MF: Law on the Management of State-Owned Companies, one of the most significant reforms

By adopting the Law on the Management of State-Owned Companies, the Parliament of Montenegro supported one of the most significant reforms in the field of state property management in recent decades, the Ministry of Finance (MoF) announced.

The government department adds that with this law, Montenegro is making a decisive turn away from practices that have been characterized for years by fragmented management, unclearly defined responsibilities, and insufficient focus on results.

"For the first time, the state is establishing a unique, modern and responsible system of managing its companies, based on professionalism, transparency and protection of the public interest. State capital is the capital of citizens. That is why it must be managed responsibly, professionally and in accordance with the highest standards of corporate governance," the statement said.

The new law, they add, introduces clear rules and precisely defines the responsibilities of all participants in the system, with a stronger coordinating role for the Ministry of Finance in implementing the state's ownership policy.

"Business results will no longer be a matter of assessment, but a clearly measurable obligation through defined goals and regular monitoring of their achievement. One of the most important innovations relates to the professionalization of management structures in state-owned enterprises. Clear and strict criteria for the selection of candidates are being introduced, an independent commission that carries out the selection, as well as the obligation that members of the management bodies possess appropriate knowledge, experience and competencies. Members of the management bodies will be selected following a public competition," the statement reads.

As stated, this means that expertise becomes the basic criterion, and responsibility is an integral part of management.

"The space for discretionary decision-making and political influence will be significantly narrowed, while results and performance will be key indicators of success. The law also provides for the inclusion of independent members in management bodies, clear conditions for re-election and dismissal, (non)achievement of set goals and indicators is linked to the duration of the mandate of management structures, as well as a transparent remuneration policy linked to achieved results," it states.

The Ministry of Finance adds that, at the same time, the state clearly defines when and under what conditions it should be the owner of companies.

"State ownership is retained exclusively where there is a justified public interest and strategic importance for Montenegro, thus protecting the principles of market competition and preventing unjustified expansion of the state portfolio. The special importance of the law is also reflected in the protection of public finances. Multi-year planning, regular reporting and systematic management of fiscal risks are introduced, so that state-owned enterprises no longer represent a potential source of hidden costs and unpredictable liabilities to the budget. This reform confirms Montenegro's clear commitment to building efficient institutions and a responsible attitude towards the assets of all citizens. By harmonizing with the OECD principles of corporate governance of state-owned companies, Montenegro further strengthens its credibility and confirms the European course of reforms," ​​they pointed out.

The benefits of this law will be felt, they add, primarily by citizens, through more efficient and responsible state-owned enterprises, greater stability of public finances, fewer fiscal risks, and more sustainable development of the country.

"The process of preparing the law was open and inclusive. Representatives of institutions and the civil sector participated in its drafting, and numerous suggestions from the public debate were incorporated into the final legal solution. The adoption of this law is not just the adoption of a new regulation. It is a reform decision to introduce order where there was not enough of it, to raise management standards and to put the public interest at the center of all decisions concerning state property. With this law, Montenegro sends a clear message that responsibility, expertise and results are becoming the foundation of state resource management," the MF statement concludes.

"By adopting the Law on the Management of State-Owned Companies, we are sending a clear message that state capital belongs to citizens and must be managed responsibly, professionally and in their best interests. We are leaving behind the times of unclear responsibilities and lack of results. With this law, we are introducing a system in which expertise, integrity and performance become the basis for the management of state-owned enterprises," said the relevant Minister, Novica Vuković.