions (including strategic planning autonomy and independent supervisory board powers) may still be constrained by temporary derogations linked to martial law, which allow continued involvement of ownership entities or ministries in approving key strategic and financial documents for certain SOEs (notably large energy and transport enterprises).

The supervisory board’s role in strategic planning is also now more structured and evidence based. It is required to periodically review and update the SOE’s strategic plan, which outlines the enterprise’s goals and operational direction over a three-to-five-year horizon. In turn, SOEs must report annually on the implementation of these strategies, including financial results and progress toward performance targets.

The legislation also establishes supervisory boards as the primary interlocutor with the state ownership entity. This institutionalised dialogue is intended to reduce political interference and enhance stability in corporate planning. It is supported by strengthened requirements for board transparency, including self-assessment and external evaluation procedures that improve both internal functioning and stakeholder accountability.

CEO appointment and executive remuneration

The reforms significantly enhance the role of SOE boards in executive management decisions, notably the appointment and removal of CEOs, approval of their contracts, and determination of remuneration terms. These powers are reserved exclusively for supervisory boards, as per the SOE Law and the Law on JSC. Alongside the State Ownership Policy adopted in late 2024, the Cabinet of Ministers approved a remuneration policy (Resolution No. 1369 of 29 November 2024) for supervisory board members and senior managers of SOEs, which is to be implemented by 31 December 2025 and sets principles for remuneration linked to company performance and complexity of management tasks.

The CEO Remuneration Policy for SOEs, adopted alongside the State Ownership Policy, outlines a structured approach to ensure that executive pay is competitive yet proportionate. The policy reflects a long-term orientation, linking remuneration not to short-term outputs but to sustainable enterprise growth, strategic objectives, and sector-specific challenges. It promotes transparency by requiring detailed contractual documentation of remuneration terms and prohibits excessive compensation through a principle of moderation. The remuneration framework also introduces specific limitations on additional types of payments for supervisory board members, including prohibiting performance-based variable remuneration for board members, and requires publication of remuneration information on enterprise websites and in open data portals.

Until the full implementation of this policy - scheduled no later than 31 December 2025 - interim salary caps continue to apply based on asset size, income, and staffing levels of the SOE. The total CEO remuneration may not exceed UAH 1.25 million (USD 30,365) per month. It is important to note that there are no similar caps for other employees, including the CEO’s deputies, which allows for cases where deputies' salaries may be higher than the CEO's. However, these limits do not apply to state-owned banks, which are governed separately under the Law on Banks and Banking and regulations of the National Bank of Ukraine. Importantly, once in force, the CEO remuneration policy will require that maximum pay levels be set based on market-level benchmarks, adjusted for industry specifics. The Ministry of Economy is responsible for publishing the outcome of this benchmarking analysis. This ensures alignment with broader governance reforms and promotes trust in the independence and quality of SOE leadership.

3.6.3. Board composition and exercise of objective and independent judgement

VI.C. SOE board composition should allow the exercise of objective and independent judgement. All board members, including any public officials, should be nominated or appointed based on qualifications relevant to the enterprise’s sector of activity and business profile, and have equal legal responsibilities.

Procedures for board member appointment vary depending on the legal form and status of the SOE. As described earlier in this report (see Section II.A), most SOEs are joint-stock companies or unitary enterprises. The selection and nomination processes for independent supervisory board members in these entities are governed by CMU Resolutions No. 142 with additional stipulations for economically important SOEs outlined in CMU Resolution No 777. In these enterprises, the nomination committee - comprising senior officials from the Ministry of Economy, Ministry of Finance, State Secretary and the relevant ownership entity, as well as independent experts - conducts a structured assessment process. Candidates for independent board positions are identified through executive search firms, enhancing the transparency and meritocracy of appointments. However, the methodology used by different executive search firms for assessing candidates and developing shortlists varies significantly and lacks standardisation. As noted earlier, under martial law, all SOEs, except for 11 strategically important ones, are exempt from the formal nomination procedures.

By contrast, the appointment of state representatives to SOE boards remains more discretionary. Although the approval of the nomination committee is still required in economically important SOEs, (CMU Resolution No. 143), in most other cases, ownership entities may directly appoint candidates with limited formal assessment or competitive procedures. Furthermore, the appointment rules differ across sectors: for example, in SOBs, appointments are governed by specific legislation requiring at least half of board members to have financial sector experience. In strategic enterprises such as Ukroboronprom, even broader exceptions apply.

While the appointment mechanisms differ, Ukrainian law sets minimum qualification and integrity requirements for all board members. As established under the SOE Law and JSC Law, candidates must hold higher education credentials, demonstrate relevant experience and professional competencies, and have a clean legal record. Independent board members are additionally required to exhibit impartiality, integrity, and an impeccable professional reputation. In banking and financial SOEs, the NBU mandates that at least half of board members possess sector-specific qualifications.

To support effective board functioning, board composition is also expected to reflect a mix of competencies and experience, often outlined in the company's charter or internal regulations. However, no formal diversity requirements currently exist in law, and there is limited guidance on ensuring gender balance or broader representational diversity on SOE boards. Conflict of interest provisions are stronger in certain sectors, notably state-owned banks, and are generally applicable across SOEs under the JSC Law and anti-corruption legislation.

Issues around conflict of interest have, in some cases, delayed appointments or affected board functionality. Board members are required to recuse themselves from decision-making in cases of conflict, but mechanisms for identifying and addressing these situations vary in practice. Moreover, politically exposed persons, including all supervisory board members, are subject to enhanced financial oversight and asset disclosure requirements.

Ukrainian law establishes clear disqualifying criteria for individuals serving as independent board members.13 These include prior employment within the SOE or its affiliates, significant business or audit relationships, ownership stakes or material interests in the company, and holding certain public offices or political positions. The law explicitly prohibits politicians and holders of specified state positions from serving as independent directors, ensuring that board members remain free from undue influence and can exercise their duties independently (OECD, 2024[20]).

The dismissal and replacement of supervisory board members can be initiated by the shareholder (the ownership entity in the case of 100% state-owned entities). However, practical delays in formalising resignations or replacing board members have resulted in periods where boards are formally in place but not operational due to inactive members. In state-owned banks, detailed conditions for termination of board members are provided by law, including non-compliance with strategic objectives or regulatory requirements. State representatives may also be recalled by their nominating authorities at any time, often without clearly stated reasons. Anecdotal evidence suggests such changes may coincide with political transitions, indicating potential ongoing risks of political interference.

Legal ambiguities also persist around remuneration of state representatives. While CMU and anti-corruption laws prohibit civil servants and other officials from engaging in paid activities, exceptions exist for board membership in the interest of the state.14 Nevertheless, the interpretation of these rules varies, and it is not always clear whether state representatives may receive full remuneration for board service. As discussed previously (see Section VI.B), remuneration frameworks for both independent and state-appointed board members are evolving, with further clarity expected as relevant CMU policies are implemented.

While Ukraine has made notable advances in formalising the qualifications, independence, and nomination processes of SOE board members, implementation gaps and inconsistencies and procedural exemptions related to martial law remain. Strengthening transparent appointment practices, ensuring balanced and diverse board composition, and resolving legal ambiguities around remuneration and conflict of interest will be essential to consolidating progress in this area.

Box 3.9. Energoatom Under Wartime Conditions

The case of Energoatom, Ukraine’s largest nuclear energy operator and a systemically important SOE, illustrates both progress in corporate governance reform and the challenges of implementation under martial law.

In late 2025, anti-corruption authorities initiated investigations into alleged irregularities related to procurement and payment arrangements. While proceedings remain ongoing, the case exposed weaknesses in internal control systems, including risk management, compliance and internal audit functions, as well as shortcomings in whistleblower protection mechanisms. These developments highlighted gaps in the effective application of the “three lines of defence” model and underscored the importance of active supervisory board oversight in high-risk SOEs.

