Corporate Governance Guidelines for Government and Privatised Enterprises in Kenya

Topics: Nationalization, Public sector, Public ownership Pages: 3 (998 words) Published: May 12, 2013

Since the 1990s a wave of privatization of state-owned enterprises has taken place throughout the world. Nevertheless, there are still many companies in government hands. What should the proper corporate governance guidelines for these companies be? And for privatized companies already in private hands?

The proper cooperate governance guidelines (CGG) for state owned enterprises (SOE) and the privatized companies should not be different from the other enterprises. SOE’s and the privatized once have an advantage because of their connection with the government. These enterprises should begin with the OECD principles for cooperate governance (OECD, 2004) and build upon them with their specific CGG so as to guard against having unethical added advantage over the other enterprises. The principles of governance (OECD, 2004) are flexible in nature as they have room for adaptation to the context. The flexibility should be considered carefully so as not to be adapted in a way that would infringe the stakeholders’ rights. This paper lists the guidelines for SOE’s and those which have been privatized. At the beginning there should be legal and regulatory framework that ensures a level playing field in markets where state owned and private sector companies compete to avoid market distortions (OECD, 2005). The framework should complement OECD principles of cooperate governance (OECD, 2004). Among the aspects identified by OECD (2005) include distinguishing between state ownership function and other state function, applying general laws and regulations SOE’s and offering competitive conditions regarding finances. The next guideline is on ownership. OECD (2005) directs that the state should act as informed and active owner and establish a clear consistent ownership policy ensuring that the governance of SOE’s is carried out in a transparent and accountable manner, with the necessary degree...

References: Narveson, J. (2003). Ethics in the Business and Professional Life. Retrieved from
OECD. (2005). OECD Guidelines on Corporate Governance of State-Owned Enterprises. Paris, France: OECD Publication Service.
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