Functions and powers of the entity
Collective duties of the board and individual duties of board members
Role of the board chair
General responsibilities of members
Members' interests and conflicts: identification, disclosure and management
Disclosure of information
Gifts and hospitality
Board meeting procedures
Crown entities as employers
Planning and reporting
Board and member performance evaluation
Board appointments and reappointment
Remuneration and expenses for board members
Liability and protection from legal claims or proceedings
Summary of minimum content for a governance manual by chapter
Board committees can enhance the effectiveness and efficiency of boards, by allowing closer scrutiny and more efficient decision making in some areas of board responsibility. When boards establish committees, careful consideration is required of the powers, duties, reporting procedures, membership and duration that apply to the committees.
Clause 14 of Schedule 5 of the Crown Entities Act 2004 (CE Act) provides for a board, by resolution, to appoint committees:
- to advise it on any matters relating to the entity's functions and powers that are referred to the committee by the board; or
- to perform or exercise any of the entity's functions and powers that are delegated to the committee. The board must ensure that at least one of its members is on a committee which is to exercise a board power or function. If a committee does not include a board member it can only have an advisory function.
Committee members of Crown entities must disclose, in a manner similar to that required of board members, any interests they may have (clauses 14 (2) and 15 (2) of Schedule 5 for committees of statutory Crown entities). More detailed provisions on interests can be found in the relevant chapter of this guidance.
An entity's own legislation may also contain provisions relating to the establishment and operation of committees of the board: if so, the board's governance manual must reflect these provisions.
Committees should only exist where there is a clear reason for them, and they assist the governance of the entity. Reasons might include providing increased scrutiny over key areas, and efficient use of resources such as individuals contributing in areas specific to their expertise. Committees can be standing or ad hoc in nature, and should be subject to regular review as to whether they should continue to exist. Good practice could be for a 'sunset clause' to be included in the terms of reference for most, if not all, committees.
The entity's board remains accountable for decisions that are made by committees. Accordingly committees should have clear formal charters that set out their roles and delegated responsibilities. There should be explicit reporting requirements back to the main board, which will allow other board members to question committee members and assess the effectiveness of the committee.
There is no prescribed number or type of committees, but a Finance / Audit / Risk committee is the most common, and is widely recommended in the public and private sectors. An Audit committee provides oversight of the entity's financial and risk management. It should generally include some independent (non-board) members, members with financial expertise, and a committee chair who is not the board chair. For guidance on audit committees in the New Zealand public sector, see the good practice guide issued by the Office of the Auditor-General; www.oag.govt.nz/2008/audit-committees/.
One operational matter that is often delegated to a committee is the review of the chief executive's performance.
See also the chapter on fees and remuneration for members of committees (Chapter 18).
Governance manual content: Board committees
At a minimum a good governance manual should cover:
- details of the entity's committees, including their roles, responsibilities, accountability, reporting procedures, membership and duration; and
- procedures for establishing new committees and for reviewing whether existing committees should continue.