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In this context, state-owned enterprises (SOE) refer to companies under the control of government through holding majority share.

Interestingly, when SOE do exist, they are usually placed under the ownership of the executive. For example, Taiwan's national power provider, Taiwan Power Company, is a subsidiary of Ministry of Economic Affair.

But by doing so, these SOE are subjected to policy changes of incumbent government. Wouldn't it make more sense to place the SOE ownership under the legislature, and let the parliament elect board members so that the board composition is more representative of the whole country?

I wonder if there are cases where countries intentionally place SOE under ownership of the legislature instead of the executive?

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    I wasn't able to find statutory sources, but I clearly remember following German (state) parliamentary debates where members of the board were either elected or selections made by the government approved by a vote. Mind you, the board members elected were mostly members of the government themself (state secretaries). - For other Germans reading this: I am talking about public companies held by the state, not Anstalten des öffentlichen Rechts, which I think would not qualify under the definition of this question.
    – ccprog
    Feb 3, 2023 at 14:34
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    I'm not strong enough on the details to make this an answer, but what happens when a government doesn't really have distinct exectutive & legislature branches, like in the UK - researchbriefings.files.parliament.uk/documents/SN06053/…
    – Tetsujin
    Feb 4, 2023 at 9:44

3 Answers 3

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By definition, it is the task of the executive branch to execute the law.

State-owned companies are typically considered to be a concrete implementation, i.e. they are one way the government can provide services they are required to provide by some law. They could also provide them in some other way (e.g. paying private companies, or providing them directly as an office/department of the government).

Therefore, placing the ownership (or at least the executive responsibility for it) within the department of the executive branch responsible for the topic seems natural.

The legislative branch is responsible for defining/changing legislation, not implementing it.


Having the ownership placed with the executive branch does not automatically imply that the government can easily replace personnel there - that is an entirely different topic. The employees of such companies may enjoy a range of additional protections compared to private companies, and special rules for how the board members and employees are to be chosen - defining these rules and protections is up to the legislative branch.

As an example, in Austria, most state-owned companies were run by a system called "Proporz" in the second half of the 20th century. Boards were typically composed of (roughly) equal numbers of members of the major political parties, and this also extended to executive positions, all the way down to department heads etc. This helped to establish stability, but it hampered progress in some areas, as party membership was more important than qualification (this has been officially abandoned decades ago, but such practices establish significant inertia).

There are also special constructs like Austrias public TV and radio provider ORF, which is not owned by anyone, but a "Stiftung öffentlichen Rechts (sui generis)"/"Foundation under public law", a legal entity in its own right, with a dedicated law ("Bundesgesetz über den Österreichischen Rundfunk (ORF-Gesetz)"/"Federal Law on Austrian Broadcasting") defining how it is to be managed.

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The Example of the Taiwan Power Company

Interestingly, when SOE do exist, they are usually placed under the ownership of the executive. For example, Taiwan's national power provider, Taiwan Power Company, is a subsidiary of Ministry of Economic Affair.

This assertion isn't quite right.

The executive doesn't "own" state-owned enterprises, even if it may control those enterprises. Likewise, describing an entity like the "Taiwan Power Company" as a "subsidiary of the Ministry of Economic Affairs", when really what it does is appoint the company's top officials and supervise them, is misleading.

The profits of the enterprise, if any, go to the state, not to a particular agency's budget for its own purely discretionary use. It can't sell the company without legislative approval either, and if it did sell the company, the proceeds of the sale wouldn't be limited to one branch of government, let alone to use by the particular agency that supervises the managers of the SOE.

The legislature has power to set policies regarding the company and to adopt budgets determining where the economic proceeds of the company go.

Also, in Taiwan, distinguishing different branches of the government is a bit complicated in this semi-Presidential system too, and partisan division between the executive branch and the unicameral legislature has been the exception rather than the rule there:

The government is divided into five branches (Yuan): the Executive Yuan (cabinet), the Legislative Yuan (Congress or Parliament), the Judicial Yuan, the Control Yuan (audit agency), and the Examination Yuan (civil service examination agency).