The functioning of the supervisory board also came under scrutiny. Although formally established in line with recent reforms, delays in appointing independent members and contractual disputes limited its effective operation. The board did not consistently operate with a majority of independent members, constraining its ability to exercise robust oversight during a critical period.

Following the emergence of the case, the supervisory board’s mandate was terminated early by government decision. This raised questions regarding adherence to procedural safeguards introduced under the SOE Law, which limits early dismissal to defined grounds supported by structured performance evaluations. The absence of a completed independent evaluation prior to dismissal highlighted potential gaps between the legal framework and its implementation.

Subsequent wartime amendments to the board evaluation framework allowed ownership entities to conduct and approve evaluations without mandatory involvement of independent consultants. While justified as a response to extraordinary circumstances, these changes may weaken safeguards intended to protect board independence and increase reliance on the institutional capacity of ownership entities.

Overall, the Energoatom case underscores the importance of consistent, rule-based implementation of governance reforms. It highlights the need to safeguard board independence, maintain robust evaluation and dismissal procedures even under exceptional conditions, and ensure that internal control and integrity frameworks are fully operational in strategically important SOEs.

Source: Oleksandr Lysenko (2025[21]), Провал корпоративного управління в "Енергоатомі" став ударом по всій реформі, https://epravda.com.ua/power/proval-korporativnogo-upravlinnya-v-energoatomi-stav-udarom-po-vsiy-reformi-814157/

3.6.4. Independent board members

VI.D. An appropriate number of independent board members should be on boards and on specialised board committees.

Ukrainian legislation provides relatively robust requirements for the inclusion of independent directors on the supervisory boards of SOEs, with the SOE Law mandating that a majority of board members must be independent in SOEs with supervisory boards. The SOE Law prevails in practice for SOEs that are structured as joint-stock companies or state unitary enterprises. These provisions align with international best practices.

At the same time, the effectiveness of independence frameworks depends not only on formal criteria but also on the integrity and transparency of nomination processes. Strengthening board nomination procedures - including the role and composition of nomination committees - would help ensure that candidates are selected on merit and possess the capacity to exercise objective judgement. Some stakeholders have expressed concerns that selection processes may occasionally favour candidates who meet the formal definition of independence while remaining susceptible to external influence. Ensuring genuinely competitive procedures and safeguarding nominees from undue pressure remain important for the credibility of board reforms.

In state-owned banks, requirements are even more specific: six out of nine supervisory board members must be independent. In SOEs earmarked for privatisation, appointments are also expected to follow the general independence criteria, but delays in appointments or legal disputes have stalled compliance, creating barriers to the privatisation process.

To qualify as independent, board members must meet both general legal criteria and sector-specific standards. The SOE and JSC laws define an independent director as someone who is not subject to influence in performing their duties. A wide range of independence criteria are outlined in legislation (see also Section VI.C), including prohibitions against having held prior managerial positions within the company or its affiliates, receiving significant financial compensation from the company, holding substantial ownership stakes (typically 5% or more), or maintaining other material business relationships. Moreover, Ukrainian law outlines criteria disqualifying individuals from serving as independent board members. They include prior employment within the SOE or affiliated companies, significant business or audit relationships, and links to controlling shareholders or connections to controlling shareholders or individuals with substantial influence over the company. Additionally, new financial independence requirements have been introduced, stipulating that the remuneration received from board service must not be the board member’s sole or primary source of income. The purpose is to reduce financial dependence on the company so directors can act independently and avoid conflicts of interest.

Further criteria for independence, including those regarding education, professional experience, and integrity, are detailed in CMU Resolution No. 142. This regulation requires that independent board members have full civil capacity, no criminal record, and possess appropriate qualifications and sector-specific knowledge. They must not serve in elected office or hold conflicting roles within public administration. During the selection procedure, candidates must undergo screening to ensure they meet all these criteria. Disqualification mechanisms are also in place: shareholders may challenge board member appointments in court, and in state-owned banks, the National Bank of Ukraine holds the authority to veto or disqualify nominees.

According to the SOE Law and the State Ownership Policy, all SOEs with supervisory boards are also required to establish at least two specialised committees: audit, and nomination and remuneration committees. In each of these, a majority of members must be independent. This is intended to promote objective oversight and insulate key governance decisions - such as performance evaluation, risk management, and executive compensation.

To ensure compliance with independence criteria, directors must provide a personal written declaration of their independence at several key stages: when applying for selection, when appointed by shareholders, during annual disclosures, and in the annual report. This declaration process adds a layer of formality to the appointment and oversight mechanisms for independent directors.

Capacity considerations also warrant attention. Instances have been observed where independent directors simultaneously hold multiple board mandates across several SOEs in addition to other professional roles. While not necessarily incompatible with legal independence criteria, a high accumulation of mandates may constrain the time and engagement directors can devote to each enterprise, potentially affecting board effectiveness. Consideration could therefore be given to monitoring board workloads or introducing guidance on the reasonable number of concurrent appointments.

3.6.5. Mechanisms to prevent conflicts of interest

VI.E. Mechanisms should be implemented to avoid conflicts of interest preventing any board member from objectively carrying out their board duties and to limit political interference in board processes. Politicians who are in a position to materially influence the operating conditions of SOEs should not serve on their boards. Former such persons should be subject to predetermined cooling-off periods. Civil servants and other public officials can serve on boards under the condition that they are nominated based on merit and conflict of interest requirements apply to them.

The Ukrainian legal and regulatory framework contains a range of mechanisms aimed at identifying and mitigating conflicts of interest within the governance structures of SOEs. These measures are grounded primarily in the Law on Prevention of Corruption, which applies broadly to officials across public institutions, including members of supervisory boards of SOEs.

Under this law, conflicts of interest are defined in both potential and real terms:

• A potential conflict arises when an individual’s private interests could affect the impartiality or objectivity of their official duties.

• A real conflict is a situation where such private interests actually compromise decision-making.

• Private interests are interpreted broadly and include both property and non-property interests, such as personal, family, political, religious, or other organisational affiliations, which might give rise to undue influence.

In the context of SOEs, board members are obligated to declare any conflict of interest to the supervisory board and to the National Agency on Corruption Prevention. Remedies for conflict-of-interest situations can include recusal from decision-making, restricted access to sensitive information, removal of voting rights, or, in more severe cases, dismissal from board or executive positions.

The legal framework also includes “cooling-off” provisions designed to prevent former public officials from leveraging insider knowledge or influence after leaving office. Specifically, those who have exercised regulatory, supervisory, or decision-making authority over legal entities are prohibited, for one year following the end of their mandate, from:

• entering into employment or business relationships with those entities;

• using privileged information for personal or commercial gain; and

• representing third parties in legal or administrative proceedings against their former public employer.

However, these rules only apply to SOEs that are treated as private‑law entities. In particular, the rule was effectively circumvented in the Naftogaz case. These provisions are more rigorously applied in state-owned banks, where supervisory board appointments are subject to additional screening. The NBU has the power to disqualify candidates on conflict-of-interest grounds. Similarly, the SOE Law and JSC Law prohibit individuals who serve as shareholders, founders, executives, or board members of a company from holding similar roles in another SOE operating within the same or related market, to prevent market distortion or self-dealing. However, the notion of “related markets” is not comprehensively defined in legislation, leaving scope for broad interpretation. Greater legal clarity could help ensure that safeguards against conflicts of interest remain proportionate and do not inadvertently constrain the pool of qualified candidates, particularly where professional expertise has been developed in adjacent or international markets. An exception to this restriction was recently introduced for critical infrastructure SOEs that have been confiscated under martial law, recognising the need for continuity of governance in strategic sectors.

Board-level conflict-of-interest oversight mechanisms have also evolved. According to the SOE Law and State Ownership Policy, supervisory boards are tasked with managing conflict-of-interest issues in line with national law and internal governance instruments, such as codes of ethics or board regulations. In addition, restrictions on related-party transactions and disclosure requirements, provide another important layer of protection.

