Accountability

Shareholding Ministers’ expectations of Crown company boards are formally outlined in the Owner’s Expectations Manual (OEM). This document clarifies the environment within which the shareholder expects boards to meet their responsibilities and shareholding Ministers’ expectations.

The OEM outlines expectations in a number of areas including board duties, reporting requirements, financial governance, and the way in which the board deals with strategic issues.

Board accountability

Crown company boards account for their performance through a set of parameters and targets contained in:

• A Statement of Corporate Intent (SCI) for Crown research institutes and state-owned enterprises.
• A Statement of Intent (SOI) for Crown entity companies, statutory entities and council-controlled trading organisations.

The content of these documents is prescribed by the Crown company’s founding legislation and by Ministers’ expectations.

Boards prepare their SCI/SOIs each year and, once accepted by shareholding Ministers, are tabled in Parliament. They then become public documents. The company’s actual performance against its SCI or SOI targets is later outlined in its annual report, which is also tabled in Parliament.

Shareholder accountability

Shareholding Ministers are in turn accountable to Parliament for the performance of Crown companies. Parliamentary select committees review company performance and members of the Crown company boards may be asked to appear before committees.

Reporting requirements

The reporting requirements for Crown companies are greater than the obligations imposed on other companies by the Companies Act 1993. For example, annual reports must include additional information, while state-owned enterprises and Crown research institutes are required to provide half-yearly reports. By practice, they also provide quarterly reports. Crown companies also provide Ministers with their draft business/strategic plans that contain considerably more information (often commercially sensitive) than is required to be included in the SOI/SCI.

Together with the Treasury, CCMAU conducts a review of each document and reports to Ministers on its overall soundness.