Ukrainian govt approves procedure for assessing state-owned companies' efficiency

MOSCOW. Nov 13 (Interfax) - The Ukrainian government has adopted a decree offering a procedure for assessing state-run companies' fulfillment of the targets set in the owner's letter of expectations, Ukrainian media said, citing a statement on the Economy Ministry's website.

The document was drawn up by the Economy Ministry to ensure compliance with the law updating corporate governance, the statement said.

"The evaluation procedure is intended to increase control over the efficiency of state-owned companies' performance. It is based on the owner's letter of expectations, which clearly sets the targets for the enterprise and says what performance results are expected," it said.

Under the new rules, such an assessment will be conducted on the basis of state-owned companies' annual report submitted to the management entity, such as the Economy Ministry, another corresponding ministry, the government, etc. This report must contain information on the fulfillment of the targets set in the owner's letter of expectations.

Based on the results of an evaluation, a company's performance may be found effective, satisfactory or non-satisfactory.

The assessment results will be taken into consideration while taking management decisions, including those related to a company's top management.

The new procedure is expected to help boost state-run companies' transparency and accountability and improve corporate governance.

Letters of expectations are a new document in the planning system which enacts the law updating corporate governance, the ministry said. This instrument allows the government to determine specific objectives for companies, as well as expectations regarding their profitability, liquidity and other indicators.