20.05.2026
As part of the Energy Club special project “Corporate Governance in the Energy Sector: New Rules of Accountability, Trust, and Control,” we spoke with Nino Patsuriia, Doctor of Law, Professor at the Department of Economic Law and Economic Procedure of the Institute of Law at Taras Shevchenko National University of Kyiv, and Academician of the Ukrainian Academy of Technology.
The conversation focused on the legal nature of corporate governance, the line between the legitimate influence of the state as an owner and manual intervention, the accountability of supervisory boards, fiduciary duties, the impact of martial law on corporate procedures, and the necessary legislative changes for the state-owned energy sector.
According to Nino Patsuriia, authentic corporate governance differs from imitation not by the formal existence of supervisory boards or policies, but by the actual legal capacity of governance bodies, the protection of their powers, and a fair distribution of accountability. She emphasizes that the state, as an owner, must act through legislatively defined instruments rather than replacing supervisory boards with directive management. This is particularly vital in the energy sector, where state-owned enterprises simultaneously perform commercial, social, and security functions.
— Corporate governance in Ukraine is often perceived as a set of formal procedures: a supervisory board, committees, policies, and reporting. From a legal standpoint, what distinguishes an authentic corporate governance system from its imitation?
— Taking a functional approach to legal analysis, the primary criterion for distinguishing between “authenticity” and “imitation” is the actual legal capacity of corporate governance bodies and a fair distribution of accountability among them.
The issue of formalism in corporate governance, where the mere presence of a supervisory board or external policies is seen as a sufficient indicator of reform, is one of the key challenges for Ukrainian energy companies under the legal regime of martial law. A substantive analysis of the legal norms regulating the corporate governance system reveals that authenticity is distinguished from imitation not by the existence of bodies formed in accordance with regulations, but by the reality of their legal capacity and the legal protection of their powers.
Professional discourse demonstrates that in an authentic corporate governance system, members of the supervisory board are guided by fiduciary duties to the company (duty of care and duty of loyalty), as opposed to merely legitimizing the decisions of the relevant ministry (the owner). Proper regulation of the corporate governance system implies approaches where the supervisory board typically appoints and dismisses top management, approves KPIs, and oversees the internal audit system, among other responsibilities.
A key feature of an authentic system is the implementation of clear mechanisms for the civil liability of corporate governance body members for losses caused to the company by their actions or omissions. Consequently, there is a regulatory need to institutionalize D&O (Directors and Officers) liability insurance.
— In the energy sector, the state frequently acts simultaneously as owner, regulator, policymaker, and crisis manager. In such a model, how can the powers of the state as a shareholder, the ministry, the supervisory board, and company management be legally and properly segregated?
— The energy sector exhibits a high concentration of state ownership, which creates a risk of conflict of interest when the state simultaneously acts as an owner (seeking profit), a regulator (setting or capping prices and tariffs), and a policymaker (imposing social obligations, etc.).
The OECD Guidelines clearly indicate the necessity of separating these functions to ensure market neutrality. A legally correct model requires institutional separation.
In such an architecture, the supervisory board must serve as an “insulator” that protects the company from direct interference by the state authority responsible for policy formulation. Law No. 3587-IX reinforces this separation by restricting the owner’s right to interfere in matters that fall within the exclusive competence of the supervisory board.
— From the perspective of corporate law, where is the line drawn between the legitimate influence of the state as an owner and unlawful manual management?
— From the corporate law standpoint, the line between the legitimate influence of the state as an owner and improper manual management lies in the clear separation of policy functions from operational management, and its main legal criterion is adherence to the principle of autonomy of the supervisory board.
Legitimate state influence implies that the state acts exclusively within the procedures provided by OECD standards, the Law “On the Management of State-Owned Objects,” and Law No. 3587-IX. It exercises its ownership rights through legislatively defined instruments: state ownership policy, Expectation Letters, general meetings, and the composition of the Supervisory Board.
