Briefing text:

The Strategy for the management and reform of enterprises with state participation was developed on the basis of best foreign practices and approved by the Cabinet of Ministers.

The main objectives of the strategy are as follows:

• Improvement of legislation on enterprise management and reform;
• Continuous reduction of the number of enterprises with state participation;
• Introduction of modern methods of corporate governance in enterprises and ensuring openness and transparency of their activities.

In order to achieve these objectives, the State Assets Management Agency carried out the following actions:

1) Based on the requirements of the strategy, the relevant legal regulations were coordinated.

2) The Law "On state property management" was approved by the Senate of Oliy Majlis, and the draft Law "On privatization" was submitted to the Legislative Chamber for discussion.

3) A procedure for the formation of candidates for the managers and members of the supervisory board of enterprises with state participation has been developed.

4) In order to reduce state participation in the economy more than 500 state enterprises were privatized and about 600 enterprises were identified for reorganization and liquidation within the framework of resolutions of the President and the Government.

As a result, in 2021 the number of enterprises with state participation decreased by 30 percent.

As of today on the basis of "sell or explain" principle defined in the Strategy more than 2 thousand enterprises were accounted and proposals on their sale, reorganization and liquidation were prepared.

Continuing the work in this direction, by 2025 it is planned to reduce the number of enterprises with state participation by 75 percent.

For this purpose it is not allowed to establish new enterprises with state participation without relevant grounds, and existing state unitary enterprises shall be gradually privatized or liquidated.

5) Five international and local companies with the support of the European Bank for Reconstruction and Development have been engaged to implement the norms of the strategy in practice, including the definition of commercial and non-commercial objectives for large enterprises, the development of a dividend policy and a code of ethics and thus started the work in this direction.

6) In order to create equal conditions for enterprises with state participation and private sector, the practice of granting exclusive privileges and state guarantees to state-owned enterprises will be abolished.

7) In order to attract qualified specialists to the management bodies of enterprises the Association of Independent Members of the Supervisory Board was created.

As of today 71 independent members have been attracted to the supervisory boards of 54 state enterprises.

To continue this work, according to the results of competitions held jointly with the World Bank, a special company of international level was attracted.

It should be noted that from this year the term of office of enterprise managers and members of the supervisory board has been increased to three years, while previously it was one year.

In this case, the performance of the managers of the company is evaluated on the basis of the results of the implementation of KPIs and performance of members of the Supervisory Boards, depending on the state of corporate governance, and the results are used to decide on the extension of their employment contract.

8) In order to strengthen the internal control system in more than 120 enterprises, the Supervisory Board has established an Audit Committee.

9) At present 2 enterprises (JSC "Uzmetkombinat", JSC "Power heating plants") together with "Ernst & Young" company are implementing a risk management system.

10) Focusing on the work done in terms of transparency and information disclosure, for the first time a consolidated report on the effectiveness of enterprises and the use of state property was prepared and submitted to the Legislative Chamber of the Oliy Majlis and the Cabinet of Ministers.

In addition, in order to ensure transparency and accountability of activities of enterprises the system of monitoring for completeness and relevance of information on their websites was established.

All these activities serve to increase accountability to the public and ensure transparency of public authorities and enterprises.

11) Also, on October 26 of this year there was adopted a Government Decision providing for amendments and additions to 8 regulatory and legal documents, based on the requirements of the Strategy. According to the document it is established:

• creation of a supervisory board in state unitary enterprises;
• selection of the internal audit service on a competitive basis;
• approval by the State Assets Management Agency of the questionnaire for evaluation of the corporate governance system in enterprises.

At the same time the list of enterprises required for disclosure of information was extended and the special right of the state "golden share" was abolished.

The Agency will continue its work in this direction.