Gov’t mandates state-owned companies to obtain finance ministry’s approval for loan acquisitions
PCB noted that this is a guideline developed under Article 62 (m) of the Act on Privatization, Corporatization, Monitoring and Evaluation of State Business Enterprises
Moosa Zameer, Minister of Finance
The government has made it mandatory to obtain approval from the Ministry of Finance and Planning for loans taken by state-owned companies.
A circular issued by the Privatization and Corporatization Board (PCB) on Tuesday revealed that the board has developed guidelines for how government companies, companies with government participation, and government businesses operating on commercial principles should proceed when taking loans.
PCB noted that this is a guideline developed under Article 62 (m) of the Act on Privatization, Corporatization, Monitoring and Evaluation of State Business Enterprises, to facilitate further strengthening of the management of government companies, companies with government participation, and government businesses operating on commercial principles, and to uphold corporate governance principles, in order to achieve the objectives stated in Article 2, Clause 6 of the Act.
The circular states that companies wishing to take loans must complete the requirements in this guideline, decide to take the loan at the board level, and then seek approval from the company's shareholders. Once approval is obtained, the decision to take the loan must be shared with the Privatization and Corporatization Board within days days of approval.
The guideline states that under the amendment brought to Article 22 of the "Code of Corporate Governance for State-Owned Enterprises" at a meeting of the Privatization and Corporatization Board, companies required to follow this code must complete the requirements in this guideline and then submit their request for approval to the Ministry of Finance and Planning.
It also states that among companies currently exempted from following this code, those with majority government shareholding should also complete the requirements in this guideline and submit their request for approval to the Ministry of Finance and Planning. In addition to this, other state business enterprises have been asked to complete the requirements in this guideline and obtain shareholder approval when changing the company structure.