Unlawful manual management or interference in economic activity begins where the state exceeds the limits of legally established procedures and exerts direct, unjustified influence on operational activities, bypassing the supervisory board.
The company’s Charter and Article 5 of the Law “On the Management of State-Owned Objects,” which explicitly prohibits state authorities from interfering in economic activities, serve as legal safeguards. Any deviation from this principle constitutes a breach of the owner’s fiduciary duties and is classified as an abuse of power, unless it is publicly justified and recorded in the minutes.
— The supervisory board should be an independent body for control and strategic oversight. However, independence without accountability can create new risks. What should the legal liability of supervisory board members in state-owned energy companies look like?
— The independence of supervisory board members must be balanced by a system of accountability based on the concept of fiduciary duties (duty of care and duty of loyalty).
Supervisory board members must be held liable for damages caused to the company due to their unlawful decisions, inaction, or misconduct. This is implemented through the mechanism of a derivative suit, where the shareholder (the state) files a lawsuit on behalf of the company against an officer.
At the same time, legal liability should not arise from risky decisions that led to a negative outcome if the board member acted in good faith, based on sufficient information, and in the best interests of the company. The boundary of liability begins where a conflict of interest or a deliberate disregard for risks occurs.
For state-owned energy companies, introducing Directors and Officers (D&O) liability insurance is critical. This allows the attraction of top-tier professionals while ensuring a functional mechanism for loss compensation in the event of an error.
— How should the performance of a supervisory board be properly evaluated: through the company’s financial results, the quality of management oversight, risk management, the anti-corruption system, strategic decisions, or other criteria?
— Evaluating the effectiveness of a supervisory board in the energy sector is not limited to financial performance indicators (profit) alone, especially in times of war. Pursuant to Cabinet of Ministers Resolution No. 12 of January 10, 2025, “Certain Issues of Evaluating the Performance and Reporting on the Work of the Supervisory Board of a State-Owned Unitary Enterprise and a Business Entity with More Than 50 Percent of Shares (Interests) Owned by the State,” Ukraine has introduced a systemic approach to evaluating state enterprise supervisory boards.
Performance is no longer assessed solely by net profit, as this is often a derivative of the state’s tariff policy rather than the quality of governance. Therefore, the evaluation is comprehensive (Balanced Scorecard) and must be conducted based on specific criteria and areas: strategic alignment (the extent to which supervisory board decisions contribute to energy security and decarbonization in accordance with Cabinet of Ministers Decree No. 373-r of April 21, 2023, “On approval of the Energy Strategy of Ukraine for the period until 2050”); quality of control and compliance (the effectiveness of internal audit and anti-corruption systems, avoidance of sanction risks, ensuring transparency in procurement activities); risk management (evaluating the board’s ability to ensure infrastructure resilience and business continuity under crisis conditions); stakeholder engagement (the board’s capacity to balance the interests of the state as an owner and regulator, creditors, and consumers); external assessment (regular external evaluations of supervisory board performance by independent consultants to avoid subjectivity from state authorities); and ESG and sustainability (implementation of reporting on sustainable development, climate, and social risks).
— In Ukraine, conflicts often arise around the appointment and dismissal of supervisory board members. What legal safeguards are needed to make these processes less politicized, more predictable, and compliant with sound corporate governance principles?
— One of the biggest issues in Ukrainian corporate governance is the cyclical turnover of supervisory boards that accompanies changes in the Government. Law No. 3587-IX attempts to resolve this issue by introducing an exhaustive list of grounds for the early termination of a supervisory board member’s powers (Article 51).
To ensure predictability in the appointment and dismissal of supervisory board members, the following steps are required: legislation must strictly limit the possibility of early termination of board members’ powers to specific violations or objective circumstances, eliminating subjective, evaluative categories; and a mechanism should be implemented where the terms of office of supervisory board members expire at different times. This ensures institutional memory and protects against a complete restructuring of the board during political transitions in the country.
