Baltic Institute of Corporate Governance (BICG) has prepared recommendations to improve nomination process of Supervisory Board members in Latvian SOEs, and presented these recommendations to the Latvian Government and ministries.
“I want to thank BICG for the well balanced suggestions on how to organize effective nomination process of Supervisory Boards in the Latvian SOEs. Latvia recently joined the OECD as a member, and we know that the OECD recommendations envision setting the state ownership policy, to ensure effective governance of SOEs and proper implementation of financial and non-financial objectives,” says Arvils Ašeradens, Latvian Minister of Economy and Deputy Prime Minister.
“Latvian SOEs sector has a great impact on the Latvian economy, and we will re-establish Supervisory Boards in all the largest SOEs. Professional and well-organised Supervisory Boards are the most effective instrument to ensure supervision of management. These Boards should be professional, independent and competent, in both corporate governance and respective market where an SOE operates. BICG recommendations are really suitable to reach a co-ordinated and balanced SOEs governance practice,” says Mr Ašeradens.
17 separate recommendations can be divided into four groups:
- Changing the approach to the strategy of the selection;
- Creating a successful Nomination Committee;
- Defining the requirements for the potential candidates;
- Good communication.
“To reduce the existing formal approach to the nomination process, BICG recommends for the Latvian Government to draft a single, binding strategy for board member nomination, as a roadmap for how to organize the process: how to create a Nomination Committee, how to define the requirements for the potential candidates, and how to provide the information to attract the said candidates,” comments Andris Grafs, BICG Country Manager in Latvia.
BICG notes that a centralised model for the nomination of all Supervisory Board members of SOEs should find how the ministries (as shareholders) will be engaged in the process. Existing practise for centralised selection of heads for the Latvian governmental institutions can be an example to use.
“We advise as well that experts with a very good knowledge of business, corporate governance and management of human resources should comprise the majority of members of the Nomination Committees, while politicians and associated persons should not participate,” says Mr Grafs.
BICG recommendations emphasize that requirements for selecting board members should not be overly restrictive, for example, asking for experience of financial oversight in the very specific area where an SOE operates.
“Financial knowledge or experience in the specific area of business can be priorities in the selection criteria, but it is not necessarily reasonable to ask for the same candidate to have both qualities, when an SOE operates in a very specific business area. Such approach limits the number of potential candidates. Also, it is recommended to ensure that a board must work as a team, where each member can bring a different expertise,” says Mr Grafs.
The full set of recommendations were presented to the wider public at a press conference on the 30th of June in Riga.
Please see it attached (in Latvian):
…
…
…
…
…
…
…
…
Andris Grafs, BICG Country Manager Latvia, and Arvils Ašeradens, Latvian Minister of Economy and Deputy Prime Minister, during the press conference.
Andris Grafs, BICG Country Manager Latvia, and Arvils Ašeradens, Latvian Minister of Economy and Deputy Prime Minister, during the press conference.
BICG recommends for the Latvian Government to draft a single, binding strategy for board member nomination, as a roadmap for how to organize the process.
For more information, please contact:
Andris Grafs
Country Manager Latvia
Mob. +371 297 84407
E-mail andris[at]bicg.eu
