The Romanian government has undertaken important legal and institutional changes over the past decade to improve the governance and performance of its state‑owned enterprises (SOEs), yet significant implementation shortcomings persist. This review describes and assesses the corporate governance framework of the Romanian SOE sector against the OECD Guidelines on Corporate Governance of State‑Owned Enterprises (“SOE Guidelines”). It makes recommendations to help the Romanian authorities design adequate mechanisms to ensure the implementation of applicable rules for the exercise of state ownership and the governance of SOEs.

State‑owned enterprises (SOEs) play an important role in the Romanian economy – in terms of their overall volume, but even more so because of their role in systemically important sectors such as energy and transportation. The total SOE sector is valued at approximately USD 19 billion and employs around 183 000 people. Compared with other post-transition economies, Romania has a relatively large portfolio of listed SOEs, which have played a significant role in developing the stock market. Eighteen majority-owned SOEs are traded on the stock exchange, the largest and most valuable of which are concentrated in the energy sectors (i.e. hydrocarbons and electricity). Overall, however, there is high heterogeneity in the performance of SOEs. While the state’s portfolio has showed positive returns on equity and assets in recent years (albeit significantly less than private firms), this is entirely attributable to the five most profitable SOEs without which the aggregate operating result would be sharply negative. Further, while the median SOE is slightly larger than the median non-SOE in terms of asset size, SOEs underperform significantly compared to non-SOEs both in terms of sales and profitability.

This chapter first discusses the Romanian business environment and capital market before providing an overview of the state‑owned enterprise sector – including information regarding its size, sectoral distribution, and economic and financial performance. It then outlines the legal and regulatory frameworks bearing on SOE governance, including details on the general corporate governance framework as well as on sectoral laws and regulations applicable to SOEs. It finally describes ownership arrangements and examines how the state exercises its ownership rights, with a particular focus on policies and practices underpinning board and executive appointments, performance monitoring and financial oversight of SOEs.

This chapter describes the corporate governance framework of Romanian SOEs specifically with regard to how actual policies and practices compare with the recommendations of the OECD Guidelines of Corporate Governance of SOEs. In particular, it examines: (i) the rationales for state ownership, (ii) the organisation of the state ownership function, (iii) the level playing field between SOEs and private companies, (iv) the treatment of non-state shareholders and other investors, (v) principles and standards of responsible business conduct, (vi) transparency and disclosure policies and practices, and (vii) the roles and responsibilities of the boards of directors of SOEs.

The Romanian Government has undertaken important reform efforts over the past decade to improve the governance and performance its state‑owned enterprises. Yet, significant implementation shortcomings exist. This chapter sets forth policy recommendations to help the Romanian authorities undertake further reforms as well as designing adequate mechanisms to ensure the implementation of the already existent rules for the exercise of state ownership and governance of SOEs.