On March 21, 2023, the government has started the transformation of State Conglomerate “Ukroboronprom” into a joint stock company «Ukrainian defence industry». This is a historic event for Ukraine’s defence industry.
The reform of state’s military-industrial complex provides for transformation of state enterprises into business entities and implementation of the best practices of corporate governance.
Ukroboronprom has informed that as of today there already 27 enterprises transformed into either JSC or PLC. 29 more are in the process of transformation.
Prime minister Shmyhal emphasised that Ukraine aims to build one of the most potent defence industries in the world. It is crucial primarily for Ukraine’s security but will also facilitate economic development and recovery.
This reform started in 2021 when the Verkhovna Rada approved the Law “On reforming the state enterprises of defence industry”.
NAKO sincerely welcomes real actions to reform Ukraine’s defence industry. We have supported the implementation of the best corporate governance practices in Ukroboronprom since 2017.
In 2019-2020, NAKO, with the involvement of international experts, made a significant contribution to the procurement of independent audit services for the Concern and its enterprises. Thanks to this, it was possible to successfully conduct a tender in 2019 and perform an audit in 2020.
As part of the tradition started in 2019, NAKO regularly participated in the Nomination Committee, which selected directors for the Concern's enterprises in transparent competitions. For example, with the participation of civil society, the directors of those enterprises were elected: 410-ЦА, "Zorya-Mashproekt", and "Impuls".
At the same time, NAKO's consistent advocacy for implementing OECD standards contributed to adopting the Law that initiated the reform. In particular, our recommendations improved the provisions on the powers of supervisory boards and the movement of property and resources.
This government decision is another step towards increasing the competitiveness of the Ukrainian defence industry on the world market, which will make it possible to attract more investment projects and promote the development of more efficient enterprises that will provide the Ukrainian army with high-quality support.
We will continue to monitor the transformation of the concern and the reform of the industry.