Despite the strength of the legal provisions, challenges persist in practice.. One such risk is that individuals may serve on boards or in executive roles across multiple SOEs, particularly in overlapping or related sectors, potentially creating conflicts of interest when organisational interests are not well delineated. While laws often require recusal where conflicts arise, and there are some anecdotal reports of overlapping mandates, public evidence of systematic dual roles is limited. This underlines the importance of robust transparency, formal conflict-of-interest policies, and periodic audits to ensure governance integrity.

3.6.6. Role and responsibilities of the chair

VI.F. Good practice calls for the chair to be independent and with a role separate from that of the CEO. The chair should assume responsibility for boardroom efficiency and, when necessary, in co-ordination with other board members, act as the liaison for communications with the state ownership entity.

Good governance principles strongly advocate that the chair of the board should be independent of executive management and have a role clearly separated from that of the CEO. This separation of powers is intended to prevent conflicts of interest, enhance boardroom effectiveness and ensure robust oversight. The chair’s responsibilities include steering board meetings, fostering constructive deliberations, ensuring that the board functions efficiently, and representing the board in communications with the state ownership entity or shareholder.

In Ukraine, this principle is largely embedded in the corporate governance framework for SOEs, where the prevalent two-tier board structure inherently separates supervisory board roles from executive management, including the CEO. Ukrainian legislation, notably the SOE Law and the JSC Law, defines the chair’s election and mandate in detail. Specifically, in majority state-owned enterprises, the supervisory board elects the chair by simple majority, with the possibility of re-election. For state-owned banks, which are subject to stricter governance requirements, the chair of the supervisory board must be selected from independent members.

The chair’s powers, as defined, include convening and presiding over supervisory board meetings, managing the board’s work, and, importantly, serving as the key interlocutor with the state ownership entity. The voting structure typically grants one vote per board member, with the chair’s vote becoming decisive in the event of ties in state unitary enterprises, whereas in JSCs such casting vote rights are subject to charter provisions. The chair also carries procedural duties such as opening general meetings and proposing corporate secretaries.

Prior OECD assessments have noted practical shortcomings, particularly a lack of consistent, institutionalised communication between the supervisory board chair and the state ownership entity (OECD, 2021[2]). However, recent governance reforms aimed at institutionalising dialogue between the board and owner through formal consultations on enterprise strategy and annual goal-setting processes are expected to address these gaps, thereby strengthening the chair’s role.

3.6.7. Board employee representation

VI.G. Where employee representation on the board is mandated or commonplace, mechanisms should be developed to guarantee that this representation is exercised effectively and contributes to the enhancement of the board skills, information and independence.

In Ukraine, the SOE Law provides for the participation of representatives from local self-government bodies and trade unions - or other labour collective-authorised bodies - in supervisory board meetings, particularly on issues affecting employment relations and collective labour agreements. These representatives typically have advisory voting rights, allowing them to provide input without full decision-making power. While this framework ensures labour concerns are formally heard, it inherently limits employee representatives’ influence on employment-related matters, often excluding them from broader strategic or financial deliberations. The advisory vote, as opposed to full voting rights, restricts the capacity of employee representatives to shape board decisions decisively. Furthermore, the right to participate is contingent upon invitation by the supervisory board, which may limit consistent employee engagement. In practice, however, employee or trade union participation on Ukrainian SOE supervisory boards is not widespread and tends to be applied inconsistently. Large SOEs such as Naftogaz, Ukrenergo and Ukrzaliznytsia typically do not feature permanent employee representatives on their boards; when participation occurs, it is usually ad hoc and confined to employment-related discussions.

3.6.8. Board committees

VI.H. SOE boards should consider setting up specialised committees, composed of independent and qualified members, to support the full board in performing its functions, in particular the audit committee or equivalent body – for overseeing disclosure, internal controls and audit-related matters. Other committees, such as remuneration, nomination, risk management or sustainability may provide support to the board depending upon the SOE’s size, structure, complexity and risk profile. Their mandate, composition and working procedures should be well defined and disclosed by the board which retains full responsibility for the decisions taken. The establishment of specialised committees should improve boardroom efficiency and should not detract from the responsibility of the full board.

In Ukraine, the establishment of board committees in SOEs is mandated by a combination of legal instruments, including the SOE Law, JSC Law, and the State Ownership Policy. As noted earlier, these regulations require the formation of at least an audit committee and either a nomination committee or a remuneration committee within supervisory boards, with a majority of members being independent directors. In state-owned banks, the governance requirements are even more stringent: audit committees must be composed exclusively of independent members, and risk committees are compulsory to monitor complex financial and operational risks.

The JSC Law provides detailed mandates for each committee. The nomination committee oversees the composition, size, and competencies of the board and executive management, manages recruitment processes, and may support the development of ethics policies and compliance measures aimed at preventing conflicts of interest. The remuneration committee is responsible for developing, reviewing, and proposing remuneration policies, linking pay to KPIs and incentive schemes aligned with enterprise performance and strategy. The audit committee plays a critical role in supervising internal audit functions, monitoring the independence of external auditors, and ensuring transparent financial reporting. It is granted unrestricted access to all relevant financial information and must report publicly twice yearly, thus promoting transparency and accountability.

Despite a solid legislative foundation, implementation across Ukraine’s SOEs is uneven. Leading SOEs such as Ukrenergo have made significant progress in establishing well-functioning committees with independent majorities and clear mandates.15 However, many other SOEs lag behind, with committees either not established or operating with less independence and clarity. The delayed appointment of supervisory board members further undermines committee effectiveness, as does the limited establishment of dedicated risk committees outside of the banking sector. In some SOEs, risk oversight remains fragmented or incorporated into audit committees without the focused expertise a standalone risk committee would provide.

Moreover, while ethics committees are not mandatory, many large SOEs have formed them to strengthen compliance and ethical culture. The variation in committee structures and practices partly reflects differences in legal forms - corporatised SOEs, particularly joint-stock companies, face stricter governance requirements than state unitary enterprises and other legal forms– as well as differences in company size and complexity. This underlines the need for governance frameworks that are both rigorous and adaptable to SOE-specific circumstances. It is worth noting that the typical size of supervisory boards in major Ukrainian SOEs is around five members, as reflected in government-approved board compositions, although board size should also take into account the need for effective and efficient functioning.

3.6.9. Annual performance evaluation

VI.I. SOE boards should, under the chair’s oversight, regularly carry out a well-structured evaluation to appraise their performance and efficiency, and assess whether they collectively possess the right mix of background and competences, including with respect to gender and other forms of diversity.

Law No. 3587-IX mandates structured evaluations of supervisory boards in SOEs. Historically, board evaluations in Ukraine were largely formalistic, often reduced to shareholder acknowledgments during annual meetings without substantive analysis or accountability. The new regulatory framework16 mandates a comprehensive evaluation of supervisory boards annually, according to the procedure established by the CMU, which prescribes detailed criteria, procedures, and the role of independent consultants in carrying out these assessments.

The framework requires the publication of evaluation results within two working days of their approval. The evaluation framework covers multiple dimensions, including the composition, structure, and effectiveness of the board as a collegial body, individual board members’ compliance with legal and internal requirements, and the functionality of board committees. Furthermore, the evaluation scrutinises the supervisory board’s ability to fulfil its duties - ranging from strategic decision-making and oversight of executive management to ensuring the implementation of internal controls and risk management systems.

The evaluation integrates annual self-assessments complemented by external evaluations in specific circumstances. These processes focus on both qualitative and quantitative performance indicators, such as timely approval of strategic and financial plans and the board’s contribution to achieving organisational goals.

The quality and independence of external consultants are critical for the credibility of evaluations. Effective utilisation of evaluation should aim to constructively support the boards and ownership entity in ensuring the board is fit for purpose and to potentially identify areas where capacity building or new skills are needed.

