Ministers and companies in the state sector
General principles
3.44 The relationship between Ministers and companies in the state sector differs from the relationship between Ministers and agencies in the state services. Although the nature of the relationship with a particular company will vary, some general principles are common to all.
- Focus on policy not operations: As in all areas of their portfolio responsibilities, Ministers should focus on government policy rather than day-to-day operations;
- No product endorsement: Ministers should not endorse any product or service offered by a company in the state sector (see paragraphs 2.87 - 2.90);
- Avoidance of conflict between public duty and personal interests: As in all areas of their portfolio responsibilities, Ministers should take care to ensure that no conflict exists or appears to exist between their public duty and their personal interests (see paragraphs 2.56 - 2.70);
- Careful use of information: Information relating to companies that are listed on the stock exchange must be treated with particular care to avoid breaches of the insider trading regime (see paragraphs 8.10 - 8.12).
State-owned enterprises
3.45 State-owned enterprises are owned by the government, through two shareholding Ministers - the Minister of Finance and one other, usually the Minister for State Owned Enterprises. Most state-owned enterprises are registered as companies and are bound by the provisions of the Companies Act 1993. All state-owned enterprises are required by the Act to operate as commercial businesses.
3.46 Every state-owned enterprise has a board of directors, appointed by shareholding Ministers, that takes full responsibility for running the business. The board of directors is accountable to the shareholding Ministers for the performance of the state-owned enterprise. The shareholding Ministers are responsible to the House of Representatives for the functions given to them by the Act or the rules of the state-owned enterprise.
3.47 The role of the shareholding Ministers is prescribed in the State-Owned Enterprises Act 1986. Their functions include:
- appointing directors;
- setting dividend levels;
- monitoring performance;
- agreeing to, and presenting to the House, the state-owned enterprise's statement of corporate intent and presenting the annual report.
3.48 Most state-owned enterprises are subject to ministerial direction in relation to the content of the company's statement of corporate intent and the level of dividend payable, in accordance with section 13 of the State-Owned Enterprises Act 1986.
3.49 The Crown Company Monitoring Advisory Unit provides the government with advice that enables the shareholding Ministers to hold boards of state-owned enterprises and other Crown companies accountable for their performance.