The head of state and commander-in-chief of the armed forces is the president, who is elected by popular vote for a maximum of 2 four-year terms on the same ticket as the vice-president. The president appoints the members of the Executive Yuan as their cabinet, including a premier, who is officially the President of the Executive Yuan; members are responsible for policy and administration. . . .

The premier is selected by the president without the need for approval from the legislature, but the legislature can pass laws without regard for the president, as neither he nor the Premier wields veto power. Thus, there is little incentive for the president and the legislature to negotiate on legislation if they are of opposing parties. After the election of the pan-Green's Chen Shui-bian as president in 2000, legislation repeatedly stalled because of deadlock with the Legislative Yuan, which was controlled by a pan-Blue majority. Historically, the ROC has been dominated by strongman single party politics. This legacy has resulted in executive powers currently being concentrated in the office of the president rather than the premier, even though the constitution does not explicitly state the extent of the president's executive power.

In General

Generally speaking, state owned enterprises as the name implies are owned by the state.

The executive and legislature are simply different parts of the management team of the entity that is the state. They aren't really entities in their own right. Moreover, in parliamentary systems, the executive and legislative branches are in any case, basically fused.

This said, there are some fairly trivial enterprises owned by the state that are managed by a government's legislative branch to the exclusion of the executive branch.

For example, in the United States, the Library of Congress and the Capitol building gift shop are enterprises run by Congress rather than being managed by the President or his appointees, for reasons that are mostly historical accidents or are just expedient.

The U.S. and many other countries also have "independent agencies" which are formally part of the executive branch, but are run by boards of directors or individual directors who are appointed by legislators and/or the executive branch and/or voters in an election, but do not report to them directly.

AMTRAK, the U.S. Postal Service, the Tennessee Valley Authority, the Corporation for Public Broadcasting, many state universities and colleges, and many special districts (e.g. water boards and cemetery boards) operate in this fashion.

While it is not an enterprise exactly, in most U.S. states, the state auditor is appointed by the legislature to the exclusion of the executive branch, because this official's job is to investigate the executive branch.

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It's a fascinating question. There are shades of gray in the concept of "government ownership" be it purely on the executive end of the spectrum or legislative end. Take US utilities as an example. They may not be formally government "owned", but for all intents and purposes, they are: Gov can suddenly saddle them with what were otherwise unrelated liabilities (eg. PG&E saddled with homeowners fire and casualty property damages to keep from raising homeowner insurance premiums, something that was completely off balance sheet prior to it happening). And, Utilities are not free to charge what they want. The government chooses the methods and means.

These entities may reside in varying degrees of "state ownership" from executive whim to full legislative oversight (where the utility rate, capex, maintenence provision, fuel choice etc etc) are all subject to well-written-in-advance (legislative) procedure.

Then, also as US example, there is the almost purely executive whim action and controversy surrounding Fannie Mae and Freddie Mac. There was not much legislative day to day interference of these companies, they had shareholders too, and then it became necessary (depending on which partisan view people have on this topic) to either, "raid" the surplus of these companies to help bail out the rest of the private financial sector, or "socialize" them to prevent the root cause of damage their financial operations were allegedly "responsible" for.

If this spectrum of executive versus legislative control is present even in what is considered the most capitalist country on the planet, it certainly can prevail in SOEs belonging to more socialist and communist countries too.

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  • Fannie Mae and Freddie Mac are not government/state owned enterprise but rather a government sponsored enterprise. "As a housing GSE, Freddie Mac is a "federally chartered, shareholder-owned, private company with a public mission to provide stability in and increase the liquidity of the residential mortgage market,"" investopedia.com/terms/g/….
    – Joe W
    Feb 4, 2023 at 1:59

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