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Owner's Expectations Manual

4 The Monitoring Function

  • As 100% owner of SOEs, the Government is obliged to manage its investments in the best interests of New Zealanders. Shareholding Ministers' monitoring function is similar to that undertaken by equity holders in the case of private sector companies. However, shareholding Ministers face certain constraints, including the following, which are not faced by private sector equity holders:
    • Shareholding Ministers cannot divest themselves of ownership of the SOE without empowering legislation.
    • Unlike listed companies, SOEs do not have a share price that shareholding Ministers can use to monitor company performance.
    • Both shareholding Ministers and the SOEs are subject to additional public scrutiny via select committees and the Official Information Act 1982 (the OIA).
  • For these reasons, it is important that shareholding Ministers receive timely and relevant performance information from SOEs. The SOE Act, therefore, gives shareholding Ministers certain powers over and above those of ordinary shareholders; for example, the power to require information relating to the affairs of an SOE.

4.1 Monitoring performance

  • The role of being a shareholding Minister can place heavy demands on Ministers. These demands can be eased by giving the Ministers access to advisors with an understanding of the key issues at the strategic, public policy and individual SOE level, and who can support the Ministers, and assist in the board appointment process. Shareholding Ministers receive advice on SOEs' financial and non-financial performance from COMU. Final decisions on all SOE issues remain with shareholding Ministers or Cabinet.
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