engleski

How to increase Effectiveness of Supervisory Boards in State-owned Enterprises in Croatia

Members of the Supervisory Board perform an extremely important function not only for a company but for the country’s economy as well. Especially important is the selection and appointment of members of the Supervisory Boards of State-owned enterprises. State is the owner of the largest companies, mostly in infrastructure (transport), energy and financial sectors which implies managing of large amounts of capital which needs to be preserved (and multiplied) while performing services of general social interest at the same time. Therefore Supervisory Board members have to perform their function with a diligence of a prudent businessman in accordance with the law and business judgment rule. In order to strengthen the role of the Supervisory Board with its commissions (primarily Audit Committee) in the selection and appointment of its members, the emphasis should be placed on the expertise and competence to perform these functions. The scope and responsibilities of the members of the Supervisory Boards is regulated by the Companies Act and internal companies' rules. According to the current legislation Supervisory Board members correspond with their own assets but with the monthly fee less than EUR 300, 00 which is very weak motivation for their greater engagement. In 2010, the Code of Corporate Governance is adopted for State-owned enterprises, but practice has shown that it hasn’t been applied yet. Having in mind the failures that have occurred in elections, responsibilities and actions of the Supervisory Boards of State-owned enterprises, which in turn affect the quality of corporate governance, we propose measures to increase the effectiveness of the Supervisory Boards

Board effectiveness, Code of Corporate Governance, State-owned enterprises, Supervisory Board

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