On April 21, the Ministry of Economic Development and Trade (MEDT) has officially formed the new supervisory board of Naftogaz. The board consists of five members, three of whom are independent members Dr. Marcus Richards, Charles Proctor, and Paul Warwick. Yulia Kovaliv, the First Deputy Minister of Economic Development and Trade of Ukraine and former Energy and Coal Industry Minister of Ukraine Volodymyr Demchyshyn have joined the supervisory board as representatives of the government.
The supervisory board members profiles are available on the company website in the corporate governance section.
The search of the candidates to Naftogaz supervisory board was carried out by Odgers Berndtson recruiting agency commissioned by the European Bank of Reconstruction & Development.
“The management team of Naftogaz welcomes the formation of the independent supervisory board, which will align our work with the OECD principles. It will pave the way for transforming Naftogaz into an effective energy company run in a transparent manner. The establishment of the supervisory board in Naftogaz is a result of joint efforts of the government, ministries, international financial organizations, consultants and the company. The importance of this step in reforming the company can hardly be overestimated”, said Andriy Kobolyev, CEO of Naftogaz.
Background on corporate governance reform in Naftogaz
In 2015, the government of Ukraine embarked on the corporate governance reform in Naftogaz developed in line with the OECD principles of corporate governance for state-owned enterprises. These principles regulate relations with shareholders and stakeholders, requirements towards transparency and information disclosure, segregation of duties of management bodies at all levels, as well as other matters of corporate governance.
On 5 December 2015, the Cabinet of Ministers of Ukraine by its Resolution No. 1002 approved the new Naftogaz Charter, the Supervisory Board Rules of Procedure, and the Executive Board Rules of Procedure, to apply throughout the transitional period until 1 April 2017. These documents were also approved in a restated version to come into force on 1 April 2017.
In the result of the corporate governance reform, the supervisory board of Naftogaz shall be effectively insulated from political meddling and graft. It shall receive an unprecedentedly wide range of authority and responsibility, including, i.a., improved control over the company’s executive board. The supervisory board shall establish committees dealing with audit, ethics, as well as nomination and remuneration issues. The supervisory board shall also set up and control functions responsible for compliance, risk management and prevention of corruption.