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Owner's Expectations Manual

2.3 Government ownership policy

  • One of the underlying principles of the SOE model as it was conceived in the 1980s was that government-owned trading entities would operate according to normal commercial disciplines. These would include capital market disciplines.
  • The Government's policy in relation to SOEs has the following goals:
    • to be clearer with SOE boards about shareholding Ministers' expectations of the companies
    • to provide shareholding Ministers with a greater understanding of, and therefore confidence in, the performance of SOEs, through enhanced benchmarking
    • to develop appropriate capital structures which impose financial disciplines on SOEs while ensuring they have sufficient capital to make operational investment decisions without recourse to the Crown, and
    • to ensure that requests for capital are considered in line with the business needs of the SOE, while recognising the Crown's preference that major investments are considered relative to other demands for capital across the Crown by incorporating SOE requests for equity for significant investments into the normal budget process.
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