Pezeshkian Seeks to End Government Business Ownership; Saipa Under Privatization Scrutiny

With the announcement of the list of shares eligible for divestment and Pezeshkian's emphasis on resolving the status of state-owned companies, the privatization of Saipa has been raised again, although the final divestment of this automaker has not yet been announced. Which companies are on the divestment list? According to Akharin Khodro, on 18 Mehr 1405, Seyed Ali Madanizadeh, Minister of Economic Affairs and Finance, announced the list of shares eligible for divestment […] Pezeshkian seeks to end government business ownership; Saipa under privatization scrutiny

With the announcement of the list of shares that can be transferred and the doctors' emphasis on assigning duties to state-owned companies, the privatization of Saipa has been raised again; However, the final transfer of this car manufacturer has not been announced yet.

According to the report of last car, on 18 Mehr 1405, Seyyed Ali Madanizadeh, Minister of Economic Affairs and Finance, announced the list of transferable shares subject to Part 2 Clause "B" of Article 5 of the Law of the Seventh Plan of Progress. This list includes shares of main companies that were in the portfolio of subsidiary companies until June 30, 1405. Names of companies such as Iran Khodro, Saipa, Social Security Investment (Shasta), Bank Parsian, Bank Ekhtaz Novin, Omid Investment Management Group, Shipping of the Islamic Republic of Iran, Persian Gulf Petrochemical Industries, National Copper Industries of Iran and Khuzestan Steel can be seen in this list.

Of course, this notification does not mean the sale of all Saipa shares or the finalization of its privatization. The main issue is that the shares of the main companies are in the hands of the subsidiary companies that are designated for transfer within the framework of the law. Determining the amount of shares included in the transfer of Saipa also requires checking the details of the attached table.

On Mehr 20, 1405, President Masoud Mezikian, in a speech about the state of state-owned companies, emphasized the necessity of assigning tasks to these groups. He announced that investigations were carried out on how to hand over companies under the authority of the government. Medikian declared the value of assets and resources at the disposal of state and private companies to be around 6 to 7 thousand hamats and criticized the management problems of these companies. He also pointed to the obstacles to changing managers due to people's affiliations, and emphasized the necessity of appointing managers based on competence, expertise and ability.

Running large companies, especially unprofitable ones, requires significant financial resources. In addition to managing these collections, the government must also provide for its public expenses and economic and social obligations. When a company needs continuous support to continue operating and cannot obtain the financial resources it needs from economic activity, state ownership may put more pressure on public resources. Privatization can transfer part of the responsibility of financing, administration and development of these companies to the private sector. However, ownership change alone does not improve a firm's performance. The qualification of the buyer, the transparency of the sales process, the level of competition and the new ownership structure are factors affecting the outcome of the assignment.

One of the issues raised in state entrepreneurship is the simultaneous role of the government as owner and supervisor. On the one hand, the government has direct interests in the management decisions of the companies under its ownership, and on the other hand, it must monitor their performance and compliance with regulations. Leaving the corporation can provide the ground for the government to focus more on regulation, creating competition and protecting the rights of consumers. The list announced by the Ministry of Economy is not limited to the automobile industry and includes companies in the fields of banking and finance, petrochemicals, basic metals and shipping. Therefore, the transfer of Saipa shares is part of a wider policy of determining the assignment of assets and state-owned and affiliated companies.

According to paragraph "b" of Article 5 of the Law of the Seventh Development Plan, the Ministry of Economic Affairs and Finance, in cooperation with other executive bodies, is obliged to adjust the management powers of the government and public non-governmental institutions and organizations in companies to the amount of their shares. One of the goals of this ruling is to prevent the formation of non-transparent structures through the acquisition of shares of main companies by subsidiaries and affiliates. The Ministry of Economy must identify the beneficiaries of the main companies, determine the shares that can be transferred and proceed with the transfer process in compliance with the general policies of Article 44 of the Constitution and related laws.

The Seventh Plan Law also provides mechanisms for dealings with related parties and strengthening the position of small shareholders. The Ministry of Economy is required to provide the basis for small shareholders' proposals for the plan in the board of directors and company assemblies and to increase the transparency of transactions with related parties. The disclosure of details of the transaction, the price, the process of determining the price, the reasons for not carrying out the transaction with unrelated parties, and the expert report on asset pricing are among the items of interest in this ruling.

Another part of the law limits the management authority of the government in devolved companies. According to this ruling, it is forbidden to issue a ruling by government officials to be a member of the board of directors of these companies, more than the percentage of government ownership. This ruling emphasizes the relationship between the amount of shares and management authority and prevents the government from maintaining the management control of the transferred company without proportion to its share.

For some cases of acquisition of shares of public companies by subsidiaries and affiliates, the legislator has also set a performance guarantee. According to the note of this paragraph, in the first year of the execution of the decree, 25% of the profit belonging to the subsidiary or affiliated companies will be received as tax. This amount will reach 50% from the second year onwards, and from the third year, the shareholders will not have the right to vote.

Also, punishments such as two years of dismissal from public and government services, ban on membership in the board of directors and executive management of commercial companies, and the return of double the salaries and benefits received during the management period have been foreseen for the offending managers. In general, in addition to the transfer of shares, the law of the 7th plan seeks to improve the relationship between ownership and management authority and increase transparency. However, determining the degree of compliance of these rulings with Saipa's shareholding structure requires an examination of the composition of shareholders and the company's official documents.

The importance of the privatization of Saipa comes back to the position of this company in the automobile industry and the impact of its performance on consumers. The amount of production, product quality, car price and delivery time of registered cars are among the indicators that make the performance of this car manufacturer important for people. According to the statistics presented about the outstanding obligations of automobile manufacturers at the end of August 1405, about 87% of the total obligations were assigned to Saipa. This share shows the necessity of examining the financial, production and management situation of the company; However, the figure and the basis of its calculation should be reconciled with the official statistics of outstanding obligations before publication.

The transfer of Saipa is not limited to the sale of a block of shares. It should be determined which group will take over the control of the company after the handover, where will the necessary resources to supply the parts and increase the production come from, and how will the outstanding obligations be determined. The change of ownership can help to improve the performance of Saipa when it is accompanied by a clear plan for financing, increasing productivity, managing debts and determining the task of the subsidiary companies. Accountability to customers should also be part of the new management plan. Otherwise, the transfer of ownership from the government to the private sector will not necessarily solve the company's accumulated problems.

The notification of the list of transferable shares, the statements of doctors and the assignments of the 7th plan law, the withdrawal of the government from the corporation and the reform of the management structure of the companies have become an important issue again. However, these developments do not mean the finalization of Saipa's privatization or setting a specific time for its handover. To evaluate the result of this policy, it must be determined how much stock will be transferred, what powers the new owner will have, and what is the plan to correct the production situation and the company's obligations. The measure of the success of the privatization of Saipa is not only the change of ownership; Rather, it is improving performance, providing stable financing, reducing production problems, and assigning outstanding obligations. The main question is whether the implementation of the 7th plan law will lead to real reform of the ownership and management structure or whether the transfer will remain limited to the transfer of shares.

The last car website was designed and coded by Tosi Group, and all rights to its format are reserved by him.