Legal mechanisms for the implementation of corporate rights by public law entities

Abstract

The state is the largest owner of corporate rights. Entities operating on the basis of state ownership only, as well as entities whosestate share in the authorized capital exceeds fifty percent or is a value that provides the state with the right to decisive influence on economicactivity are recognized as economic entities of the public sector of the economythese subjects. Instead, the subjects of economicsector of the economy are entities that operate on the basis of communal property only, as well as entities in the authorized capital ofwhich the share of communal property exceeds fifty percent or is a value that provides local governments with the right to decide impacton the economic activities of these entities.There are two main features of corporate rights of the state in the subjects of public law: 1) management of such corporate rightsis carried out in the manner prescribed by a separate law; 2) the purpose of managing the corporate rights of the state is to meet stateand public needs.In 2016, Ukraine underwent a reform that resulted in a significant strengthening of the legal regulation of the activities of supervisoryboards in companies in the authorized capital of which more than 50 percent of shares (stakes) belong to the state. In particular,an important novelty was that the majority of members of the supervisory board in such companies must be independent members ofthe supervisory board. Thus, in relation to the corporate rights of the state, the legislator has established a number of special restrictions.In particular, the corporate rights of the state are prohibited to transfer to companies for the formation of their authorized capital, exceptfor the transfer to the authorized capital of state joint stock companies and state holding companies. This restriction is aimed at preventingcovert privatization or withdrawal of corporate rights from state ownership.Significant strengthening of legal regulation of supervisory boards in companies in the authorized capital of which more than50 percent of shares (stakes) belong to the state, resulted in the introduction of the provision that the majority of members of the supervisoryboard in such companies must be independent members of the supervisory board. An independent member of the SupervisoryBoard has equal rights and responsibilities with other members and independently decides on voting on all issues on the agenda of theSupervisory Board meeting.