Railway Reform: Toolkit for Improving Rail Sector Performance - ppiaf

Railway Reform: Toolkit for Improving Rail Sector Performance
7. Administering the Railways
• Legal and regulatory frameworks should be flexible enough to adjust stateowned
railways’ capital structure if necessary to achieve company objectives.
• State-owned railways should face competition in accessing finance; relationships
with state-owned banks, state-owned financial institutions, and other
state-owned companies should be transparent and commercially based.
7.3.3 Contractual relationships between government
and railways
Relations among state entities (Government owner, Ministry of Transport, Ministry
of Finance, etc.) and the railway corporation must be based on public written
documents to ensure long-term business sustainability. A railway law should establish
relationships and long-term agreements to ensure that the railway is immune
to political changes that would undermine its inherent need for long-term
planning. Typically, other legal agreements between state and railway enterprises
relate to railway infrastructure administration and railway enterprise social responsibilities
—usually multi-annual contracts for infrastructure maintenance,
and public service contracts to establish terms and conditions for managing these
obligations. All written agreements should follow standard business practices.
Box 7.1 Corporate Governance Principles At DB AG
(1/1/2011)
On July 1, 2009, the Federal Government of Germany adopted the Federal Public
Corporate Governance Codex regarding principles of good corporate management
and investment management comprising internationally and nationally recognized
standards of good and responsible management. The management of DB AG have
decided to comply with the German Corporate Governance Code on a voluntary basis
and have adopted separate Corporate Governance principles for DB AG. Corporate
Governance at DB AG stands for responsible corporate management that supervises
and organizes its structures and processes to achieve a long-term increase of value.
Dual-level Management System
As a German Aktiengesellschaft (joint stock corporation), DB AG is subject to a twotier
management and monitoring structure. The two bodies are strictly segregated in
terms of their membership and also in terms of their powers. The Management
Board manages the company under its own responsibility. The Supervisory Board
role is to monitor the activity of Management Board and is also responsible for appointing
and dismissing persons to and from the Management Board. In order to be
able to guarantee optimum corporate management, it is considered that it is extremely
important that the Management Board and Supervisory Board maintain a
continuous dialog and cooperate efficiently and in a climate of mutual trust for the
benefit of the company.
Supervisory Board
The Supervisory Board advises and monitors the Management Board with regard
to its management of the company. The Supervisory Board comprises 20 members,
namely ten shareholders' representatives and ten employees' representatives.
The Chairman of the Supervisory Board is a different person than the CEO
of DB AG. The Supervisory Board is informed at least every quarter by the Management
Board of the development of business, and in particular the development
of revenues and the position of the company. The Managing Board also reports
regularly to the Supervisory Board with regard to the measures taken in DB
Group for complying with laws and internal measures (Compliance). The Supervisory
Board is also responsible for auditing and approving the annual financial
statements and the consolidated financial statements of DB AG.
The World Bank Page 111