Ownership, relationships and protocols for CRIs

This page has guidance for Crown Research Institutes (CRIs) on ownership, relationships and protocols. It is section 4 of the CRI Toolkit.

Overview of relationships

This diagram illustrates the relationship between CRIs, shareholding Ministers, MBIE SSI and The Treasury.

 

 

Shareholding ministers’ role and responsibilities

The Minister of Science and Innovation and the Minister of Finance, are ‘responsible ministers’, as stated in the Crown Entities Act (section 10).

The Minister of Science and Innovation generally takes the lead shareholder role, particularly as the formal point of contact with CRI boards.

The role of the Minister of Finance as a CRI shareholder reflects the importance of the science sector to the Crown’s economic and financial objectives. The Minister of Finance may occasionally delegate responsibility to an Associate Minister of Finance.

The role of shareholding ministers is to oversee and manage the Crown’s interests in, and relationship with, CRIs. Shareholding ministers are responsible to the House of Representatives for the performance of the functions given to them under the Crown Entities Act and the CRI Act. Shareholding ministers’ responsibilities include:

  • appointing and dismissing directors (including chairs and deputy chairs)
  • overseeing the Government’s ownership priorities and objectives, through the Statement of Core Purpose (SCP) and the outlook letter
  • approving any major transaction, as required under the CRI Act, the Companies Act or the CRI’s Statement of Corporate Intent (SCI)
  • monitoring board performance and taking necessary remedial steps if boards fail to progress towards the outcomes in their SCPs, or fail to meet the targets in their SCIs and business plans
  • commenting on draft SCIs and business plans
  • supporting CRIs’ medium- to long-term strategic directions
  • tabling final versions of SCIs in the House of Representatives
  • developing and communicating the Government’s ownership policies
  • consulting with boards if issues cannot be resolved between the board and the Ministry of Business, Innovation and Employment's Science, Skills and Innovation Group (SSI)
  • tabling annual and half-yearly financial reports in the House of Representatives
  • passing resolutions at annual meetings or special meetings, or agreeing to pass written resolutions in lieu of such meetings.

Shareholding ministers’ powers

Under the Companies Act, the Crown Entities Act and the CRI Act, Ministers have statutory powers to:

  • exercise their rights as a shareholder under the Companies Act
  • direct the board to alter the company’s Statement of Corporate Intent (section 15)
  • determine the level of dividend payable by the company for any financial year
  • request additional information from the CRI.

Shareholding ministers are required to exercise their powers in a manner consistent with the purpose and principles of a CRI. They have no power to direct CRIs to regard, or give effect to, a government policy unless specifically provided in another Act (section 105 of the Crown Entities Act).

Ministerial directions

The process for issuing ministerial directions was changed following the 2013 amendments to the Crown Entities Act.

Directions to support whole-of-government approach

Under section 107(external link) of the Crown Entities Act 2004, the Minister of State Services and the Minister of Finance may jointly direct Crown entities to support a whole-of-government approach.

Under Section 7(6) of the CRI Act, the directors of a Crown Research Institute must have regard to any such direction given to Crown entity companies.

Shareholding ministers expect:

  • CRIs to be knowledgeable on any such directions and the available support from central government.
  • CRIs to apply these directions as appropriate.

Directions from shareholding ministers

Under Section 15 of the CRI Act, the shareholding ministers may by written notice to the board, direct the board of a CRI to include or omit elements of the Statement of Corporate Intent or to determine the level of dividend payable.

Before giving any direction under their powers, shareholding ministers must consult with the CRI board. They should then table notice of the direction in the House, and publish the notice in the Gazette.

Directions from the Prime Minister

The Prime Minister may also give directions to CRIs in times of national emergency.

Our SSI and The Treasury ownership roles

Our Science, Skills and Innovation Group (SSI) has responsibility for the majority of CRI ownership functions including financial and non-financial monitoring.

