Governance Coordination Centre

Probably the main tool to achieve professional governance is the development of independent board members institute. The importance of independent board members is stressed and in detail discussed in recommendations of OECD, World Bank and other organizations. In Lithuania Governance Coordination Centre (VKC) in close cooperation with Ministry of Economy develops and introduces into practice the application of this institute. VKC representatives participate in board member selection committees, provide assistance in selection process, communicate with selected independent board members, consult them and provide with methodological assistance.

Taking into consideration that the majority of Lithuanian SOEs are managed by ministries, responsible for policy making of the respective industries (eg. SOEs working in agriculture sector are managed by the Ministry of Agriculture), the risk of prioritizing policy implementation instead of the financial results is deemed high. In order to reduce the risk, VKC participates in the decisions related to formulation of shareholder expectations, calculates the required rates of return on equity (which are confirmed by the Cabinet of Ministers), provides recommendations to the companies and their owners to improve the SOE strategies.

Safeguarding of the transparency is one of the major aims in SOE governance. It was and remains as one of the primary reasons to establish VKC. Currently VKC provides with suggestions and recommendations to further improve the Transparency guidelines (Resolution of the Government of Lithuania), as well as acts upon the requirements of the guidelines: VKC collects the data on SOE performance, special obligations, strategy implementation, CEO salaries, and other types of information. The data is further refined, systemized and provided to the Government, while the non-confidential information is disseminated to the public.

We consult the institutions performing the role of owners, SOEs, municipalities and their companies on corporate governance issues. We also prepare the Good Governance Index, which aims to evaluate the extent to which SOEs follow the Good practices of corporate governance. The index include the requirements set by Transparency guidelines and other requirements with the Lithuanian legislation, it also evaluates higher-than-mandatory practices and recommendations proposed by various institutions, including OECD recommendations, Nasdaq company governance codex for the listed enterprises, among others. We strive to achieve that the SOEs would adopt the governance tools regarded as a highest-level global standard.

VKC representatives participate as speakers at various seminars, present the up-to-date governance policy principles to SOEs. Currently the priority is given to introduce independent board members to peculiarities of SOEs governance, we also cooperate with Special Investigations Service, Baltic Institute of Corporate Governance and others. We also share the Lithuanian good practice with other OECD member-countries and others.