3.6.10. Risk management and internal controls

VI.J. SOE boards should actively oversee risk management systems. Boards should ensure that these systems are reassessed and adapted to the SOEs’ circumstances with a view to establishing and maintaining the relevance and performance of internal controls, policies and procedures

The legislative reforms also embed a comprehensive internal control system within Ukrainian SOEs, incorporating risk management, compliance, and internal audit functions. The supervisory board bears direct responsibility for overseeing these controls, ensuring they are appropriately designed, regularly reassessed, and tailored to the enterprise’s scale and risk profile.

Supervisory boards are mandated to appoint internal auditors who operate independently and report directly to the board and its audit committee, enhancing the credibility and effectiveness of internal oversight. The roles of Chief Compliance and Risk Management Officers are similarly codified, with a clear reporting line to the board and rights to escalate critical issues, reinforcing the independence of compliance and risk functions within the organisational hierarchy.

Importantly, Ukraine’s governance framework integrates anti-corruption efforts into the internal control system, requiring the identification of corruption risks and the establishment of procedures for conflict resolution, procurement integrity, and ethical conduct. These elements are critical for fostering a culture of integrity and compliance within SOEs.

Nonetheless, implementation remains uneven. Ensuring that internal auditors and compliance officers possess the necessary expertise and autonomy across diverse SOEs is a persistent challenge, compounded by the need for supervisory board members themselves to enhance their capabilities in overseeing complex risk and control environments. Effective whistleblower systems, which are fundamental to uncovering and mitigating internal risks, require further strengthening to ensure protection and responsiveness.

3.7. State-owned enterprises and sustainability

Key findings

VII. The corporate governance framework should provide incentives for state ownership entities and SOEs to make decisions and manage their risks in a way that contributes to SOEs’ sustainability and resilience and ensures long-term value creation. Where the state has sustainability goals, the state as owner should set concrete and ambitious, sustainability-related expectations for SOEs, including on the role of the board, disclosure and transparency and responsible business conduct. The ownership policy should fully recognise SOEs’ responsibilities towards stakeholders.

Sustainability and responsible business conduct are not yet systematically embedded in SOE governance. While some enterprises have begun sustainability reporting, most SOEs lack clear expectations, measurable targets or board-level oversight of environmental, social and integrity objectives. Public service obligations are rarely linked to sustainability outcomes, and stakeholder engagement remains limited, constraining transparency and long-term value creation.

The Review recommends requiring major SOEs to disclose material sustainability-related information in the short term, with supervisory boards overseeing sustainability, integrity and risk management systems. Anti-corruption frameworks should be strengthened, including internal controls and whistleblower protections. Over the medium to long term, sustainability objectives should be embedded in the ownership policy, performance frameworks and board mandates aligned with national recovery priorities and international commitments. Integrating sustainability into SOE governance will support reconstruction, protect public resources and reinforce accountability.

Table 3.20. Recommendations on state-owned enterprises and sustainability

	Short-term recommendation	Long-term recommendation
1	Introduce sustainability disclosure for major SOEs (esp. energy, transport, extractives), in line with and complementary to the Sustainable Development Reporting Strategy approved in October 2024.	Integrate sustainability into State Ownership Policy and SOE performance frameworks, where material.
2	Task supervisory boards with sustainability oversight.	Evaluate PSOs for alignment with sustainability goals.
3	Ensure supervisory boards of all large SOEs explicitly oversee anti-corruption compliance programmes.	Institutionalise stakeholder engagement (labour, civil society, communities) in SOE planning.
4	Strengthen existing internal controls, compliance and integrity systems, including procurement controls.	Ensure RBC and highest standards of integrity in SOEs.
5	Prioritise implementation of internal whistleblower channels and ensure independence of anti-corruption officers.	Link board evaluation and nomination procedures to anti-corruption performance, reinforcing accountability.
6	Apply existing external audit requirements consistently to detect potential corruption risks	Integrate anti-corruption monitoring into SOE strategic planning and operational frameworks.
7		Regularly review and update compliance programmes, ensuring alignment with OECD RBC standards and national anti-corruption laws.

Source: OECD Secretariat compilation.

3.7.1. Setting sustainability goals

VII.A. Where the state has set sustainability goals, they should be integral to the state’s ownership policy and practices.

VII.A.1. Setting concrete and ambitious sustainability-related expectations for SOEs that are consistent with the ownership policy and practices. In doing so, the state should respect the rights and fair treatment of all shareholders.

Since adhering to the OECD Declaration on International Investment and Multinational Enterprises in 2017, Ukraine has taken steps to embed RBC into its state ownership practices. The adoption of State Ownership Policy and the revised Law on the Management of State Property represent important milestones in this direction. The State Ownership Policy integrates RBC as a cross-cutting policy principle, aligning with the OECD Guidelines for Multinational Enterprises on Responsible Business Conduct and the UN Guiding Principles on Business and Human Rights. It affirms that SOEs should not only pursue commercial objectives but also contribute to sustainable development, environmental stewardship, and social inclusion. The State Ownership Policy also provides for the implementation of corporate responsibility initiatives, including respecting human rights, contributing to social and economic development, and promoting environmental sustainability and renewable energy adoption.

However, while the State Ownership Policy acknowledges sustainable development as a broad objective of state ownership, it stops short of articulating clear and measurable expectations which would support future performance monitoring. Sustainability-related commitments in Ukraine’s SOE portfolio are largely fragmented and unevenly applied. They tend to be confined to a limited subset of large, economically significant enterprises, often those linked to international financing or subject to donor oversight. For instance, Naftogaz has voluntarily adopted environmental and decarbonisation targets, motivated by international development bank requirements, while Ukrenergo has made strides in sustainability transparency. Similarly, Ukrposhta has initiated green logistics and digital transformation pilots, reflecting sustainability co-benefits.

Furthermore, integration of sustainability metrics into SOE performance evaluations and reporting remains limited, although efforts to have more standardised approaches towards collection of financial and non-financial indicators can support more harmonised efforts. Sustainability disclosures are voluntary and sporadic, lacking alignment with international standards such as the Global Reporting Initiative (GRI) or the IFRS S1 and S2 standards. Further alignment with the European sustainability-related reporting and disclosure frameworks are expected.

VII.A.2. Communicating and clarifying the state’s expectations on sustainability through regular dialogue with the boards.

While Ukraine’s normative framework increasingly recognises the importance of sustainability in state ownership, the state’s ability to communicate these expectations effectively and consistently to SOE boards remains underdeveloped. The State Ownership Policy articulates high-level commitments to responsible business conduct and sustainable development, yet structured dialogue between the state and SOE boards on these issues is, based on anecdotal information, largely absent. Communication on sustainability is often limited to strategic documents or formal instructions, without adequate follow-up mechanisms to translate these broad goals into board-level expectations.

In practice, interactions between the ownership entities - principally the Ministry of Economy - and SOE boards continue to focus on financial performance, compliance, and alignment with overarching state strategies. While sustainability may surface during the review of investment plans or strategic documents, anecdotal experience suggests these exchanges remain infrequent and lack institutionalisation. It is however noteworthy that a small number of top-tier SOEs have begun addressing environmental and social risks and opportunities at board level.

VII.A.3. Assessing, monitoring and reporting on SOEs’ alignment with sustainability-related expectations and performance on a regular basis.

Ukraine has made visible progress in strengthening the legal foundation for non-financial reporting in the SOE sector. Legal provisions such as the Law on Accounting and Financial Reporting, along with Ministry of Finance regulations and Cabinet of Ministers resolutions, outline broad requirements for non-financial disclosures. Including environmental performance, labour policies, and anti-corruption practices. However, reporting remains uneven in scope and depth, and is often approached as a compliance exercise rather than a strategic tool.

In June 2025 the Cabinet approved a draft amendment to the Law on Accounting and Financial Reporting to align Ukraine’s corporate reporting framework with the EU Corporate Sustainability Reporting Directive (CSRD) and the European Sustainability Reporting Standards (ESRS), envisaging phased reporting obligations for large enterprises, including major SOEs. This decision follows the Government’s October 2024 Strategy for the Implementation of Sustainability Reporting. However, these measures had not yet been fully transposed into binding law or put into operational effect as of mid-2025: parliamentary adoption, secondary regulations, reporting calendars and auditing requirements remain outstanding, and practical implementation - particularly capacity building within ownership entities - continues to be a major challenge (Ministry of Finance, 2025[22]).

