Railway Reform: Toolkit for Improving Rail Sector Performance - ppiaf

Railway Reform: Toolkit for Improving Rail Sector Performance
10. Corporate Governance
10 Corporate Governance
OECD on Corporate
Governance 1
Corporate governance
provides the structure
through which the objectives
of the company
are set, and the means
of attaining those objectives
and monitoring
performance are
determined.
10.1 Introduction
Governance involves setting policy, supervising its implementation, and verifying
that the policy is administered properly. 113 Governance processes vary by type of
organization. For government agencies, governance is the process by which government
policies are implemented, monitored, and enforced. For entities organized
as state-owned enterprises or corporations, governance is how the interests
and policies of government shareholder are represented, implemented, monitored,
and enforced. For private railways, governance processes are how shareholder
interests are represented and protected. Governance is a means to ensure
that the organization is implementing shareholder-set policy, conducting business
lawfully, and performing according to expectations.
Most railways are now organized as state-owned or private corporate enterprises.
This chapter will describe how corporate enterprise governance processes work.
10.2 Railway Enterprise Structure and Authority
10.2.1 Company governance and management structures
Typical enterprise governance structures following international practices are
organized as shown in the figure below. Legislation and regulations in each jurisdiction
determine the legal roles and responsibilities of these organizations and
their designation. 114
The board of directors is the principal body responsible for corporate governance.
The board represents shareholder interests and has primary responsibility to en-
113 OECD Principles of Corporate Governance, (2004).
www.oecd.org/dataoecd/32/18/31557724.pdf
114 For instance at Deutsche Bahn, the Board of Directors is called the Supervisory Board.
The World Bank Page 156