— Does current Ukrainian legislation sufficiently protect independent supervisory board members from political or administrative pressure? If not, what modifications would be required?
— From a formal legal standpoint, the situation has improved with the adoption of Law No. 3587-IX. However, de facto, independent members remain vulnerable to indirect pressure, which poses a practical challenge.
Necessary modifications to strengthen protection include: the regulatory institutionalization of D&O liability insurance; a well-defined role for the regulator (clarifying powers as an arbiter in disputes regarding compliance with corporate governance procedures); and legal guarantees for board members who report instances of interference or corruption by state authorities.
— During wartime, it is often argued that complex corporate procedures can delay decision-making. How can a balance be found between the speed required to manage critical infrastructure and compliance with proper corporate procedures?
— Under the legal regime of martial law, the energy sector has become a cornerstone of national security. For critical infrastructure management, balance is achieved primarily through the segregation and delegation of authority—for instance, granting management broader thresholds for operational decisions in extraordinary situations (such as emergency repairs), subject to a post-audit by the supervisory board. Expanding the digitalization of procedures and establishing emergency protocols—action algorithms pre-approved by the supervisory board for typical wartime risks—allows management to act instantaneously within regulated boundaries.
— Can martial law serve as a justification for narrowing corporate governance standards in state-owned energy companies? Where should the line be drawn between the exceptional powers of the state during war and the risk of rolling back reforms?
— Martial law cannot serve as an excuse for dismantling the system of checks and balances. Any restrictions on corporate governance standards must be strictly time-bound and tied to specific territories or facilities. The state may intervene as a regulator, but as an owner, it must act through the supervisory board, without replacing its functions with directive management.
— The fiduciary duties of officers are a core theme in corporate law. How should these duties apply to supervisory board members and management of state-owned energy companies? To whom do they owe their primary responsibility—the company, the state as a shareholder, society, or everyone simultaneously?
— Fiduciary duties are the foundation of corporate law. They encompass the duty of care and the duty of loyalty.
For supervisory board members in the energy sector, a multi-faceted choice arises regarding which interest takes priority: the company, the state as a shareholder, or society?
Legally, liability remains dedicated to the company. If a decision by the owner (the state) clearly harms the company, the supervisory board is obligated to highlight these risks and, as a last resort, refuse to execute the decision if it contradicts the law or the Charter.
— State-owned energy companies frequently perform social and security functions alongside commercial ones. How should this be legally reflected in company objectives, strategy, and management/supervisory board KPIs?
— State-owned energy companies do not just play a commercial role; such business entities form the backbone of national security. OECD principles emphasize that these non-commercial objectives must be legally institutionalized so that management is not penalized for low profitability resulting from the fulfillment of social tasks.
This should be incorporated into the contracts of the CEO and supervisory board members. The company must maintain separate accounting for costs associated with fulfilling public service obligations (PSOs) so that the state and investors can see the actual commercial efficiency of the business. Since 2025, large state-owned enterprises have been required to publish detailed reports on their social and environmental impact, making it a standard part of their legal reporting.
— Speaking of corporate governance reform in the energy sector over the coming years, which three legal changes do you consider most essential?
— Summing up the corporate governance reform in the energy sector of the economy, we can highlight the priority legal directions that can ensure its completion:
These changes will allow Ukraine’s energy sector to transition to a sustainable development model built on trust, accountability, and professionalism.
Consequently, an analysis of the official position of the regulator, expert opinions, and practical commentary from business representatives indicates a certain misalignment between the strategic objectives of the state and the current needs of the energy market within the corporate governance reform process.
On one hand, the updated regulatory framework is an important step toward European integration, aimed at harmonizing legislation, increasing transparency, and strengthening the country’s investment attractiveness. On the other hand, experts point out the complexity of directly adopting Western models without properly accounting for national specifics.
To achieve a balance of interests, further implementation of the reform should be made more pragmatic, focusing on the gradual adaptation of international standards to Ukrainian realities.
