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Article Some Issues Pertaining to the Legal Position of Economic Entities in the Public Sector of Economy
Authors VALERIIA POIEDYNOK
Name of magazine Legal journal «Law of Ukraine» (Ukrainian version)
Issue 6 / 2018
Pages 57 - 70
Annotation

Economic entities of the public sector of economy still play an invariably important role in the achievement of economic and social goals in any country. The large scope of the public sector in Ukraine, unsatisfactory financial and economic indicators of its performance, presence of novels regarding the legal position of state-owned enterprises are the factors making this article topical today. The purpose of the article is to provide a more detailed definition of the concept of an economic entity in the public sector of economy, to make the classification of such entities and give a critical assessment of the innovations to the Law of Ukraine “On Amending Some Legislative Acts of Ukraine Regarding Administration of State-Owned and Communal Property” in the context of their consistency with the best world practices of public sector administration. The author demonstrates that an economic entity in the public sector of economy should be understood as an economic entity upon which the State has a decisive influence by directly or indirectly holding an interest in its authorized capital (property) exceeding 50 %, or by otherwise exercising an equivalent degree of control; the author also provides the classification of economic entities in the public sector of economy. It is established that the best world practices require that such entities use the same legal incorporation forms which are used in the private sector, i.e. corporate legal incorporation forms; however, Ukraine maintains a specific legal incorporation form of a State-owned economic entity – a State-owned unitary enterprise (with its types being a State-owned commercial enterprise and a State-run enterprise). The adoption of this Law is given a critical assessment as an actual abolishment of the system of corporatization of State-owned unitary enterprises. Instead, the legislator resorted to the method unprecedented in the world practice – that of “importing” certain instruments of corporate governance into the legal incorporation form of a unitary enterprise. The author expresses the opinion that the potential of these instruments may not be fully realized within the framework of the unitary form which is alien to them, and may not eliminate its inherent shortcomings, such as limited market communication and lack of access to external sources of financing. Therefore, the Law does not remove the need for gradual corporatization of at least the most economically active state-owned commercial enterprises.

 

Keywords entity of the public sector of economy; state-owned unitary enterprise; corporate governance; supervisory board; independent audit
References

List of legal documents 
 

Legislation 
1. Deiaki pytannia provedennia audytu subiektiv hospodariuvannia derzhavnoho sektoru ekonomiky [Some issues of the Audit of Business Entities of the State sector of the Economy]: postanova Kabinetu Ministriv Ukrainy [the Resolution of the Cabinet of Ministers of Ukraine] vid 4 chervnia 2015 r. № 390. URL: https://www.kmu.gov.ua/ua/ npas/248248066 (accessed: 15.05.2018) (in Ukrainian). 
2. Deiaki pytannia upravlinnia derzhavnymy unitarnymy pidpryiemstvamy ta hospodarskymy tovarystvamy, u statutnomu kapitali yakykh ponad 50 vidsotkiv aktsii (chastok) nalezhat derzhavi [Some Issues of Management of State Unitary Enterprises and Economic Partnerships, in the Authorized Capital of Which more than 50 Percent of the Shares (Shares) Belong to the State]: postanova Kabinetu Ministriv Ukrainy [the Resolution of the Cabinet of Ministers of Ukraine] vid 10 bereznia 2017 r. № 142. URL: http://zakon.rada.gov.ua/laws/show/142-2017-%D0%BF (accessed: 14.05.2018) (in Ukrainian). 
3. Hospodarskyi kodeks Ukrainy [The Economic Code of Ukraine]: Zakon Ukrainy [the Law of Ukraine] vid 16 sichnia 2003 r. № 436-IV. URL: http://zakon.rada.gov.ua/ laws/show/436-15 (accessed: 10.05.2018) (in Ukrainian). 
4. Metodyka vyznachennia chastky derzhavnoho sektoru u skladi ekonomiky: zatverdzhena nakazom Ministerstva ekonomichnoho rozvytku i torhivli Ukrainy [Methodology for Determining the Share of the Public Sector in the Composition of the Economy: Approved by the order of the Ministry of Economic Development and Trade of Ukraine] vid 20 hrudnia 2012 r. № 1466. URL: http://zakon.rada.gov.ua/laws/ show/z0110-13#n13 (accessed: 14.05.2018) (in Ukrainian). 
5. Poriadok vyznachennia umov oplaty posluh ta kompensatsii vytrat chleniv nahliadovykh rad derzhavnykh unitarnykh pidpryiemstv ta hospodarskykh tovarystv, u statutnomu kapitali yakykh bilshe 50 vidsotkiv aktsii (chastok) nalezhat derzhavi [The Procedure for Determining the Conditions for Payment of Services and Compensation of Expenses of Members of Supervisory Boards of State Unitary Enterprises and Economic Partnerships, in the Authorized Capital of which more than 50 Percent of the Shares (Shares) Belong to the State]: zatverdzheno postanovoiu Kabinetu Ministriv Ukrainy [Approved by the Decision of the Cabinet of Ministers of Ukraine] vid 4 lypnia 2017 r. № 668. URL: http://zakon.rada.gov.ua/laws/show/668-2017-%D0%BF (accessed: 14.05.2018) (in Ukrainian).