The State Ownership Policy has introduced more robust expectations, requiring SOEs to disclose their contributions to sustainable development and to report publicly on their sustainability practices. These requirements are reinforced by recent regulatory advances, including the National Securities and Stock Market Commission’s Regulation No. 608, which mandates enhanced public reporting portals for joint-stock companies, including SOEs. Importantly, the State Ownership Policy also recognises the relevance of stakeholder engagement and transparency in sustainability governance.

3.7.2. Boards and sustainability

VII.B. The state should expect SOE boards to adequately consider sustainability risks and opportunities when fulfilling their key functions. The following prerequisites are essential for ensuring effective sustainability management at the enterprise level:

VII.B.1. SOE boards should review and guide the development, implementation and disclosure of material sustainability-related objectives and targets as part of the corporate strategy.

Ukraine has made important legislative and policy advances in formalising the role of supervisory boards in SOE governance, notably through the adoption of the State Ownership Policy and the revised SOE Law. Both frameworks assign SOE boards responsibility for approving corporate strategies that include non-financial dimensions. However, in practice, the integration of sustainability-related goals into enterprise-level strategy remains limited and uneven.

A minority of economically significant SOEs have proactively embedded ESG considerations into their corporate strategy. For example, Naftogaz has developed an ESG strategy that includes tracking Scope 1 and 2 emissions and exploring renewable energy opportunities. Similarly, Ukrenergo aligns its corporate objectives with Ukraine’s energy transition goals and discloses data in line with the GRI. These companies demonstrate that board-level engagement on sustainability is possible when supported by institutional capacity and donor-driven incentives.

Elsewhere, however, sustainability remains marginal to strategic planning. Many SOE boards lack members with relevant ESG expertise and have not established dedicated committees or staff for environmental and social oversight. Initiatives such as energy efficiency pilots or war-related humanitarian efforts - like those led by Ukrposhta or Ukrzaliznytsia - are typically operational in nature and not embedded within the strategic oversight functions of the board. This fragmentation is compounded by the voluntary nature of reporting. A coordinated approach from the state to guide or assess how boards integrate sustainability into strategy formulation would help boards understand the state's expectations in this regard.

VII.B.2. SOEs should integrate sustainability considerations into their risk management and internal control systems, including by conducting risk-based due diligence.

The integration of sustainability risks into SOE risk management frameworks is progressing but remains uneven across the sector. Ukraine’s State Ownership Policy and legal framework emphasise the importance of responsible business conduct, including the need for enterprise-level risk-based due diligence to identify, prevent, and mitigate adverse impacts on people, society, and the environment. However, practical implementation of these sustainability obligations remains limited, and systematic integration into board-level risk management and reporting is not yet widespread.

Leading SOEs such as Naftogaz and Ukrenergo provide positive examples. Naftogaz operates a Committee on Health, Safety, Environment and Reserves, which monitors sustainability-related risks, while also maintaining an integrated management system that incorporates environmental considerations. Ukrenergo, Energoatom and Ukrhydroenergo have similarly begun integrating sustainability risks into internal control systems, including through environmental monitoring procedures and alignment with sectoral decarbonisation goals.

However, most SOEs still treat sustainability risks in a reactive rather than preventative manner. Risk registers tend to prioritise financial and operational exposures, with sustainability risks - particularly long-term environmental and human rights risks - largely absent from audit or compliance systems. For instance, in the coal sector, environmental and labour risks are significant, yet assessments often focus narrowly on operational compliance rather than long-term due diligence or community engagement.

The State Ownership Policy does not currently mandate formalised risk-based due diligence processes, such as those recommended in the OECD Due Diligence Guidance for Responsible Business Conduct. Furthermore, there is no overarching ownership-level mechanism to monitor or support the integration of sustainability risks into SOE governance. Sectoral oversight remains fragmented, with few tools or expectations issued by the state to ensure that these risks - especially in high-impact industries - are properly mapped, mitigated, and disclosed.

To close this gap, the state could consider introducing regulatory requirements or guidance on risk-based due diligence, prioritising high-risk sectors and large SOEs. Building internal control capacity and integrating sustainability risks into enterprise risk management systems will be essential to ensure sustainable and responsible SOE performance over the medium and long term.

VII.B.3. SOE boards should consider sustainability matters when assessing and monitoring management performance.

The integration of sustainability considerations into board-level performance monitoring in Ukraine’s SOE sector is still at an early stage, with limited evidence that boards systematically assess management on the basis of environmental, social, and governance outcomes. Under Ukraine’s SOE Law and State Ownership Policy, supervisory boards are empowered to oversee the overall strategy and performance of state-owned enterprises, including aspects related to sustainability and corporate social responsibility.

While some large SOEs have begun referencing sustainability in their mission statements or strategic documents, there is limited alignment between these commitments and the KPIs used in board oversight. ESG metrics - when present - tend to appear in general reporting rather than being integrated into incentive structures or formal assessment criteria for executives. For example, board-level evaluation frameworks rarely include quantifiable targets related to carbon emissions, workplace safety improvements, gender equality, or community impact, which would allow for measurable indicators on which to evaluate SOE performance.

There are isolated efforts among some enterprises. Naftogaz, for instance, has adopted policies and internal reporting mechanisms on safety and environmental risks, and its supervisory board receives updates on these issues. However, it remains unclear to what extent such information feeds into structured performance reviews of senior management. Similarly, Ukrposhta and Ukrenergo have launched sustainability initiatives with board oversight, yet have not publicly detailed whether sustainability performance is formally considered in assessing leadership effectiveness.

Furthermore, performance contracts and remuneration frameworks for SOE executives are not yet standardised to include sustainability dimensions. This contrasts with emerging international practice where non-financial indicators - such as employee well-being, environmental compliance and ethical conduct - are increasingly considered alongside financial metrics in executive evaluations.

While supervisory boards in Ukraine have the legal authority to oversee sustainability-related matters, a consistent practice of incorporating these considerations into the performance assessment of SOE management has not yet taken root. Strengthening this linkage would support greater accountability for sustainable outcomes and align board practices with shareholder expectations.

3.7.3. Disclosure and transparency of sustainability-related practices

VII.C. The state should expect SOEs to be subject to appropriate sustainability reporting and disclosure requirements, based on consistent, comparable and reliable information:

VII.C.1. Sustainability reporting and disclosure should be aligned with high-quality internationally recognised standards that facilitate the consistency and comparability of sustainability-related disclosure across markets, jurisdictions and companies.

In Ukraine, while policy frameworks have begun to recognise the importance of sustainability disclosure, actual practices remain fragmented, limited to a handful of large SOEs, and largely driven by donor requirements rather than consistent state policy.

The State Ownership Policy introduces legal obligations for SOEs to publicly disclose non-financial information related to environmental protection, anti-corruption, labour rights, and social contributions. However, these obligations stop short of prescribing standardised formats or requiring the use of internationally recognised frameworks such as the GRI, the Sustainability Accounting Standards Board (SASB), or IFRS. As a result, disclosures vary widely in scope, format, and reliability - limiting comparability across enterprises and sectors.

Only a few large SOEs have institutionalised sustainability reporting aligned with international standards. Table 3.14 provides an overview of reporting practices in selected SOEs. Naftogaz, for example, publishes annual ESG reports based partly on GRI principles, supported by a dedicated board committee on Health, Safety, Environment, and Reserves. Ukrenergo reports in accordance with GRI and integrates sustainability risks into internal controls, while also promoting diversity and inclusion. Ukrposhta and Ukrzaliznytsia have launched green and humanitarian initiatives, particularly in response to wartime disruptions, though their reporting remains limited and non-standardised. Outside of these leading SOEs, the majority of SOEs - especially smaller or municipally owned entities - do not report on sustainability performance at all.

