PARTICIPATION IN A DISCUSSION ON THE NEW GOVERNANCE FRAMEWORK FOR LOCALLY OWNED COMPANIES

 

The Capital City Property Relations Department organized a briefing and discussion on the newly enacted Law on the Governance of State and Locally Owned Companies to introduce its key provisions and support preparations for implementation.

G. Gangamurun, CEO of UBIM, together with relevant officials, participated in the discussion and reviewed the changes the new law will introduce to the structure, operations, and governance of locally owned entities.

The new framework clarifies the legal grounds for establishing locally owned companies. In particular, a locally owned company may be established where a local government is required to deliver public services within its statutory mandate and such services cannot be adequately provided by the private sector alone or are not financially viable for private sector delivery.

The law also classifies state and locally owned companies into two categories based on their objectives and functions: commercial companies and public service companies. The applicable classification must be clearly specified in each company’s charter.

Existing locally owned legal entities are required to align with the new requirements by January 1, 2028. However, Article 50.6 expressly provides that the provisions governing the reorganization of self financing public enterprises into companies or public service organizations do not apply to hospitals, schools, or kindergartens.

The law will take effect on January 1, 2027. The discussion also covered how locally owned entities should prepare for compliance with the new framework and strengthen governance, management, oversight, accountability, and transparency in line with the new requirements.

Sources: Law on the Governance of State- and Locally Owned Companies; Capital City Property Relations Department.