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Owner's Expectations Manual

5.7 Other expectations

  • In addition to the above expectations, SOEs are also expected to take account of the following expectations shareholding Ministers have of the board. These expectations ensure that the board has greater accountability for the performance and activities of the SOE.

5.7.1 “No surprises” policy

  • Ministers expect boards to be sensitive to their interests. Boards must be mindful that shareholding Ministers are accountable to a wider audience and the affairs of the companies, positive and negative, can impact on the responsible Minister. This is referred to as the “no surprises” policy, further detail of which is set out below. A failure to keep the Ministers informed on significant issues at appropriate times can create situations that may divert attention from a company's day-to-day business.
  • In considering the “no surprises” policy, shareholding Ministers expect boards to:
    • understand wider government policy issues as part of their decision-making
    • be aware that the Crown has interests that are wider than those of ordinary shareholders in private companies
    • be aware of the potential implications of company-specific issues on the Crown and/or its balance sheet, and
    • be sensitive to the demand for accountability placed on shareholding Ministers from both Parliament and the New Zealand taxpayers.
  • Under the “no surprises” policy, shareholding Ministers expect to be informed well in advance of any material or significant events, transactions and other issues relating to the company that may be contentious or could attract public interest, whether positive or negative. Examples of matters that could fall within the “no surprises” policy could include, but are not limited to:
    • changes in the CEO
    • potential/actual conflicts of interest by directors
    • potential/actual litigation by or against the entity/company, its directors or employees
    • fraudulent acts by the company's directors or employees
    • breaches of an SOE's corporate social responsibility obligations (refer to Chapter 6)
    • significant company restructuring
    • large-scale redundancies
    • industrial disputes
    • significant acquisitions and divestments
    • significant health and safety issues
    • the release of significant information under the OIA, and
    • imminent media coverage of any activities that could attract critical comment or on which the shareholding Ministers could be asked to express a view.
  • 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.
  • Depending on the details or circumstances of the issue, communication can be by way of a telephone call, email, letter or a meeting between the board and shareholding Ministers. Boards should advise the details of the issue and what the board intends to do to respond. Ministers' offices are the first point of contact for most issues.
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