This blog was originally published on the Center for International Private Enterprise’s (CIPE) Development Blog.

On May 1, 2016, the law, On Introduction of Amendments to Certain Legislative Acts of Ukraine Regarding Protection of Investors’ Rights (No. 289-VIII), came into effect. It introduced a number of new aspects to Ukrainian corporate law including the right to shareholder derivative actions, direct payment of dividends to shareholders, and –perhaps the most relevant to reducing corruption and privatizing state owned enterprises– the establishment of independent directors.

In many developed economies, independent directors serve as a source for ongoing advice for senior management, set the strategic direction for the company, and provide investors (both public and private) confidence that their interests are represented through additional oversight, strategy development, and the scrutiny of major decisions undertaken by management. In state owned enterprises and family owned firms, independent directors serve as additional checks on the company from the perspective of the public or nonvoting family members, respectively, among other functions key to the long-term sustainability of such enterprises.  Read More...