## **<mark>Box 7</mark>**

## **<mark>Centralized models: the role of the Ministry of State Treasury in Poland</mark>**

<mark>In Poland, SOEs are subject to a series of additional disclosure requirements above those set forth in the Company Law. The MoST prepares specific guidelines on financial reporting on an annual basis to explain and clarify all these requirements. SOEs have to prepare detailed reports on management board activity, plus a report on their activity in the previous financial year, and a report on the result of the examination of financial reports. Moreover, a special Quarterly Report has to be approved by the Supervisory Board and submitted to the Treasury, giving information on the financial situation, the remuneration of employees, financial credibility and potential risks. Another Quarterly Report on guarantees granted has to be submitted to the Ministry of Finance. In Poland, the MoST prepares the “Report on economic and financial conditions of SOEs”, which is communicated to the government and parliamentary committees concerned. Moreover, it is posted on the MoST’s Web site. The MoST Principles lay down the instruments of ownership supervision, focusing on the criteria and the methods of supervision together with a comprehensive set of regulations, rules, and procedures of MoST corporate supervision and the selection of members of supervisory boards who have adequate preparation to provide effective corporate supervision. Fields of expertise for candidates wanting to be Treasury representatives on SOEs’ Supervisory Boards include: Legal: Civil Code, Commercial Company Code, Labour Code, Bankruptcy Law and court conciliation procedures, commercialisation and privatization procedures Corporate governance: role of boards, GSMs Business: management, marketing, business plans, accounting, corporate finance, valuation methods, restructuring, state aid for enterprises. Those who pass the exam receive a special certificate and are registered in a database. The database presently includes 35,000 names for 5,000 positions as of 2005. The Treasury organizes training for SOE board members in economics, law and corporate governance issues and one meeting a year on the guidelines about how to present financial reports.</mark> <mark>The MoST Principles contain no information about the ownership supervision policy with respect to the SOEs supervised by ministries other than the MoST, such as the Ministry of Infrastructure (the Polish Railways, the Polish Post, the Polish Airports) and other infrastructure sectors (e.g. energy). In addition, the Polish Golden Veto Act provides for the special right of the state to veto certain key decisions in strategic companies. Pursuant to the Golden Veto Act, the MoST prepares and annually updates a list of companies of strategic significance for the state in the energy, telecommunication infrastructure and railways sectors. In those companies, the state, regardless of the size of shareholdings but provided that the state is a shareholder, has the right to monitor and veto key corporate decisions: sale of substantial assets, change of corporate goals, relocation of the company headquarters outside the borders of Poland, and dissolution of the company. In those companies, the Government has the right to appoint so‐called observers, who should be provided with complete access to company’s information on issues significant for the public interest.</mark>

# **6.3 Centralized model – Independent Agency**

The centralized model where an independent agency is in change of SOEs is relatively untested also in developing countries. With the exception of Kosovo, which represents a special case, as the administration of Publicly Owned Enterprises (POEs) is currently a power reserved to UNMIK, (see Box 8), there are virtually no real life examples. The Kosovo case reinforces the lessons from the Polish case in that they confirm the challenges of applying a centralized model to the case of infrastructure. It also highlights potential misalignments of incentives coming from the introduction of an independent agency – not accountable for fiscal impact and provision of subsidies ‐ to exercise the ownership function.

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