Crown companies

The Crown owns many other companies in addition to the 11 active state-owned enterprises (SOEs) referred to in my post on the distinctions between SOE companies and privately-owned companies.  They are described below, with links to the distinguishing elements of their respective governance frameworks.

  • State owned enterprises
  • Mixed ownership model companies
  • Air New Zealand Limited
  • Schedule 4A companies
  • Crown Research Institutes
  • Other Crown entity companies
  • Other commercial undertakings of the Crown
  • Appointment to boards of Crown companies

 State owned enterprises

There are 15 SOEs under the State-Owned Enterprises Act 1986:  the 11 active companies that I mentioned in my earlier post:

… plus:  Electricity Corporation of New Zealand Limited (a residual entity following the electricity reforms of the 1990s);  Learning Media Limited (in liquidation since December 2013);  New Zealand Railways Corporation (a statutory corporation that owns the railway land and leases it for a nominal fee to KiwiRail Holdings, which runs the rail business);  and Terralink NZ Limited (receivership/liquidation in 2001 and finally struck off in 2013, but not yet removed formally from the SOE Act).

There are several other companies that have been SOEs over time but that have been removed from SOE status for various reasons.  The current SOEs are all companies under the Companies Act 1993, except for New Zealand Railways Corporation, which was established under the New Zealand Railways Corporation Act 1981 as a body corporate.

Mixed ownership model companies

There are 3 mixed ownership companies: Genesis Energy LimitedMeridian Energy Limited, and Mercury NZ Limited (formerly named Might River Power Limited).  These companies were removed from the SOE Act in 2013 and 2014 when up to 49% of the shares in each company were offered to the public, and their shares are now publicly listed on the NZX (New Zealand) and ASX (Australia).  In addition to the governance frameworks applying to other publicly listed companies, the mixed ownership companies are governed by Part 5A of the Public Finance Act 1989, which requires the Crown to retain 51% ownership, limits other owners to 10%, and continues some particular provisions of other legislation.

Solid Energy New Zealand Limited was also slated to become a mixed ownership company, but it encountered financial difficulties from 2011 and was not suitable for public listing.  Solid Energy is still an SOE, but it is now subject to a Deed of Company Arrangement as it works through a debt compromise with its lenders.

Air New Zealand Limited

Air New Zealand Limited is the other majority Crown owned company that is publicly listed.  It is not formally a mixed ownership company.  However, its constitution  does place some restrictions on share ownership, and it also provides for a “Kiwi Share” that confers some powers on the Crown that are not available to other shareholders.

Schedule 4A companies

There are currently eleven companies listed in Schedule 4A of the Public Finance Act 1989:

As well as being limited liability companies subject to the Companies Act 1993, the Schedule 4A companies are subject to a number of provisions of the Crown Entities Act 2004, as if they were Crown entities.  These are set out in s 45OA of the Public Finance Act 1989.

Health Benefits Limited is now inactive, its business having been transferred to NZ Health Partnerships Limited, which is jointly owned by the District Health Boards.

 Crown Research Institutes

Crown Research Institutes (CRIs) are Crown entity companies established under the Crown Entities Act 2004 as CRIs.  They are governed by the Crown Research Institutes Act 1992.  There are currently seven CRIs:

Industrial Research Ltd was originally a CRI, but it is now a subsidiary of Callaghan Innovation, which is a Crown entity governed by the Callaghan Innovation Act 2012.

Other Crown entity companies

There are four other Crown entity companies directly owned by Ministers on behalf of the Crown:

They are listed in Schedule 2 of the Crown Entities Act 2004.

There are also many companies that are subsidiaries of other Crown-owned organisations.  For example, Kiwibank Limited is owned by New Zealand Post Limited, Accident Compensation Corporation and the New Zealand Superannuation Fund.

In addition, the Crown has a large financial portfolio of investments in companies, with less than a controlling interest.  For example, the New Zealand Superannuation Fund, which is owned by the Crown, has a wide range of corporate holdings.  Another example is the shareholdings of the Crown in some regional airport companies.

Other commercial undertakings of the Crown

This post was about companies owned by the Crown.  There are several Crown entities that are not companies but have varying degrees of commercial operations.  The entities making up the Government Reporting Entity (as at 30 June 2015) are listed in the Annual Financial Statements of the Government.

Appointment to boards of Crown companies

Crown companies generally have two shareholders on behalf of the Crown: the Minister of Finance and another shareholding minister.  The Treasury usually administers the board appointment process on behalf of Ministers.

Prospective candidates can register their interest at www.boardappointments.co.nz.  For information on board appointment processes across the wider state sector, see my post on state sector board appointments.

[Updated to April 2017.]