6. Pro upravlinnia obiektamy derzhavnoi vlasnosti [On the Management of State-owned Objects]: Zakon Ukrainy [the Law of Ukraine] vid 21 veresnia 2006 r. № 185-V. URL: http://zakon.rada.gov.ua/laws/card/185-16 (accessed: 15.05.2018) (in Ukrainian). 
7. Pro vnesennia zmin do deiakykh zakonodavchykh aktiv Ukrainy shchodo upravlinnia obiektamy derzhavnoi ta komunalnoi vlasnosti [On Amendments to Certain Legislative Acts of Ukraine on the Management of State and Municipal Property]: Zakon Ukrainy [the Law of Ukraine] vid 2 chervnia 2016 r. № 1405-VIII. URL: http://zakon.rada.gov. ua/laws/show/1405-19 (accessed: 15.05.2018) (in Ukrainian). 
8. Pro vnesennia zmin do deiakykh zakonodavchykh aktiv Ukrainy shchodo korporatyvnykh dohovoriv [On Amending Certain Legislative Acts of Ukraine on Corporate Contracts]: Zakon Ukrainy [the Law of Ukraine] vid 23 bereznia 2017 r. № 1984-VIII. URL: http://zakon.rada.gov.ua/laws/show/1984-19 (accessed: 15.05.2018). 
9. Uhoda pro Koalitsiiu deputatskykh fraktsii “Ievropeiska Ukraina” [Coalition Agreement of Deputy Factions “European Ukraine”] vid 27 lystopada 2014 r. URL: http://zakon3. rada.gov.ua/laws/show/n0001001-15 (accessed: 15.05.2018) (in Ukrainian). 
 

Bibliography 
 

Authored books 
10. OECD Guidelines on Corporate Governance of State-Owned Enterprises (OECD Publishing 2015) (in English). 
11. G20/OECD Principles of corporate governance (OECD Publishing 2015) (in English). 
12. Robinett D, Held by the visible hand: the challenge of state-owned enterprise corporate governance for emerging markets (World Bank 2006) (in English). 
13. Shcherbyna V, Hospodarske pravo: pidruchnyk [Economic Law: Textbook] (Iurinkom Inter 2013) (in Ukrainian). 

Journal articles 
14. Simon C Y Wong, ‘Improving Corporate Governance in SOEs: An Integrated Approach’ [2004] 7(2) Corporate Governance International 12-3 (in English). 
15. Dykhne Ye, ‘Nahliadovi rady na derzhavnykh pidryiemstvakh: plius chy minus’ [‘Supervisory Boards at State-Owned Enterprises: Pro or Con’] (Novoe vremia, 31 Lypen 2017) accessed 15 May 2018 (in Ukrainian). 
16. Tsymbal A, ‘Audyt ukrainskykh derzhavnykh pidpryiemstv: problemy ta osoblyvosti’ [‘Audit of Ukrainian State-Owned Enterprises: Challenges and Peculiarities’] (Forbes Ukraina, 15 Veresen 2016)accessed 15 May 2018 (in Ukrainian). 

Theses abstracts 
17. Zakharchenko A, ‘Upravlinnia obiektamy derzhavnoi vlasnosti (hospodarsko-pravovi aspekty)’ [‘Administration of State-Owned Property (Economic and Legal Aspects)’] (avtoref dys d-r yuryd nauk, Instytut ekonomiko-pravovykh doslidzhen NAN Ukrainy 2017) (in Ukrainian). 

Websites 
18. ‘State-owned enterprises: Catalysts for public value creation?’ (PwC, 2015) accessed 15 May 2018 (in English). 
19. ‘Derzhavnymy pidpryiemstvamy zamist ministerstv budut keruvaty nahliadovi rady’ [‘State-Owned Enterprises Will be Managed by Supervisory Boards Instead of Ministries’] (Ministerstvo ekonomichnoho rozvytku i torhivli Ukrainy, 2018) accessed 15 May 2018 (in Ukrainian). 
20. ‘Pytoma vaha derzhavnoho sektoru v ekonomitsi’ [‘Share of the Public Sector in Economy’] (Ministerstvo ekonomichnoho rozvytku i torhivli Ukrainy, 2018) accessed 15 May 2018 (in Ukrainian). 

 

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