17.03.2026
Before proceeding to the analysis of the events currently unfolding around state-owned distribution system operators, I will make a brief but important clarification regarding my status. Until December last year, I was an independent member of the Supervisory Board of JSC “Ukrainian Distribution Networks” (UDN). My dismissal, as well as that of the entire board, took place as part of a “package” political decision, without any individual grievances. Considering such actions illegal and damaging to my professional reputation, I am contesting this decision in court. This is a normal, European approach to protecting one’s rights. However, it is precisely this experience of working within the system that allows me today to professionally evaluate what the new management of JSC “UDN” is doing with state-controlled enterprises.
The creation of a single management company for state-owned DSOs was once positioned as a step toward European standards. However, the way these standards have been implemented in practice lately raises many questions. It all started in February when JSC “UDN” announced extraordinary shareholders’ meetings for the 27th of that month at five of its enterprises simultaneously: Khmelnytsk-, Kharkiv-, Ternopil-, Mykolaiv-, and Zaporizhzhiaoblenergo. The sole purpose of the meetings was to terminate the powers of the current supervisory boards and elect new ones.
On the eve of these events, the relevant voting ballots became available. It turned out that the majority shareholder proposed exclusively full-time employees of UDN itself for the new supervisory boards. Not a single candidate for the position of independent director was nominated. In the public sphere, UDN representatives voiced a very specific legal position: they claimed that the corporate rights of all oblenergos are their “private property,” and therefore, the requirements for the mandatory presence of independent members on supervisory boards allegedly do not apply to them.
It was this intention to deliberately ignore the institute of independent directors that forced Energy Club to send an official letter to First Vice Prime Minister Denys Shmyhal on February 26, calling for a halt to the rollback of corporate reform.
The meetings were scheduled for February 27. It is now mid-March, and we are witnessing absolute informational silence. The market, experts, and minority shareholders do not know if these meetings took place at all. There are no minutes or voting results on official resources, although, according to NSSMC rules, such documents must be published within five, or at most ten, days. The information vacuum surrounding basic management decisions is not at all similar to the behavior of companies that declare a course toward OECD rules.
While the results for the five oblenergos remain unknown, JSC “UDN” is launching a similar process in a sixth company — JSC “Cherkasyoblenergo,” where the meeting is scheduled for March 20. And again, we see the same ballots where only advisors and legal counsels of UDN are nominated. However, if we refer to Articles 72 and 76 of the Law of Ukraine “On Joint Stock Companies,” it clearly states: in companies where more than 50% is directly or indirectly owned by the state, the creation of audit, remuneration, and nomination committees is mandatory. These committees must be headed by independent directors, and they must also constitute the majority in them. Without fulfillment of this norm, the legitimate work of the supervisory board is simply impossible, regardless of how anyone interprets the concept of private property.
In addition to the purely legal aspect, there is also the logic of corporate governance itself. A supervisory board is created to control the actions of management. If the oblenergos are managed by the leadership of JSC “UDN,” and the supervisory boards include direct subordinates of that same leadership, a situation of self-control arises. This completely contradicts the basic essence of independent oversight.
Another thing that causes surprise is the scaling of old mistakes. Until recently, the expert community harshly criticized the practice where the same officials were members of the supervisory boards of several state-owned DSOs at the same time, pointing to a conflict of interest. Today, this model is returning. The same employees of JSC “UDN” are being nominated to five or six companies simultaneously. For example, UDN advisor Mykhailo Horyn and legal counsel Mariia Dovha are listed as candidates for Khmelnytsk-, Kharkiv-, Ternopil-, Zaporizhzhia-, and Cherkasyoblenergo. Among the candidates is also Iryna Kholodnova, whose name has already been mentioned in the public space precisely because of the practice of simultaneously serving on several supervisory boards of previous convocations.
And here we come to the question of the operational and financial efficiency of such an approach. According to open data, the average remuneration for a member of the supervisory board of a state-owned DSO is about 170,000 hryvnias per month. If a full-time UDN employee becomes a member of six supervisory boards at once, the total amount of their monthly remuneration reaches about one million hryvnias. A purely pragmatic question arises: is one person physically and qualitatively capable of immersing themselves in the complex technical, legal, and financial processes of six different infrastructure giants while working full-time at JSC “UDN” itself? The answer is obvious.
If full-fledged supervision is physically impossible under such conditions, we are dealing with the creation of purely nominal bodies. High market remunerations in supervisory boards were introduced to attract the best independent experts to the public sector, who bear fiduciary responsibility for their decisions. Turning this mechanism into a tool for financial stimulation of loyal staff members for formal presence means distorting the very idea of European corporate governance.
Corporate reform should build institutions, not convenient schemes for manual management. To attract investment in the reconstruction of the energy sector, we must demonstrate impeccable compliance with the rules of the game. It remains to be hoped that the relevant ministry will pay attention to these processes and return the formation of management bodies in oblenergos to a transparent and legally defined course.