The Treasury also has an ownership role. It will:

  • undertake an assurance role on monitoring completed by our SSI
  • assist our SSI on financial matters and take an active role if significant financial matters arise
  • lead board appointments process in close consultation with our SSI
  • with our SSI, advise shareholding ministers on appropriate rates of return on equity calculated specifically for each CRI.

Managing intellectual property

Shareholding ministers expect that CRIs remove barriers to technology and knowledge transfer, especially those barriers relating to accessing Crown-funded data, contracting processes, and intellectual property.

We see commercialisation of intellectual property (IP) from research as an important way to create benefits for New Zealand. Generally, it sees research providers as best placed to make these decisions.

Reasonable steps should be taken to protect IP that is discovered in the course of research and operation of the CRI. Likewise, effort should be made to look for alternative users of IP if the companies involved in research do not have a pipeline to commercialisation, and another organisation is better suited to use the IP for national benefit.

See the Cabinet IP Guidelines. [PDF, 24 KB]

Managing research data

CRIs are expected to plan for the management and development of research data infrastructure. Data management plans should be developed collaboratively with stakeholders, including other research institutions, and focus on enhancing the on-going value of the data to New Zealand.

A data management plan should:

  • address permanent storage, accessibility and reusability of data
  • include collaborative arrangements with other relevant organisations to maximise the shared use of the data
  • consider conditions for the use of data by the CRI’s clients, that may be included in a contract
  • specify data management arrangements across all of the CRI’s collaborations.

CRIs’ data management and licensing practices should comply with the:

Managing databases and collections

CRIs hold science databases and collections of great significance.

The principles used to identify such databases and collections are:

  • the databases and collections are being held on behalf of New Zealand, where continued provision, maintenance and utilisation are critical for New Zealand science to deliver public benefit
  • the benefits of these databases and collections accrue to many, varied users and third party beneficiaries, while the costs of provision belong to the CRI.

CRIs are expected to manage databases and collections in a way that enhances their on-going value to New Zealand. Management plans should build on existing plans and primarily consider:

  • the expectations outlined in the CRI’s Statement of Core Purpose for the collaborative use of databases and collections
  • how to improve stakeholders’ access to, and reuse of, databases and collections through better interoperability, relevance and affordability.

Management plans may also include consideration of international commitments, legislative requirements and cost/benefit analysis.

CRIs that wish to cease managing, or to materially reduce databases and collections, should first consult with current and prospective users. The consultation period should explore opportunities to improve stakeholders’ access to, and reuse of, databases and collections through better interoperability, relevance and affordability.

The CRI must seek prior agreement with us before making substantial changes to any Nationally Significant Database or Collection.

Strategic advisory panels

Shareholding ministers expect CRIs to establish independent scientific advisory committees and end-user panels as recommended by the CRI Taskforce (Recommendation 19). These panels are to provide advice to the board; each CRI should use its advisory committees to inform its development of strategy and priorities.

Specifically, the panels will advise on research strategies, scientific programmes and technology transfer activities. They are to provide high-level, forward-looking advice rather than retrospective judgements.

It is recommended to have 2 separate panels as they will provide different perspectives for the boards: Strategic Scientific Advisory Panel and a Strategic User Advisory Panel. A CRI may decide that it needs to have more than 1 of each type of strategic panel.

A panel’s advice will have a 5-year horizon. It is expected that the strategic advisory panels will:

  • meet occasionally over the year
  • be as small in composition as practicable
  • regularly review and adjust their membership to ensure that new information and fresh perspectives are incorporated.

Appointment of panels

CRI boards define the terms and conditions for panel appointments. However, at a minimum, panel membership should comprise:

  • an independent Chair
  • members who
    • bring a diverse range of knowledge, skills, experience and strategic insights
    • understand the board’s needs and expectations.

CRI boards will need to manage the balance between continuity of, and changes to, panel membership. All panel members, including the Chair, must be independent and declare all conflicts of interest. The panel Chair is responsible for managing any conflicts of interests.

Ensuring an effective panel

CRI boards will appoint panels, make their role and purpose explicit, and are ultimately responsible for the panels.

