Board nomination frameworks and practices

The nomination of SOE directors is one of the primary responsibilities of the state as an active owner. According to ownership structures (centralised, widely dispersed or dual structures involving two ministries) this may remain with individual ministers or involve the entire cabinet and/or executive powers. In exercising these powers, ministers need to be mindful of the fact that they are custodians of the public interest rather than the owners of companies. The process should be rules-based and overseen by a governmental ownership function. Insofar as the ownership function has discretionary powers, it is well-advised to exercise them along similar lines and private sector good practices. This could include relying on external recruitment consultants, building databases with pools of directors and engaging the active involvement of the incumbent boards of directors. Where SOEs have private sector minority investors, processes are usually in place to safeguard the minority representation.