These gaps are particularly acute in high-risk sectors such as state-owned coal enterprises, where legacy issues - including environmental degradation, safety violations and labour disputes - are prevalent. In many such cases, non-financial risks are neither disclosed nor subject to independent review, despite their material impact on stakeholders and fiscal sustainability.

While the State Ownership Policy provides a necessary policy foundation, implementation of sustainability disclosure remains voluntary and enterprise-driven. Further alignment with international best practice - including clearer requirements for report content, frequency, and independent assurance - would enhance transparency and accountability across the SOE portfolio.

Table 3.21. Overview of key sustainability reporting practices by selected Ukrainian SOEs

SOE	ESG/Sustainability Report Published	Standards Used (e.g. GRI, TCFD)	Environmental Targets Set	Social Metrics Disclosed
Naftogaz	Yes (Annual ESG report)	Internal + partial GRI	Yes (decarbonisation, energy use)	Yes (workforce, safety)
Ukrenergo	Yes	GRI	Yes (grid decarbonisation)	Yes (D&I, HSE)
Ukrposhta	Limited	None disclosed	Pilots on green logistics	Limited
Ukrzaliznytsia	Limited	Not standardised	Energy efficiency efforts	Limited
Energoatom	No	N/A	No	Some workplace indicators

Source: Naftogaz (2025[23]), Investor relations and reports, https://www.naftogaz.com; NPC Ukrenergo (2025), Corporate announcements, https://ua.energy; Ukrposhta (2024[24]), Corporate information, https://www.ukrposhta.ua; Energoatom (2025[25]), Corporate governance information, https://old.energoatom.com.ua.

VII.C.2. Phasing in of requirements for annual assurance attestations by an independent, competent and qualified attestation service provider, in accordance with high-quality internationally recognised assurance standards should be considered.

In some leading SOEs, boards receive periodic updates on sustainability topics such as workplace safety, energy use, or environmental compliance. However, this information is rarely subject to independent assurance. Phasing in requirements for annual third-party assurance of sustainability disclosures - particularly in sectors with high environmental or social exposure - would enhance data reliability, access to information for concerned stakeholders, and support informed board oversight.

3.7.4. Responsible business conduct

VII.D. The state as an owner should set high expectations for SOEs’ observance of responsible business conduct standards together with effective mechanisms for their implementation, should fully recognise SOEs’ responsibilities towards stakeholders and should request that SOEs report on their relations with stakeholders. Such owner’s expectations should be publicly disclosed in a clear and transparent manner.

VII.D.1. Governments, state ownership entities and SOEs should recognise and respect stakeholders’ rights established by law or through mutual agreements. Where stakeholder interests are protected by law, the workforce and other stakeholders should have the opportunity to obtain effective redress for violation of their rights at a reasonable cost and without excessive delay.

Labour rights in Ukraine are underpinned by the Labour Code, which defines collective bargaining, trade union rights, and workplace conditions. SOEs must comply with these provisions, and employee representatives may attend supervisory board meetings under both the Law on Management of State Property and the JSC Law, although they retain only advisory roles. The law protects non-discrimination (including on the basis of sexual orientation), supports union inspections, and emphasises labour safety through sector-specific provisions in hazardous industries (e.g. nuclear and coal). However, practice remains inconsistent: mining sector SOEs have experienced issues with wage arrears and occupational risks, and wartime legal provisions have, in some cases, allowed reduced worker protections. Moreover, consumer protection laws ensure access to accurate information, product safety, and fair purchasing terms, while bankruptcy and securities legislation aim to safeguard creditor and investor rights.

Despite this legal framework, practical access to affordable, effective remedy remains limited - particularly for local communities facing environmental harm or employees experiencing labour violations. Barriers include prolonged legal proceedings, insufficient resourcing of enforcement bodies, and wartime exceptions that complicate enforcement. Ongoing development of accessible alternative dispute mechanisms and strengthened regulatory monitoring could significantly enhance the realisation of stakeholder rights in practice. In this context, Ukraine’s National Contact Point (NCP) for Responsible Business Conduct, located within the Ministry of Economy in the Division of International Investment Cooperation and Promotion of Development of Socially Responsible Business, provides an additional mechanism. The NCP promotes the OECD Guidelines for Multinational Enterprises for Responsible Business Conduct and handles cases, referred to as “specific instances”, related to alleged non-observance of the Guidelines, offering mediation and conciliation to help resolve disputes (OECD, 2025[26]).

It should also be noted that in areas related to environmental and community engagement, the 2018 Environmental Impact Assessment Law requires entities, including SOEs such as Naftogaz and Ukrenergo, to conduct Environmental Impact Assessments and actively engage local communities during project planning, providing mechanisms for redress and ensuring participation through unified public registries. Additional environmental legislation, including codes regulating subsoil and water resources, further strengthens community engagement by mandating public comment periods and accessible disclosure of environmental impacts.

VII.D.2. SOEs should develop and encourage meaningful stakeholder engagement in advancing sustainability and ensuring a just transition, particularly from persons or groups that may have an interest in or could be impacted by an enterprise’s activities.

Ukraine’s State Ownership Policy formally embeds stakeholder interests in state ownership, referencing sustainable development, human capital, regional growth, and social responsibility. In practice, engagement tends to be project-specific and appears to remain isolated initiatives rather than systematic approaches to stakeholder engagement. Examples include Naftogaz’s community support programmes, which between 2015 and 2020 provided social, infrastructural, and educational support to communities affected by its operations in the Yuzivska area, and Ukrzaliznytsia’s psychosocial support initiatives for employees during wartime. These examples illustrate how SOEs can respond to local community and employee needs (Naftogaz, 2025[23]).

The EIA process noted earlier mandates public consultation and allows community involvement in environmental decision-making. However, this is a reactive rather than proactive engagement mechanism, initiated after project development rather than during strategic planning. Civil society involvement often remains fragmented and is concentrated around compliance checkpoints rather than contributing to ongoing governance.

In line with the OECD Guidelines for Multinational Enterprises for Responsible Business Conduct, enterprises should engage with relevant stakeholders or their legitimate representatives as part of due diligence, providing opportunities for their views to be taken into account in relation to activities that may significantly impact them.

VII.D.3. Mechanisms for employee participation should be permitted to develop. Where employees and other stakeholders participate in the corporate governance process, they should have access to relevant, sufficient and reliable information on a timely and regular basis.

Ukraine has passed legislation enabling employee participation in supervisory boards via advisory attendance. However, these arrangements remain qualitative rather than quantitative, with no voting rights or performance responsibilities tied to the participation of employee or trade union representatives.

VII.D.4. State ownership entities and SOEs should take action to ensure high standards of integrity in the state-owned sector and to avoid the use of SOEs as conduits for political finance, patronage or personal or related-party enrichment.

Ukraine has made important strides in building a legal and institutional framework to combat corruption and prevent the misuse of SOEs for political or private gain. The Anti-Corruption Strategy (2021–25) outlines systemic reforms to improve transparency, reduce political interference, and establish a culture of compliance. This is supported by measures such as Law No. 2322-IX/ 2022, which strengthens protections for whistleblowers, and earlier amendments in 2019 that expanded integrity-related obligations across public institutions. In parallel, Ukraine has established external oversight mechanisms, including the National Agency for the Prevention of Corruption, which monitors conflict-of-interest declarations, enforces anti-corruption reporting, and oversees ethics training. However, the degree of implementation of these functions remains uneven, with anti-corruption reporting in particular often limited to the formal adoption of strategies and perfunctory implementation reports. Many large SOEs have adopted internal integrity channels, such as whistleblower hotlines and internal audit units, though their operational independence remain inconsistent across enterprises.