It is important that the strategic advisory panels do not undermine the relationship of board and management. Therefore, it is recommended that the panels work with management before reporting to the board.

A board may wish to receive and consider separate advice from both management and panels on all or some matters pertinent to the purpose of a panel. If so, it should ensure that each has had the opportunity to consider and comment on the other’s advice.

The panel chair should write the panel’s reports and approve minutes of all panel meetings.

Resource distribution and management

The Government acknowledges that research is ‘risky’ but that risk may lead to high returns.

CRIs are expected to develop research programmes within their ‘scope of operations’ (as defined in the Statement of Core Purpose) only where the opportunity to purchase research from alternative sources has been fully considered and deemed inappropriate in terms of cost and/or value to New Zealand.

Researchers often manage this risk by establishing multiple lines of investigation, halting unpromising research at a sufficiently early stage, and reallocating funds to more promising lines of enquiry.

A systematic approach to science investment will ensure that there is a balance in investments that mitigates risk and maximises the potential benefits to New Zealand.

CRIs are expected to consider the balance of inputs (people and other resources) across their programmes. A balance of inputs will support CRIs to make more informed decisions about whether the planned allocation of resources is appropriate, or whether re-prioritisation is required.

It will also enable CRIs to compare the distribution of their resources with that of other research providers, where relevant. For example, the number of staff allocated to undertake each activity at a high level would aid the internal planning process and would be of value to shareholding ministers.

Shareholding ministers expect CRIs to develop capabilities that support and enable:

  • successful technology transfer to end-users
  • appropriate collaboration both nationally and internationally, including best use of expertise and resources
  • effective management in an environment of uncertainty, including ‘stop-go’ decision-making
  • an appropriate balance between targeted, applied and near-market research, and technology transfer
  • excellence in research and other areas of the CRI’s work.

Boards should regularly examine, and recalibrate if necessary, a CRI’s research portfolio and capability development initiatives. This will ensure that funds are reallocated to more promising lines of enquiry, where necessary.

Managing international engagements and activities

CRIs are expected to develop an international engagement plan that will contribute to the outcomes in their Statement of Core Purpose. The plan should consider:

  • relationships with key domestic partners including research organisations, the Ministry of Foreign Affairs and Trade, our SSI and international funders
  • memberships and ways to develop relationships with key international partners
  • objectives for international engagement and ways to measure progress towards these objectives
  • participation in international activities that may benefit New Zealand
  • collaboration on relevant bilateral and multilateral initiatives
  • the CRI’s participation on international scientific advisory panels
  • including international members on the CRI’s own scientific advisory panels.

Shareholding ministers are comfortable with international activities that have the potential to extend science networks and/or generate income. However, boards should ensure that any activities:

  • are consistent with the CRI’s legislated operating principles, with particular emphasis on providing demonstrable benefits to New Zealand
  • do not detract focus from the CRI’s core business activities in New Zealand
  • do not create undue risk for areas of core national science capability
  • anticipate returns commensurate with risk
  • are undertaken with high ethical standards and do not create risk that the New Zealand Government may be directly or indirectly associated with, and held accountable for.

‘Demonstrable benefits to New Zealand’ should include particular emphasis on, but are not limited to, the development of:

  • intellectual property
  • increase in strategic scientific knowledge, resources and capability
  • technology transfer.

These benefits would accrue for New Zealand either by:

  • being directly applied in New Zealand
  • leveraging New Zealand input into large scale international projects
  • bringing in royalties from overseas partnership for CRIs or their client groups.

Managing land sales

The relationship between the Crown and Māori is fundamental to good government. Furthermore the Crown has a number of responsibilities and obligations under the Treaty of Waitangi and its principles which guide not only its broad decision-making and engagement with Māori, but also its day to day business. CRIs have a role in supporting the Crown in meeting these obligations.

