company, on average. The real issue lies in whether, given the many and subtle ties that may exist between nominees and company management, independence can really be ascertained in the abstract on the basis of paper submissions by management, and whether independence so ascertained is really meaningful.

With or without a structured nomination process, a growing number of countries maintain databases of qualified candidates. They also increasingly rely on the professional services of recruitment agencies to fulfill this key task of Board nomination, such as Finland or Sweden. The development of such practices would help in enlarging the pool of potential experts for SOE Boards, especially to bring in more private sector experience, thereby improving SOE Boards’ professionalism. In Poland, the Ministry of State Treasury requires potential candidates to SOE Supervisory Boards to pass an exam before receiving a special certificate and being registered in a database. The database for SOE directors includes 35,000 names for 5,000 positions as of 2005. The fields of expertise for candidates wanting to be Treasury representatives on SOEs’ Supervisory Boards include legal knowledge (related to the Civil Code, Commercial Company Code, Labor Code, Bankruptcy Law and court conciliation procedures, commercialization and privatization procedures) but also corporate governance (including the role of Boards, GSMs) and business (management, marketing, business plans, accounting, corporate finance, valuation methods, restructuring, state aid for enterprises).

# **4.2 Training and Evaluation of Boards of Directors**

Apart from managing appointments to Boards, the ownership entities are also increasingly involved in setting up induction processes. In the case of SOEs, these induction programs often include training in Board responsibilities, the SOE’s relationship with the government and Ministries concerned, and Board procedures. Such induction training enhances Board professionalism. Ownership entities are also increasingly active in monitoring on an on-going basis Boards’ and directors’ performance to ensure a smooth evolution of Board structure and composition.

Public trust in Boards of Directors depends on transparent governance structures and processes and clear accountability to stakeholders. The assessment of Board performance is essential for demonstrating accountability and generating public trust. One can choose to evaluate individual Board members, in order to help give participants the opportunity to improve their own effectiveness and better put their talents to use. One can also evaluate the Board as a whole – something the Nominating or Governance Committee may do as part of their mandate.

There are three areas where the searchlight of review might be directed: participation, process, and performance. Participation examines the involvement of the individual Board member. By law, Board members have fiduciary responsibilities – the duty of care, the duty of loyalty, and various other duties – that they are expected to discharge. Process and system evaluations are concerned with how the Board and its committees operate, the role played by the chair, and the support provided to the Board by staff. In this context, the role of the Board chair, or executive committee, in formulating the Board's agenda must be looked at as well as the Board’s focus on issues related to its governance responsibilities (or conversely, its time consumed with side issues or staff briefings "for information”).

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