Andrii Dukhnytskyi: "Strong corporate governance transforms a company into an investment asset"

14.05.2026

Energy Club special project dedicated to corporate governance in Ukraine’s energy sector — a topic that today defines not only the internal efficiency of companies but also the level of investor confidence and access to financing.

The focus of the special project is a new governance model in energy, the balance between the state, supervisory boards, and management, as well as the transition from formal procedures to a real tool for management and investment attractiveness.

Andrii Dukhnytskyi, lawyer, head of corporate practice at Crowe Mikhailenko, and member of the IT M&A and Corporate Law Committee, discussed the key elements of this system in an interview with the Energy Club media department. He explained how corporate governance works in practice, why it directly affects company value and resilience, the functions of supervisory boards, and common mistakes Ukrainian energy businesses still make when building governance systems.

– Mr. Dukhnytskyi, corporate governance in energy is often perceived as a formal legal construct. Why, in practice, does this issue directly affect a company’s value, resilience, and investor trust?

– Indeed, corporate governance is not just a formality on paper; it is a real system of checks and balances that directly affects the investment attractiveness of a business.

It is necessary to understand that corporate governance is a system of relations that defines the rules and procedures for decision-making regarding the activities of a business entity and the exercise of control, as well as the distribution of rights and obligations between the company’s bodies and its participants regarding management. If we talk about an LLC as the most common organizational and legal form, its bodies are the general meeting of participants — the highest body, the director/directorate — the executive body, and a supervisory board may also be created (usually it exercises control and regulates the activities of the company’s executive body).

In practice, the main methods of corporate governance for large energy companies (especially those with state participation) involve the functioning of a Supervisory Board, while for small and medium-sized businesses, a sole or collegial executive body with clearly defined restrictions in the charter is often sufficient.

Regarding the impact of corporate governance on company value, resilience, and investor trust, several positions should be highlighted:

1. Impact on value.
   A properly functioning corporate governance system correlates clearly with the market value of the company. It demonstrates that the company has clearly structured business processes for decision-making, an efficient and understandable management model, and indicates an absence of chaos in processes, which in turn minimizes economic losses from unprofessional decisions and makes the company more attractive to investors.
2. Impact on resilience.
   A professional and independent supervisory board, along with clearly defined limits on the director’s powers in local documents, protects the company from manual intervention by its owners, which can lead to both deterioration of financial indicators and market value, as well as the adoption and execution of risky decisions.
3. Impact on investor trust.
   For a foreign investor, the quality of corporate governance is the first and main indicator of reliability. A transparent system with independent oversight, effective risk management, and clear accountability significantly increases a company’s attractiveness. As a result, companies get better financing terms, higher asset valuations, and the ability to avoid destructive micromanagement. In large energy projects, this is especially important, as they involve long-term investments with high capital intensity.

Thus, effective corporate governance is the foundation that transforms a company from an unclear economic entity into an attractive investment asset. This not only increases value but also ensures resilience in difficult conditions, particularly during martial law in Ukraine.

– What typical mistakes do Ukrainian energy companies make when building a corporate governance system: in charters, powers of management bodies, decision-making procedures, and management control?

– One of the most common mistakes is the presence of gaps in constituent documents. For example, the charter may clearly stipulate broad powers for the supervisory board, but the board itself is not actually formed or functioning. In such a case, the company risks “freezing” its operational activities. In practice, I advise delegating the powers of the supervisory board to the general meeting if it is not formed, fixing this in the charter so the business can function without hindrance.

Other typical mistakes include:

• vague powers of governing bodies, lack of clear restrictions and thresholds for investment decisions;
• weak management control, i.e., conducting formal audits instead of real risk management and a lack of KPIs for employees tied to the company’s strategy.

Additionally, regarding decision-making procedures by participants and overall company management, the recommendation is as follows: concluding a corporate agreement is an essential stage of business structuring. In situations with equal share distribution (parity ownership), it acts as the main mechanism for resolving corporate conflicts, ensuring the company’s viability in the event of disagreements between participants.

– Where should the line be drawn between the owner, the supervisory board, and the executive body of the company so that management is effective but does not turn into manual intervention in operational activities?

– For effective company activity, it is necessary to clearly distinguish the powers of governing bodies in constituent documents and, if necessary, detail them in the company’s local documents.

Thus, participants (shareholders) define the strategy, approve annual reports and dividend policy, and appoint governing bodies (executive body, supervisory board). The supervisory board handles strategic planning, oversight of the executive body, controls risks, may approve the budget, and monitors the implementation of the company’s strategy. In turn, the executive body is responsible for the day-to-day management of the company, strategy execution, and operational activities.

– How important is the role of independent members of the supervisory board in energy companies, especially regarding state-owned companies or strategic infrastructure?

– In the context of European integration and the reform of state-owned enterprises, the role of independent members of supervisory boards is key. They ensure that decisions are made based on long-term economic expediency rather than political conditions, and they minimize the risk of manual management.

A clear example is the Supervisory Board of Naftogaz of Ukraine, updated in March 2026. Of the six members, four are independent international experts, including the chairperson. Such an approach significantly increases the trust of investors and donors in strategic companies.

– What should be the real functions of a supervisory board: strategic control, audit, risk management, appointment of management, control of investment decisions? Which of these are most often weak in Ukraine?