When selling land, it is expected that a CRI will:

  • engage with iwi (settled and yet to settle) at an early stage in the sale or disposal of land
  • have regard to the customary interests of iwi in land during processes involving sale or disposal, including giving iwi with strong customary interest appropriate opportunities to participate in that process
  • alert the responsible minister/shareholding minister(s) and relevant oversight agencies to any issues regarding iwi or Māori interests in land arising from proposed sales or disposal of land.

These expectations are directed at providing an opportunity for relevant iwi to participate in sale processes. It remains the responsibility of a CRI’s board and management to make decisions relating to the sale of land, including whether the steps above are appropriate.

The Crown expects these steps will not result in a CRI realising less from a sale than might otherwise have obtained. However, they will require a CRI to determine whether there are any relevant Māori interests in the land to be sold and to engage with iwi early in the process.

The Office of Treaty Settlements and the Post Settlement Commitments Unit at the Ministry of Justice, as well as Te Puni Kōkiri, may be able to provide some information to assist this process. They will not necessarily have full knowledge of iwi interests. There is no substitute for direct engagement with iwi.

No surprises policy

Under the ‘no surprises’ policy, shareholding ministers expect to be informed well in advance of events, transactions or issues that could be considered contentious or attract wide public interest, whether positive or negative.

Examples of matters that could fall within the ‘no surprises’ policy include, but are not limited to:

  • changes in chief executives
  • potential/actual conflicts of interest by directors
  • potential/actual litigation by or against the CRI, its directors or staff
  • fraudulent acts by the CRI’s directors or employees
  • breaches of a CRI’s corporate social responsibility obligations
  • transactions that affect the ownership of intellectual property
  • significant CRI restructuring
  • large-scale redundancies
  • industrial disputes
  • significant acquisitions and divestments
  • significant health and safety issues
  • the release of significant information under the Official Information Act
  • imminent media coverage that could attract critical comment, or on which shareholding Ministers could be asked to express a view
  • advance notice of any significant media statement.

Shareholding ministers expect boards to:

  • understand wider government policy issues as part of their decision-making
  • be aware that the Crown has interests wider than those of ordinary shareholders in private companies
  • be aware of the potential implications of company-specific issues on the Crown and/or its balance sheet
  • be sensitive to the demand for accountability placed on shareholding ministers from both Parliament and taxpayers.

Shareholding ministers’ expectations in relation to the no surprises policy are not intended to detract in any way from directors’ statutory obligations.

Depending on the circumstances, communication can be by telephone, email, letter or meeting. Boards should describe the issue and how they intend to manage it to our SSI in the first instance. Our SSI will pass on relevant details to the ministers’ offices.

Visits by MPs

CRI boards and executives should be aware of the potential political implications of engaging with MPs, either through visits or briefings. CRIs should always contact the Minister of Science and Innovation’s office before agreeing to or organising any visits and advise our SSI. CRIs should set and manage an agenda for the visit.

There is an established protocol for visits by MPs to CRIs:

  • visits by electorate MPs are acceptable for genuine electorate duties
  • visits by party spokespeople in the CRI, science or closely related portfolios are acceptable.

Visits by MPs for general familiarisation or discussion purposes are not encouraged.

Select committees

Select committees have wide powers to require people to appear before them and to give evidence. Among other roles, they play an important part in assessing the performance of CRIs.

A CRI may appear before a select committee to:

  • advise on legislation under formation
  • make a submission on a bill as a witness
  • review a petition submitted to a select committee about a CRI
  • provide evidence to be used in an inquiry

CRIs are required to regularly appear before the Education and Science Committee (or another select committee delegated by the Finance and Expenditure Committee) for a financial review.

Normally, the chair and CRI chief executive are expected to appear before the committee. It is not usual for external legal representation to attend. CRIs should view these financial reviews as opportunities to emphasise the importance of what they do.

Shareholding ministers expect to be advised before any CRI appears before a select committee. They also expect the CRI boards and management to be open and forthright in their dealings with committees.

Shareholding ministers expect CRI Chairs to raise any concerns they have about providing information directly with the select committee. The Chair may also request that the committee receive the information as private or secret evidence. Chairs are expected never to refuse to answer a question outright.