Importantly, Ukrainian SOEs are legally prohibited from financing political activities. According to Article 15 of the Law on Political Parties, state and municipal enterprises, as well as any legal entities in which the state or local governments hold a 10% or greater ownership or voting interest (directly or indirectly), are barred from contributing to political parties or electoral campaigns. This prohibition aims to prevent the direct misuse of public enterprises as vehicles for political funding. While the authorities affirm that Ukrainian SOEs do no provide such contributions, concerns persist around indirect mechanisms of political support, particularly at the municipal level. These may include preferential contracting, political patronage in hiring, or in-kind support for party-aligned initiatives - practices that are harder to trace and regulate, especially in smaller or less scrutinised local SOEs.

Despite these protections, risks of undue influence remain tangible. High-profile cases involving politicised appointments, non-competitive procurement, and related-party transactions – particularly in strategic sectors like energy, transportation, and utilities - underscore that many SOEs remain vulnerable to undue political influence. The State Ownership Policy institutionalises integrity principles by requiring that SOEs include corruption prevention and compliance as part of their strategic and operational planning, with requirements mandatory for large SOEs (Article 65). However, enforcement is uneven, with many SOEs lacking robust internal compliance systems, and with external oversight agencies often underfunded or politically constrained (OECD, 2025[27]).

For instance, NABU identified significant violations involving SOEs in 2024, including major corruption cases that resulted in financial losses and abuses of office. The table below summarises a selected few cases out of a much wider sample investigated by NABU, highlighting ongoing challenges in fully embedding RBC and high integrity standards in Ukraine's SOE sector. According to a NABU report, in 2024, 37 individuals from the management of SOEs were served with notices of suspicion. Indictments were filed against 51 individuals, and guilty verdicts were passed against 20 individuals.

Table 3.22. Selected NABU SOE cases 

Enterprise name	Case summary
State Food and Grain Corporation	Investigations have revealed large-scale losses exceeding USD 60 million linked to mismanagement and alleged criminal activity. Authorities have secured the seizure of assets, including overseas property, connected to individuals implicated in the case.
Ukrzaliznytsia (Ukrainian Railways)	Several schemes of misappropriation were uncovered during wartime procurement processes, including inflated contracts for equipment and services. Investigations identified multiple organised groups operating with the involvement of company officials. Seized assets in connection with these cases include significant amounts in domestic and foreign currency, as well as movable and immovable property.
Kharkivoblenergo	An embezzlement scheme related to transformer procurement was interrupted, with inflated prices for equipment identified. The scheme resulted in partial losses before being abandoned due to wartime circumstances.
Energoatom (National Nuclear Energy Company)	A case involving irregularities in the procurement of radiation monitoring equipment, valued at nearly UAH 100 million, has been brought to trial.
Chornomorsk Sea Port	Allegations of bribery involving company representatives and intermediaries were uncovered, with attempts to secure favourable contract terms in exchange for payments.

Source: National Anti-Corruption Bureau of Ukraine (2024[28]), Annual Report 2024, https://nabu.gov.ua/.

The 2025 OECD Integrity and Anti-Corruption Review also identifies persistent integrity risks in the operations of Ukrainian SOEs, particularly in procurement, a high-risk area for corruption (OECD, 2025[29]). The National Agency on Corruption Prevention plans to audit SOE anti-corruption systems, with emphasis on procurement processes. However, the implementation of compliance programmes remains uneven. Due to narrow legal thresholds, some economically significant SOEs are exempt from these requirements. Even where programmes exist, stakeholders raise concerns about their limited effectiveness, often perceived as formalistic rather than substantive. Weak governance structures further undermine integrity, with the appointment of anti-corruption officers by managers – rather than boards – compromising their independence. Recent high-profile investigations, including Operation Midas, have further highlighted persistent vulnerabilities in SOE integrity frameworks, particularly in relation to procurement and oversight.

To address these challenges, the OECD recommends strengthening anti-corruption compliance within state-owned enterprises by reinforcing the role of supervisory boards in compliance oversight. Building on recent reforms mandating independent boards in large SOEs, supervisory boards should be explicitly tasked with overseeing the design, implementation, and monitoring of anti-corruption programmes. The Review also underscores the need to fully implement and enforce newly introduced external audit requirements, ensuring that audits are carried out independently and systematically across the SOE portfolio. Together, these measures would enhance transparency, accountability, and alignment with OECD anti-corruption and integrity standards in the SOE sector (OECD, 2025[29]).

In addition, the OECD Anti-Corruption and Integrity Review recommends strengthening external auditors’ role in detecting and reporting suspected corruption. This includes introducing stronger legal protections for auditors who report misconduct, and requiring escalation of concerns to supervisory boards and public authorities where management fails to act.

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[16] OECD (ed.) (2025), OECD Economic Outlook, OECD, https://doi.org/10.1787/9f653ca1-en.

[29] OECD (ed.) (2025), OECD Integrity and Anti-Corruption Review of Ukraine, OECD, https://www.oecd.org/en/publications/oecd-integrity-and-anti-corruption-review-of-ukraine_7dbe965b-en.html.

[27] OECD (ed.) (2025), Ukraine Fifth Round of Anti-corruption monitoring follow up report, OECD, https://www.oecd.org/content/dam/oecd/en/publications/reports/2025/09/ukraine-fifth-round-of-anti-corruption-monitoring-follow-up-report_218cbaa8/097f0a38-en.pdf.

[20] OECD (2024), OECD Guidelines on Corporate Governance of State-Owned Enterprises 2024, OECD Publishing, Paris, https://doi.org/10.1787/18a24f43-en.

[2] OECD (2021), OECD Review of the Corporate Governance of State-Owned Enterprises: Ukraine, Corporate Governance, OECD, https://doi.org/10.1787/9dcc5ed0-en.

[35] Ukrenergo (2025), Announcement of competitive selection for Chairman of the Management Board of Private Joint Stock Company National Power Company UKRENERGO (NPC UKRENERGO), https://ua.energy/general-news/announcement-of-competitive-selection-for-chairman-of-the-management-board-of-private-joint-stock-company-national-power-company-ukrenergo-npc-ukrenergo/.

[24] Ukrposhta (2024), Поштові послуги, https://www.ukrposhta.ua/ua.

[17] Verkhovna Rada (2017), Law of Ukraine on the Audit of Financial Statements and Auditing Activities, No. 2258-VIII, Verkhovna Rada of Ukraine, https://zakon.rada.gov.ua/laws/show/2258-19#Text.

[14] Verkhovna Rada (2008), Law of Ukraine about Joint-Stock Companies, No. 514-VI, Verkhovna Rada of Ukraine, https://zakon.rada.gov.ua/laws/show/514-17#Text.

[18] Verkhovna Rada (2003), Commercial Code of Ukraine, No. 436-IV (as amended), Verkhovna Rada of Ukraine, https://zakon.rada.gov.ua/laws/show/436-15#Text.

[6] Verkhovna Rada of Ukraine (2025), On Amendments to Certain Laws of Ukraine Regarding Monitoring Potential Threats to Ukraine’s National Security in the Economic Sphere, https://zakon.rada.gov.ua/laws/show/2182-20#n10%22.

[4] Verkhovna Rada of Ukraine (2024), Law No. 3587-IX, https://cis-legislation.com/document.fwx?rgn=157299.

[3] Verkhovna Rada of Ukraine (2024), State Ownership Policy, https://zakon.rada.gov.ua/laws/show/1369-2024-%D0%BF#Text.

[19] Verkhovna Rada of Ukraine (2000), КАБІНЕТ МІНІСТРІВ УКРАЇНИ від 28 лютого 2000 р. № 419, https://zakon.rada.gov.ua/laws/show/419-2000-%D0%BF.

