The State of Lithuania is an important shareholder or owner of various enterprises, controlling the largest share of commercial assets in the country (with a market value of 5,6 billion EUR as of June 2017). State-owned enterprises (SOEs) create a large economic value and significantly contribute to the economic development of the whole country, as well as to the implementation of important strategic projects. Moreover, it is the property of the State, which means it is the property of all the Lithuanian taxpayers.
In 2010, the first overview of state-owned commercial assets was published, which revealed that performance results of most of SOEs were poor and that return on equity (ROE) of SOEs in 2009 reached only 0.1%. This was much lower than ROE of SOEs in other European countries as well as an average ROE of enterprises in the private sector of Lithuania (around 9%).
In 2010, the SOE reform commenced with the goal of making the State a professional and responsible owner of these enterprises, actively seeking a more efficient performance of SOEs. In July 2010, the Government approved the Transparency Guidelines, which set higher accountability standards for all state-owned enterprises. The Ministry of Economy was set responsible for supervising the implementation of the Transparency Guidelines, as well as for preparing the reports summarizing the SOEs performance results. In 2011, a new team was established in the Ministry of Economy with the tasks of supervising the Transparency Guidelines, preparing aggregated interim and annual reports, as well as contributing to the formulation of the SOE reform.
In June 2012, the Government approved the Guidelines for Implementation of Right of Ownership (Ownership Guidelines), which described the establishment of the SOE monitoring and governance coordination unit – Governance Coordination Centre (GCC). The Guidelines also described the criteria for competence and independency of SOEs‘ boards, as well as setting and achieving the SOE goals of highest levels.
In 2012, Governance Coordination Department was established in the State Property Fund. The Department carries out the GCC role, as described in the Ownership and Transparency Guidelines:
- Transparency (preparing the aggregated reports, evaluating the financial results and efficiency of SOEs);
- Goal setting (calculating of ROE that the state-owned enterprises have to achieve, evaluating the ambitiousness of the enterprises‘ strategic goals, as well as observing the implementation of those goals);
- Boards (organizing the process of nominating board members, creating a database of potential board members, evaluating the competencies of existing boards, directly participating in the boards of SOEs);
- Policy formulation initiatives (preparing methodological recommendations, initiating new laws, consulting the Government and the Ministry of Economy about formulating related policies);
- Consultations (consulting the Government and the ministries about SOE governance as well as about taking important decisions as a shareholder, consulting SOEs about their activities and the implementation of good governance practice, evaluating the soundness of new business plans, consulting the Government and the Ministry of Finance about the payment of dividends).
Lithuania, in order to become a member of the Organization for Economic Co-operation and Development (OECD), participates in the Working Party on State Ownership and Privatization Practices of the Organization's Corporate Governance Committee in which Lithuania is granted Participant status. The Governance Coordination Centre, together with the Ministry of Economy, is actively involved in the activities of this group.
As the 1st of October, 2014, after the merger of the State Property Fund with the VĮ Turto bankas, the functions of the Governance Coordination Centre are performed by the SOE Governance Coordination Department of VĮ Turto bankas.
In accordance with the 20th ofApril, 2017 amendment to Article 23 of the Law on the Management, Use and Disposition of State and Municipal Property of the Republic of Lithuania No. VIII-729, since the 1st of July, 2017 the functions of the Governance Coordination Centre of state-owned enterprises are performed by the public enterprise Monitoring and Forecasting Agency.