Shareholding ministers expect CRI boards and management to familiarise themselves with the Standing Orders of the House of Representatives before appearing in front of select committees.

Boards may wish to consider obtaining specific training in this regard. In particular, the Standing Orders provide rules relating to Parliamentary privilege. Parliamentary proceedings are subject to absolute privilege, to ensure that those participating in them, including witnesses before select committees, can do so without fear of external consequences.

This protection, enshrined in the Bill of Rights 1688, ensures that Parliament can exercise its powers freely on behalf of its electors.

People should not be deterred from giving evidence to a select committee. Such pressure, or any action taken against a person who gives evidence, might be regarded as contempt of the House, with potentially serious consequences for those involved.

Further information on select committees can be found on the State Services Commission Officials and Select Committees – Guidelines(external link) and in the procedural guides –

and on the New Zealand Parliament website.

Formation of subsidiaries

Under the Crown Entities Act, CRIs are required to notify shareholding ministers before they acquire or form a subsidiary. Shareholding ministers also expect that:

  • the parent company will comply with any restrictions in its Statement of Corporate Intent (SCI) relating to the acquisition or formation of subsidiaries
  • the powers and function of each subsidiary will be treated in practice as if it is subject to the same statutory limitations as the CRI
  • in establishing the governance arrangements for the subsidiary, the parent will act in accordance with any relevant provisions of its SCI and accepted best practice in the identification and appointment of directors
  • the parent company will be accountable to the Minister of Science and Innovation for the subsidiary’s activities and performance and will have appropriate financial controls, business planning and monitoring procedures in place
  • public accountability documents for the parent company – SCIs, financial statements and Annual Reports – will include information on the subsidiary’s activities and performance.

Joint ventures and partnerships

CRIs may wish to form joint ventures, partnerships or associations with third parties as a means to leverage expertise and capital. Shareholding ministers expect to be informed via our SSI at the early stage of any joint venture formation, particularly where the joint venture involves another New Zealand government entity or where it includes a foreign government or sovereign wealth fund.

Such engagements should not affect a CRI’s control over its core science activities and capabilities, finances or budget. In general, the shareholding ministers will not support joint ventures that result in Crown-owned assets and capabilities being transferred or diluted.

In addition, shareholding ministers expect any joint ventures to be subject to the same level of financial budgeting and monitoring rigour that applies to CRIs and their subsidiaries.

Provision of official information

As Crown-owned organisations, CRIs are subject to the Official Information Act (OIA).

CRIs are expected to inform our SSI when an OIA request is received and their proposed response to it, in accordance with the “no surprises” policy.

CRIs are expected to communicate openly with the public and to respond in a timely and adequate manner to OIA requests for information, unless the release of that information jeopardises a CRI’s commercial position or for other good reason as detailed in the OIA.

Social responsibility requirements

CRIs have corporate social responsibility (CSR) obligations beyond those of other companies.

The CRI Act requires CRIs to be socially responsible by accommodating and encouraging the interests of its community, when able to do so. CSR obligations should be reflected in all CRI policies and practices.

International CSR frameworks emphasise that:

  • CSR is about values and behaviours in an organisation’s day-to-day operations, not just about visible programmes
  • prescriptive approaches to CSR are unlikely to be successful; one size does not fit all
  • organisations should adopt specific CSR programmes that are appropriate to its impact on the environment and its interfaces with society in general.

The shareholding ministers expect CRIs to have the following processes in place:

  • specification of CSR values and behaviours and how they have been incorporated into the company
  • CSR objective and performance targets
  • specific CSR programmes
  • a reporting framework against CSR performance targets and objectives.

In addition, CRIs have an obligation to behave in a socially responsible manner at all times. Robust procedures and accountabilities should be put in place to ensure details of any breaches are communicated to boards in a timely way.

CRI boards must report any breaches of its social responsibility obligations to our SSI group as soon as possible. Our SSI group will inform shareholding ministers

Breaches should also be disclosed in the CRIs’ annual reports.