Canada - Crown Corporations Council, Manitoba

Introduction

The Minister of Finance is the Minister charged with the administration of the Crown Corporations Public Review and Accountability Act.  Crown Corporations Council is responsible to the Minister of Finance. Council is a crown corporation with it's own chairman and board of directors.

The President and Chief Executive Officer is responsible for the four full time staff and planned spending of $723,000.

Crown Corporations Council Governance Systems

Manitoba has approximately 60 Crown Organizations and ‘Government Enterprises', of which, seven fall under the purview of Council and the Crown Corporations Public Review and Accountability Act (the Act).   http://web2.gov.mb.ca/laws/statutes/ccsm/c336e.php

These seven Crowns are considered to be of a commercial nature and include:

Manitoba Hydro  http://www.hydro.mb.ca/

Manitoba Public Insurance http://www.mpi.mb.ca/

Manitoba Lotteries Corporation http://www.mlc.mb.ca/

Manitoba Liquor Control Commission http://www.mlcc.mb.ca/

Manitoba Centennial Centre Corporation http://www.mbccc.ca/

Communities Economic Development Fund http://www.cedf.mb.ca/

Venture Manitoba Tours Ltd.

These Crown Corporations in 2006 had annual revenues of $ 3.9 billion,  $ 13 billion of assets, and net income of $936 million.  None of these commercial crown corporations contribute annual dividends to government, but all of the profits from MLC and MLCC flow to government ($473 million in 2006).

The Act, which has been in effect since 1989, establishes an accountability framework for the seven Crowns subject to the Act.  It encompasses Boards of Directors, Ministers responsible, the Manitoba Legislature, Crown Corporations Council and if applicable, the Public Utilities Board.  In broad terms, application of the Act adds value in the following primary areas:

• General provisions governing corporations (Part III of the Act)
• Council's role and mandate (Part II of the Act)
• Public Utilities Board review of rates (Part IV of the Act)

Council's duties are set out in Part II of the Act.  Specifically, these duties include:

• Facilitate, in cooperation with each corporation, the development of a clearly defined mandate and a clear statement of purpose for the corporation.
• Facilitate, in cooperation with each corporation, the development of consistent and effective criteria for measuring the corporation's performance.
• Review long term corporate plans and capital expenditure proposals; ensure consistent practices among two or more corporations where appropriate.
• Provide any advice to the Lieutenant Governor in Council on those plans, proposals and practices or any other matter of policy affecting corporations that may be requested by the Lieutenant Governor in Council.
• Receive and hear submissions from any person who, in the opinion of the Council, has knowledge respecting any aspect of a corporation's activities regarding alleged failures by the corporation to comply with any Act or any policy of the Council.

In this role, Council monitors and provides on-going assessment of corporate governance practices, corporate financial planning and performance, corporate strategic and capital plans, business risks and opportunities, as well as seeking and communicating best practices that are appropriate and applicable.

The Act enhances accountability by establishing governance provisions for organizations subject to the statute.  Governance refers to the structure and practices for overseeing and directing the management of a business and its affairs.  Good governance is linked to: ensuring the organization carries out its mandate and objectives, improved corporate performance and risk management, enhancing shareholder value and ensuring the public is well served. 

Application of the governing provisions of the Act can strengthen governance requirements in areas such as board due diligence and establishment of Audit committees if the enabling legislation is silent on such matters.

Part III of the Act places statutory requirements on Board of Directors that reflect a core essence of governance principles and conduct.  Collectively, they establish a minimum standard and can supplement provisions of an organization's existing enabling legislation.  Each organization's enabling legislation will vary and commonly provides for appointment of directors, meetings, powers of the board and submission of annual activity and financial reports. 

Part III of the Act sets out a range of statutory requirements that support good governance and accountability.  Key requirements include:

• Duties of boards collectively
• Duties of directors as individuals
• Responsibility and reporting to ministers responsible and legislature
• Conflict of interest, director disclosure and avoidance standards
• Establishment of Planning and Audit committees
• Corporate plans, performance and accountability reporting

For example, directors are required to "act honestly and in good faith in the best interests of the corporation" and "to exercise the care, diligence and skill that a responsibly prudent person would exercise in comparable circumstances."  These provisions impose the same degree of responsibility on directors subject to the statute as applied to directors of private corporations.  Another important aspect establishes conflict of interest guidelines and disclosure requirements for directors.

The independence and autonomy of Board directors, management and conduct of the business affairs of the corporations is unaffected by the Act, as is policy direction to Crowns. 

Other provisions set out duties of the Board which include periodic review of strategic plans, corporate performance, and if applicable public accountability meetings.  General accountability reporting includes requiring audited financial statements and quarterly and annual reporting.  An example of a good governance disclosure practice, at Manitoba Hydro, can be found at www.hydro.mb.ca/about_us/csp_2006/csp_2006.shtml for strategic plans and annual report governance disclosure.  A good example of quarterly financial reporting required by the Act, at Manitoba Public Insurance, can be found at http://www.mpi.mb.ca/english/newsroom/quarterly.html

Organizations subject to the Act are also required to establish Audit committees for which the duties are defined.  This is particularly relevant given the trend of increased focus and attention on the role of audit committees in governance best practices.

Crown corporations can be added to the Act at the discretion of Government through legislation or by regulation.

Crown Corporation, Agency, Commission Boards

Appointments to Boards are made by the Government and is not a public process in Manitoba.  Crowns Boards Agencies and Commissions unit assists Government in the process.    Some Crowns' enabling legislation may provide requirements about the number of directors and terms. 

Board renumeration is set by the Government and varies between organizations.  Remuneration is typically outlined in the Appointment Order-In-Council.

Each Board of Directors of the Crowns under Council's purview sets their own process for Board evaluation.  Some have implemented self assessment processes and others are developing evaluation processes.

Government - Crown Agency Relationship

The primary relationship between government and Crown Agencies is fostered by the Minister Responsible for the Crown and the Chair of the Board.

Government direction to Crown Boards has not been formalized.

Crown Agency Performance Planning and Reporting

(http://www.crowncc.mb.ca/page10.html)

Statutory requirements include tabling of annual reports and quarterly reports for major commercial crowns.

Performance measurement and reporting is voluntary and for most major Crowns is guided by Council's 2001 Report on Performance Measurement and Reporting.  Key elements of a good practice system can be viewed on our web site noted above.

As part of Council's duties an annual review is conducted by Council covering the duties outlined in the Act.

Crown Agency Executive Compensation and Labour Relations

Executive compensation and evaluation is the responsibility of Board of Directors.  A Planning and Compensation Committee of Cabinet and/or Minister may be consulted by the Board on these matters.  Council conducts an annual survey of CEO compensation and provides it to Government for information.