This paper discusses the function of the management in state-owned companies. Firstly, it defines the term ‘state-owned company’ in a nutshell and the state-owned company in the Republic of Croatia notably. In addition, the paper depicts state-owned companies in terms of their main division and characteristics. The state-owned companies in the Republic of Croatia are mostly presented as profitable and unprofitable organisations that make up the majority of companies. Special attention was given to management, which still remains insufficiently explored when it comes to state-owned companies notwithstanding it is a crucial component in their functioning to ensure successful performance and accomplishment of its main functions as well as tasks regulated in most cases by law and regulations determined by the state as their owner. The functions of the management are described in terms of the main factors, and each of these – planning, organising, managing, recruiting and controlling– is aimed at bringing business operations to a higher level and complementing each other as all of these functions are interconnected. The paper also explains the role of a person in charge, namely, the manager who transfers information to the available human resources and is responsible for carrying out all of the functions in a state-owned company. The influence of the managerial functioning on a state-owned company is shown in the concluding section of the paper, how it is formed on the grounds of the levels of managerial functions performed by human potentials and how the management changes radically with the country’s entering into the European Union as well as the problems that occur within the state-owned companies when it comes to implementation of certain goals.