– The functions of the supervisory board are clearly separated from operational management, which remains with the executive body. Here is how these functions should work in practice:

1. Strategic control. The supervisory board should not just approve the strategy but also verify whether the actual actions of management align with it. This includes regular reviews of strategic KPIs, analysis of deviations, and adjustment of development directions.
2. Audit and internal control. The supervisory board ensures the creation of an independent internal audit function, approves its plan, and receives reports directly. It monitors the quality of financial reporting, compliance with legislation, and internal policies.
3. Risk management. This is one of the most important functions today. The supervisory board should approve the Risk Appetite, regularly review the Risk Register, and respond to key risks — military, cyber, regulatory, ESG, and operational.
4. Appointment, motivation, and dismissal of management. The supervisory board appoints and dismisses members of the executive body, approves the KPI system and the remuneration for the executive body (including bonuses and long-term incentives). The main goal should be to tie employee motivation to the company’s actual results, not just “plan fulfillment on paper.”
5. Control of investment decisions and significant transactions. The supervisory board sets thresholds and approves them. It also mandatory controls related-party transactions to avoid asset stripping or conflicts of interest.

Unfortunately, most of these functions in Ukrainian energy companies are implemented formally. Among the most critical problems:

1. risk management is the weakest link. It often exists only on paper, without real scenario analysis or impact on decisions;
2. control of investment decisions — supervisory boards rarely block or significantly adjust expensive investments, especially if they are “pushed” from above;
3. appointment and motivation of management — KPIs are often “soft,” unrelated to actual efficiency, and remuneration does not depend on results;
4. independence of internal audit — auditors often depend on the executive body rather than the supervisory board.

As a result, a supervisory board can turn into a “rubber stamp” for the owner’s decisions instead of being a real body of strategic control and protection of the company’s interests.

– In your practice, you have supported projects in the field of renewable energy and participated in project financing. To what extent does the quality of corporate governance affect the willingness of banks, international financial institutions, or private investors to finance energy projects?

– Today, the quality of corporate governance is no longer a formality but the main indicator of project reliability.

The presence of an independent supervisory board, transparent audit, and compliance allows for obtaining financing at significantly lower rates and with better terms. International institutions (e.g., EBRD) and banks list corporate governance as one of the most critical factors.

In my own experience, I have seen projects where a bank halted funds due to suspicion regarding an unverified ownership structure and management bodies. Without a real management system, even promising energy projects may fail bank compliance.

– Many Ukrainian energy businesses have non-resident elements in their ownership or financing structure. What risks and advantages does such a structure provide in terms of corporate governance, transparency, and investor protection?

– The presence of a non-resident in a company’s corporate structure is considered a stable benchmark of resilience. Among the main advantages are:

• transfer of high management standards and expertise from international partners;
• significant increase in the ability to finance the project with foreign investors and access to long-term capital;
• better investor protection through international arbitration and more transparent reporting;
• assistance in integrating into European market mechanisms (green tariffs, guarantees of origin).

The main risks include:

• more complex compliance (BEPS, currency regulation, etc.);
• dependence on stable state regulation;
• high requirements for substance (economic presence) of the company.

Such a structure only works under conditions of strong corporate governance. Otherwise, the advantages quickly turn into reputational and regulatory risks.

– How is corporate governance linked to the protection of company assets during the war: property preservation, legal protection, control over transactions, prevention of conflicts of interest and abuse?

– During war, quality corporate governance becomes a real shield. It prevents losses, inefficiency, or abuse from being written off as force majeure through sole decisions.

A transparent system for transaction control, internal audit, and documenting the state of assets (acts, expert opinions, SES data) creates a reliable evidence base for legal protection, international arbitrations, and the International Register of Damage, which forms the basis for future reparations.

– What needs to change in the interaction between business and state bodies so that energy companies can work in a more predictable environment and corporate governance is not replaced by administrative influence?

– In my opinion, the state must transition from the role of a rigid controller to the role of a rule-maker. This means moving away from manual management in favor of stable and predictable regulation.

Key changes should include:

• real independence of the regulator;
• digitalization of interaction and transparent data exchange;
• clear separation of competence: the state sets the strategy, while companies manage operational activity through professional supervisory boards.

Only then will corporate governance work effectively.

– What three practical steps should a Ukrainian energy company take right now to ensure its corporate governance system meets the expectations of investors, creditors, and international partners?

– If we consider this as a “roadmap” for legal transformation, I would highlight the following steps:

1. conduct a comprehensive audit of the charter, internal regulations, and powers of governing bodies. Discrepancies must be eliminated, and functions of governing bodies clearly separated;
2. form or strengthen an independent supervisory board with working committees (audit, risks, appointments) in accordance with OECD principles;
3. implement modern compliance and risk management, ensure substance (especially in the presence of non-residents), and a transparent management motivation system.

These three steps should provide a rapid and noticeable effect for attracting investors.

Corporate governance in energy works only when it ceases to be a formal construct and transforms into a real mechanism for the distribution of powers, risk control, and responsibility. Where the roles of the owner, supervisory board, and management are clearly separated, predictability of decisions, business resilience, and investor trust appear. It is this internal governance discipline that today determines whether a company is capable of being part of major energy and financial decisions, rather than remaining in a zone of constant regulatory and investment risks.