State-owned companies are often assigned public-service, strategic or economic objectives alongside commercial goals. Their accountability can run through a state ownership body, government and representative institutions. Privatized companies move into private ownership, where shareholders exercise governance rights and boards oversee management and answer to the company and its shareholders under applicable law. Neither structure guarantees better performance: the results depend on the mandate, oversight, regulation and market conditions.
What is the difference between state-owned and privatized companies?
A state-owned enterprise (SOE) is owned, wholly or partly, by the state. A privatized company is one whose ownership has shifted from the public sector to private owners. A private company may also have been privately owned from the outset, so “private” and “privatized” are not interchangeable descriptions of its history.
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Ownership can be mixed. A government may sell some shares but retain a controlling stake or other decisive influence. To understand who governs a particular company, look at the actual ownership and control rights—not just whether it has been described as privatized.
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Why might a government own a company?
Common rationales for state ownership include providing public goods and services, operating natural monopolies, and protecting broader economic or strategic interests. The OECD recommends that governments assess and disclose the objectives that justify owning an enterprise.
Those objectives need not replace commercial activity. An SOE may sell goods or services in a market while also carrying a public-service mandate. A clear mandate helps distinguish the company’s commercial aims from obligations set by the state.
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Who sets goals and directs the company?
State-owned companies
The state, acting through its ownership entity, defines or communicates the enterprise’s mandate. The company’s board and management are then expected to operate within that mandate. State ownership does not necessarily mean politicians run daily operations: OECD guidance recommends separating the government’s ownership role from its policy-making and regulatory functions. That separation can reduce conflicts of interest and help avoid both undue political interference and overly passive oversight.
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Privatized companies
In private ownership, shareholders use governance rights—including voting and board elections—to influence the company. The board guides strategy and monitors management. The G20/OECD Principles of Corporate Governance 2023 describe the board as accountable to the company and its shareholders, while also expecting it to consider stakeholder interests. Laws and regulation continue to shape a private company’s duties; private ownership does not remove public rules.
How do accountability channels differ?
An SOE can have a longer chain of accountability: management reports to the board, the board relates to a state ownership entity, and that entity may answer to ministries, government, a legislature and the public. The OECD says the ownership entity’s accountability to representative bodies should be clear and should not weaken the enterprise’s own accountability.
In a private company, shareholders can exercise rights to receive information, participate and vote, elect the board, and share in profits, as described in the G20/OECD Principles. The board oversees management and is accountable to the company and shareholders. The exact rights and duties depend on the country, legal form, listing status and sector.
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Both models rely on governance and oversight, but the people or institutions positioned to demand answers differ. In an SOE, the public ownership chain makes clarity about roles especially important; in a private company, shareholder rights and board oversight are central, alongside applicable law and regulation.
How should public-service obligations be handled?
When an SOE is expected to provide a service for public-policy reasons, the obligation should be identified rather than left implicit. OECD guidance calls for disclosure of enterprise objectives and how well they are being fulfilled, including the mandate expected by the state ownership entity. Where relevant, reporting should explain the cost of public-service obligations and how they are funded.
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Making those costs visible helps readers distinguish the expense of a policy mandate from the company’s other operations. Without that distinction, it can be difficult to assess performance or determine whether public funding and commercial activity are being accounted for transparently.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What do recent OECD figures show about SOE oversight?
The OECD’s Ownership and Governance of State-Owned Enterprises 2024 describes practices across its jurisdiction sample. These figures show how ownership and reporting are organized; they are not evidence that either public or private ownership produces better performance.
| Measure | OECD-reported figure |
|---|---|
| Global market capitalization in companies with more than 25% public-sector ownership | 12% in the report’s reference year; the report describes this as “that same year,” so the figure should not be assigned a separate calendar year without confirming its underlying reference period. |
| Jurisdictions with centralized or coordinated SOE ownership arrangements | 53% in 2024, up from 41% in 2021. |
| Jurisdictions with dispersed ownership arrangements | 27% in 2024. |
| Jurisdictions publishing annual reports on the SOE sector | 64% in 2024. |
| Jurisdictions publishing comprehensive aggregate portfolio insights | 37% in 2024. |
| Jurisdictions giving SOE boards full responsibility and autonomy to define enterprise strategy | 67% in 2024. |
The figures describe jurisdiction-level arrangements reported by the OECD. They do not compare profitability, efficiency, service quality or accountability outcomes between state-owned and privatized companies.
What to check when comparing two companies
- Ownership and control: Who owns the shares, and does the state retain a controlling stake or other decisive rights?
- Mandate: What objectives are formally assigned, and who sets them?
- Board role: Who appoints or elects directors, and how much authority does the board have over strategy?
- Accountability: Who receives reports and can require explanations—shareholders, an ownership entity, government or representative bodies?
- Public obligations: Are service mandates stated, and are their costs and funding disclosed?
- Rules and context: What laws, regulations, sector conditions and market structure apply?
These checks are more informative than assuming ownership alone determines a company’s goals or results. The OECD’s governance principles describe ways to make ownership and oversight clearer; they do not establish a universal causal case for privatization or state ownership.
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