12 May 2021

Organization for Economic Co-operation and Development (OECD) published Review of the Corporate Governance of State-Owned Enterprises in Ukraine. It mentions Ukroboronprom and particularly the Draft Law №3822, which may become a foundation of the reform.
The OECD positively welcomed the provisions that introduce independent members to the supervisory board and remuneration to them.
However, the OECD outlined a number of risks contained in the January version of this Draft Law. Namely, the Draft:
  • “cements the conflicting roles of the state as owner, policymaker, and regulator, which opens room for undue political intervention (including by the line ministry)”;
  • “does not guarantee the independence of the supervisory board from the owner and policymaker”;
  • “allows for easy replacement of management and, under the proposed corporate governance set-up.”
NAKO has previously published its position regarding corruption risks in the Draft. You can find our recommendations for the second reading here.
Reforming the governance of Ukraine’s defence industry is a national security priority matter which is crucial for Ukraine’s ability to protect its democracy and to move towards Euro-Atlantic integration. State Concern Ukroboronprom (UOP) will be transformed according to the best practices in order to increase the global competitiveness of Ukraine’s defence industry and build more efficient enterprises that will be able to supply the Ukrainian army with high-quality equipment. In order to ensure that the UOP reform not only addresses legal restructuring but also focuses on the introduction of the corporate governance standards, it is necessary to supplement this draft law with provisions that meet OECD standards before it is adopted.
NAKO’s Brief  “Corporate governance reform in Ukraine’s defence industry: from initiative to implementation.”