Annex 3.A. Corporate governance and disclosure practices

Annex Table 3.A.1. Selected 10 non-financial SOEs: Corporate governance and disclosure practices (as of December 2025)

	Ukrzaliznytsia	Energoatom	Ukrhydroenergo	Naftogaz	Ukrposhta	GTSO	Ukrenergo	Forests of Ukraine	Motor Sich	Guaranteed Buyer
SB to be established (according to law)	+	+	+	+	+	+	+	+	+	+
To be corporatised	n/a	n/a	n/a	n/a	n/a	n/a	n/a	+	n/a	+
Legal form	JSC	JSC	JSC	JSC	JSC	LLC	JSC	SE	JSC	SE
Corporatised	Yes	Yes	Yes	Yes	Yes	Yes	Yes	No	Yes	No
Triage category	Retain in state-ownership	Retain in state-ownership	Retain in state-ownership	Retain in state-ownership	Retain in state-ownership	Retain in state-ownership	Retain in state-ownership	Retain in state-ownership	Retain in state-ownership during martial law	Retain in state-ownership
Sector	Transport and postal services	Energy	Energy	Energy	Transport and postal services	Energy	Energy	Agriculture	Manufacturing	Energy
Equity Value (thousand UAH) 01.01.2025	188 384 019	258 242 977	73 472 955	398 594 415	210 235	48 729 429	8 565 097	5 559 342	19 332 606	151 728
Assets Value (thousand UAH) 01.01.2025	280 345 555	416 763 079	96 961 530	565 772 906	11 538 899	60 586 961	173 792 136	8 633 462	29 506 585	46 041 809
Net Revenue (thousand UAH) for 2024	104 149 277	207 033 230	54 159 016	157 846 966	12 978 008	38 526 852	101 122 820	23 105 905	9 190 995	66 963 410
Net Financial Result (thousand UAH) for 2024	-2 746 638	1 317 967	15 484 617	23 934 161	-413 204	2 781 320	-37 972 285	2 480 046	281 283	1 557 657
Depreciation of fixed assets, %	62	59	27	72	49	40	9	60	65	0
Employment (2025)	182 706	27 316	3 223	5441	31 459	8 579	7 534	23 623	13 271	112
Ownership entity	CMU	CMU	CMU	CMU	Ministry for Communities and Territories Development	Ministry of Energy	Ministry of Energy	Forest Resources Agency	Ministry of Defence	CMU
Letters of expectations approved for 2025	Yes	Yes	Yes	Yes	Yes	Yes	No	Yes	Yes	Yes
SB requirement according to the charter	7 with majority independent	4 independent, 3 state representatives	7 with majority independent	7 with majority independent	5 independent, 2 state representatives	3 independent, 2 state representatives	4 independent, 3 state representatives	5 with majority independent	3 independent, 2 state representatives	No
Current SB composition	3 independent, 3 state representatives	No SB2	4 independent, 2 state representatives	4 independent, 3 state representatives	4 independent, 2 state representatives	3 independent, 2 state representatives	4 independent, 2 state representatives	3 independent, 1 state representatives	3 independent, 2 state representatives	No SB
Acting CEO	Yes	Yes	No	No	No	Yes	No	No	No	Yes
Audited financial statements disclosed	Not Available	2021	2021	2024	2024	2020	2024	Not available	2020	2021
IFRS	Not Available	Yes	Yes	Yes	Yes	Yes	Yes	No	Yes	Yes
Information to be disclosed according to State Ownership Policy requirements (as of February 2025)
State ownership rationale	No	No	No	No	No	No	No	No	No	No
Letters of expectations	No	No	Yes	No	Yes	No	No	Yes	No	No
Latest management report	2020	2021	No	2021	2023	No	No	2023	No	2021
Internal regulations	No	Yes	Yes	Yes	Yes	No	Yes	Yes	Yes	No
Information on SB committees	No	No	No	Yes	Yes	Yes	No	No	Partial	No SB
Special obligations	No	Yes	Yes	Yes	No	No	Yes	No	No	Yes
Strategic development plan	No	No	No	No	No	No	No	No	No	No
Implementation Report of strategic development plan	No	No	No	No	No	No	No	No	No	No
Material transactions, on conflict of interests, and other corporate governance information	No	Yes	Yes	Yes	Yes	No	Yes	No	Yes	No
Decisions of SB	No	No	No	No	Yes	No	No	No	No	No SB
Remuneration reports	No	No	Yes	Only for mgmt. board	2022	No	Yes	No	No	No
Sustainable development	No	No	No	Yes	Yes	No	Yes	No	No	No
Compliance with SOE Guidelines3	No	No	No	No	No	No	No	No	No	No

Note:

1. This figure only considers Naftogaz and not Naftogaz Group.

2. Full Energoatom’s Supervisory Board was appointed on 28 January 2026.

3. In clause 153, the State Ownership Policy notes: “The following information shall be published on the website of the enterprise or company with a controlling state share: information on the compliance of enterprises and companies with a controlling state share with the recommendations on corporate governance of SOEs, as approved by the OECD.

Source: OECD Secretariat compilation based on information published on SOE websites (accessed December 2025).

Notes

← 1.  In other words, those operating in infrastructure, energy, or relevant for national security.

← 2.  It is important to note that this figure represents a conservative estimate, as many municipally owned enterprises may exist in other legal forms such as LLCs or JSCs, but comprehensive data on this broader universe is currently lacking.

← 3.  Public joint-stock companies; private joint-stock companies with over 50% state ownership (direct or indirect); private joint-stock companies that qualify as entities of public interest; other private joint-stock companies that have adopted a remuneration policy.

← 4.  Law No. 3723-IX on amendments to certain legislative acts of Ukraine concerning the functioning of critical infrastructure facilities during martial law.

← 5.  Subclause 7 of clause 93 of Section VII of the State Ownership Policy approved by the Resolution of Cabinet of Ministers of Ukraine No. 1369/ 2024.

← 6.  Cumulative voting is applicable during the selection of supervisory board members in JSCs, unless the state is the sole shareholder. However, supervisory board member selection processes in SOEs are determined by the CMU and differ from general procedures outlined in the JSC Law.

← 7.  Exemptions remain in place for SOEs with 100% state ownership. These companies are not required to convene general meetings in the usual way, and the ownership entity’s resolutions are considered equivalent to meeting minutes. Moreover, these SOEs are exempted from some of the safeguards that apply to significant transactions or related-party deals, unless otherwise addressed by Law No. 4196.

← 8.  Key sources include Law No. 4149, the Law on Access to Public Information, the Law on Transparency of the Use of Public Funds, the Law on Management of State Property Objects, the State Ownership Policy, CMU Resolution No. 1067, JSC Law and resolutions issued by the NCSSM.

← 9.  A report on the evaluation of the supervisory board based on the results of self-evaluation and a report on the evaluation of the supervisory board based on the results of external evaluation for the corresponding reporting year (if available); information on the performance of a strategic development plan, on the achievement of short-term and medium-term financial, operational and non-financial objectives of the activity, defined in the owner’s expectations letters; other information (if any) determined by law, the charter of an SOE and/or the regulation on the supervisory board (board of directors).

← 10.  Law “on Amendments to Paragraph 5-2 of Article 9 "Final and Transitional provisions" of the law “on State Aid to Economic Entities Regarding the Application of its Provisions During Martial Law” No. 2175-IX/ 2022 and AMCU Explanation letter No. 1-pp/ДД/ 2025 available at https://amcu.gov.ua/npas/rozyasnennya-z-pitan-zakonodavstva-u-sferi-derzhavnoyi-dopomogi?v=62595db069d3e.

← 11.  CMU Resolution “On Approval of the Procedure for Disclosure of Information by SOEs, No. 1067/ 2016.

← 12.  The information should be disclosed through https://spending.gov.ua.

← 13.  Article 29 of the SOE Law (as amended) defines the independence criteria and explicitly bars individuals holding political positions from serving on boards.

← 14.  No exemption for civil servants and no restrictions for other persons who serve as state representative.

← 15.  An inappropriate practice was discovered at Naftogaz, where all board members are also members of the strategy committee. This structure has not contributed to increasing the board’s efficiency; instead, it has resulted in unnecessary meetings, which must be further approved by the full board.

← 16.  SOE Law and CMU Resolution No 12.