Policy makers and privatisation experts agree that it is critical to “get privatisation right". A well-planned and executed transaction, backed by sound rationales, institutional and regulatory arrangements, good governance, and integrity can have consequences on future divestment activity by enhancing investor confidence while gaining the support of stakeholders and the public. Drawing on the internationally agreed OECD Guidelines on Corporate Governance of State-Owned Enterprises and decades’ worth of national experience across both OECD and Partner economies, this Policy Maker’s Guide to Privatisation provides practical advice to newcomers on key stages of the process from inception to post-privatisation. With global privatisation activity trending upwards and expected to rise, this Guide can support policy makers in their decision making process in the years to come.

1. A POLICY MAKER’S
GUIDE TO
PRIVATISATION
Key Messages
21 March 2019, Paris, OECD

2. • Policy makers and privatisation experts agree that it is critical to “get
privatisation right” as its success can impact future divestment activity,
investor confidence, and overall public and stakeholder support.
• Privatisation should be :
 Well planned and executed
 Backed by sound rationales
 Underpinned by strong institutional and regulatory arrangements
 Subject to good governance and integrity
• This Guide provides practical advice to newcomers on four stages of the
process from inception to post-privatisation and can support policy makers
in their decision-making process in the years to come.
A Policy Maker’s Guide to Privatisation

3. The Guide 4 stages:
– Stage 1: Guiding principles to inform policy
makers
– Stage 2: Measures to be undertaken prior to
divestment
– Stage 3: Organisation of the privatisation process
– Stage 4: Steps to take post-privatisation
Key findings for the privatisation
process

4. • Before embarking on a privatisation process, policy
makers should be clear on the guiding principles and
rationales underlying the transaction and should
communicate these to the public
• Privatisations are complex, they require transparent
and credible institutional frameworks that
appropriately involve stakeholders and decisions
should be backed by high-level political support
Stage 1: Guiding principles to
inform policy makers

5. • Appropriate competition and market regulation
should be in place prior to the privatisation.
• Industry or company restructuring might be
necessary to ensure readiness for the sale
• The sales method will be dependent on the asset,
market conditions, relative maturity of the
economy and the objectives determined at the
start of the process.
Stage 2: Measures to be undertaken
prior to divestment

6. • Getting appropriate advice before and during the sales process (separately for the SOE and
government seller) will be necessary
– Advisors should be selected according to quality, competence and experience
– To avoid conflicts of interest, the separation of advisory and sales mandates is critical
• Appropriate determination of company valuation is an important measure of success and is
commonly based on the principle of fair market value
• To avoid irregular practices, buyers should be selected based on a set of pre-qualification
criteria.
– Bids should be transparently handled, while respecting confidentiality
– Selected bids should reflect fair market value to avoid violations of state aid rules
Stage 3: Organisation of the
privatisation process

7. • The post-privatisation phase includes wrapping up
the sale, handling proceeds and establishing good
governance practices if the state remains a
shareholder.
• Assurances to ensure adequate protection of
shareholders is key
• Systematic ex-post evaluation and audit are critical
to independently evaluate the sale and to ensure the
integrity of the process
Stage 4: Steps to take post-
privatisation

8. • The transfer of assets from public ownership to private ownership
can create incentives for corrupt actors to abuse the privatisation
process.
• The Guide identifies a number of corruption risks that can arise in
each stage of the privatisation process.
• It provides key questions for practitioners seeking to ensure a clean
privatisation process as well as for others wishing to hold them to
account.
Fighting corruption in SOEs

9. The report draws on the OECD
Guidelines on Corporate
Governance of State-Owned
Enterprises which provide an
internationally agreed benchmark to
help governments assess and
improve the way they exercise their
ownership functions in state-owned
enterprises.
Using international good practice as
reference

10. Find more information about OECD work on the corporate governance of state-owned enterprises at:
http://www.oecd.org/daf/ca/soemarket.htm
The OECD Secretariat welcomes any questions or comments. Please address them to:
Ms. Sara Sultan Balbuena
Policy Analyst
Corporate Governance and Corporate Finance Division
Directorate for Financial and Enterprise Affairs, OECD
Sara.Sultan@oecd.org
A Policy Maker’s Guide to Privatisation