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Owner's Expectations Manual

What's New?

Summary of Significant Updates to the Owner's Expectations Manual

Summary of Significant Updates to the Owner's Expectations Manual
Reference Updates Year of update
Chapter 4
The Monitoring Function
The chapter has been updated to reflect the significant changes that have occurred since 2007, especially in relation to COMU's role and its engagement with the entities it monitors. 2012
Section 5.2
Expectations letter
This section states that the expectations letters sent by the shareholding Ministers to the board are publicly released on COMU's website, subject to commercially sensitive information being withheld. 2012
Section 5.6.1
Quarterly reports

Bullet point 2, addition of the following sentence to Quarterly report section: “Commentary on the progress of any ongoing projects which meet the threshold for ministerial consultation. This should include a general summary of progress including significant changes to either budget or planned date of completion.”

Rationale for addition:

  • Ministers/COMU are kept up to date with progress of large investments (time/cost/quality).
  • Ministers/COMU have visibility of “abandoned” projects, which were previously hidden (eg, an SOE writing off a large capital investment).

Ongoing awareness of issues with large value projects rather than during a post-investment review 12 to 24 months after completion.

Section 5.6.4
Table of key reporting dates

The table has been updated to include:

  • post-investment review expectations that Ministers have of SOEs and TVNZ
  • requirement for loading financials into the Crown's financial reporting system, and
  • companies' ability to partially release financial information from half-yearly and annual reports before it is tabled in the House, whilst following the “no surprises” policy.
Section 5.7.1
“No surprises” policy

While the SOE continuous disclosure rules refer to the “rules of a recognised stock exchange”, the OEM itself did not currently refer to the NZSX/NZDX Listing Rules.

The revised sub-clause states that “Shareholding Ministers' expectations in relation to the ‘no surprises' policy are not intended to detract in any way from directors' statutory obligations, or the obligations of the SOE under the NZX Limited NZSX/NZDX Listing Rules.”

Section 5.7.3
Post-investment review

The previous draft of the OEM stated that “subject to commercial sensitivities, the information provided by SOEs [to COMU] under the post-investment review can be publicly disclosed under the OIA”.

Based on legal advice, the revised clause now states that “[t]he information provided by SOEs under the post-investment review may need to be publicly disclosed under the OIA, subject to commercial sensitivities and any other relevant matters under the OIA”.

A new section has been included to capture ministerial expectation of all SOEs and TVNZ to review and report on significant investments, post-commencement.

Section 5.7.4
Business case review
A new section on business case reviews has been added to the manual. 2012
Section 5.7.5
The continuous disclosure regime has been extended to all SOEs and TVNZ along with changes in the disclosure threshold. 2012
Section 7.2
Performance against targets
The standardised financial performance measures for SOEs, developed by COMU in 2010, have now been included in the manual. 2012
Section 7.6.2
Dividend policy

This section has been refreshed to reflect the shareholding Ministers' expectations of SOEs' dividend policy that:

  • translates to payouts that are commensurate with their listed peers
  • gives appropriate balance between dividend and re-investment, and
  • shows a degree of consistency and improvement over the years.
Section 7.7.2
Ownership review clauses
Under this section, entities are encouraged to consult with Ministers and officials if they are considering changes to the ownership control clauses, bearing in mind the Crown's general position on ownership review clauses. 2012
Section 8.1
Consultation, expectations and thresholds
This section has been updated to reflect Ministers' expectations of boards on when they expect to be informed and consulted on significant initiatives and transactions. 2012
Section 8.2
Process for consultation
The shareholding Ministers' principles for assessing investment proposals have been updated to capture the size of the proposal and the proposal's fit within the wider SOE portfolio and the Crown's balance sheet. 2012
Section 8.3
This section has been updated to take into account Ministers' expectations that SOEs will need to demonstrate that any diversification will produce superior returns to the Crown. 2012
Section 8.6
Joint ventures
This section has been updated to reflect Ministers' support of SOEs entering into joint venture arrangements. 2012
Chapter 9

The chapter has been substantially updated, and the most significant changes are as follows:

  • Sections 9.1.3, 9.1.4 and 9.1.5 have had a number of minor changes made to better describe the differing expectations between director, deputy chair and chair. A new section 9.1.7 has been added to comment on management's role into governance positions (eg, subsidiaries).
  • The previously separate Directors' fees and reimbursement guidelines has had a minor refresh and been included in the manual as an annex. The sections of the guidelines on Directors' and officers' liability insurance (9.2.2), Consultancy services provided by board members (9.3.5) and Executive directors (9.3.6) have now been included in the manual.
  • Section 9.1.4 has been amended to strengthen the role of the chair in the board appointment process.
  • Section 9.4.2 now stresses the importance of ongoing development of company knowledge.
  • Section 9.4.3 has been strengthened with regard to the need to act if there is an issue with director or chair performance.
  • A new specimen code of conduct and code of ethics have been added as annexes.
  • The previous separate default director and chair evaluation templates have now been included in the manual.
Chapter 10
Reporting and Other Expectations for Non-SOEs
  • A chapter on ministerial expectations of Crown financial institutions and other Crown companies that COMU monitors has been added to the manual.
  • Dispute Resolutions Services Limited, a recently newly created entity, has been added to this chapter.
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