Public Enterprises Act 2002
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PUBLIC ENTERPRISES ACT 2002
Public Enterprises Act 2002 Arrangement of Sections
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PUBLIC ENTERPRISES ACT 2002
Arrangement of Sections
Section
PART I - PRELIMINARY 5
1 Short title and commencement.........................................................................5
2 Interpretation....................................................................................................5
PART II - SCHEME OF ACT 6
3 Effect or application.........................................................................................6
4 Non-commercial activities ...............................................................................6
5 Additions and deletions of public enterprises from the Schedule....................7
6 Relationship to the Companies Act..................................................................7
PART III - FORMATION AND OWNERSHIP OF PUBLIC
ENTERPRISES 7
7 Transfer of assets .............................................................................................7
8 Government to hold interest in public enterprise.............................................8
9 Role of the Minister .........................................................................................8
10 Minister may subscribe or acquire shares in public enterprises.......................8
11 Powers of Minister relating to corporate intent ...............................................8
PART IV - DIRECTORS 9
12 Directors...........................................................................................................9
13 Directors roles..................................................................................................9
14 Appointment and termination of directors to boards of public
enterprises ......................................................................................................10
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15 Board meetings and quorum ..........................................................................10
16 Powers of board..............................................................................................10
PART V - ACCOUNTABILITY 11
17 Balance sheet..................................................................................................11
18 Statement of corporate intent .........................................................................12
19 Half-yearly reports .........................................................................................13
20 Annual report and accounts............................................................................13
21 Dividends .......................................................................................................13
22 Information to be presented to the Legislative Assembly ..............................14
23 Other information...........................................................................................14
24 Audits and the role of the Auditor General ....................................................14
25 Protection from disclosure of sensitive information ......................................14
PART VI - CHIEF EXECUTIVE OFFICER 15
26 Chief Executive Officer .................................................................................15
27 Support staff ...................................................................................................15
PART VII - MISCELLANEOUS 15
28 Transfer of interests........................................................................................15
29 Provision of information by subsidiary to public enterprise ..........................16
30 Appointments in contravention of this Act ....................................................16
31 Regulations.....................................................................................................16
FIRST SCHEDULE 17
PUBLIC ENTERPRISES SUBJECT TO ALL OF THE PROVISIONS OF
THIS ACT: ........................................................................................................17
SECOND SCHEDULE 18
PUBLIC ENTERPRISES SUBJECT TO CERTAIN PROVISIONS OF
THIS ACT: ........................................................................................................18
Public Enterprises Act 2002 Section 1
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PUBLIC ENTERPRISES ACT 2002
No. 25 of 2002
AN ACT TO ESTABLISH THE OBJECTIVES, RULES AND
PROCEDURES RELATING TO PUBLIC ENTERPRISES
I assent,
TAUFA'AHAU TUPOU IV,
23rd December, 200
[21st of October 2002]
BE IT ENACTED by the King and Legislative Assembly of Tonga in the Legislature
of the Kingdom as follows:
PART I - PRELIMINARY
1 Short title and commencement
(1) This Act may be cited as the Public Enterprises Act 2002.
(2) This Act shall come into force on a day to be proclaimed by His Majesty
in Council.
2 Interpretation
In this Act, unless the context otherwise requires:
Section 3 Public Enterprises Act 2002
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“board” means the board of a public enterprise that is subject to this Act;
“Chief Executive Officer” means the head of a public enterprise
appointed by the board of a public enterprise under this Act;
“company” means a company registered under the Companies Act 1995;
“dividend” means the payment designated by the board of directors of a
public enterprise to be distributed pro rata among the shareholders and in
the case of a statutory board the payment designated by a board of
directors pro rata to the owners of the enterprise;
“generally accepted accounting practice” means standards and practices
as prescribed by the Minister by Regulation.
“interest” means the ownership, or shareholding in a company, entity or
ownership of or title to that shareholding which the Government has in a
public enterprise;
“Minister” means the Minister of Finance;
“public enterprise” means a statutory board, company or other entity in
which the Government holds a controlling interest and is listed in the First
or Second Schedule in accordance with section 5;
“subsidiary” means a statutory board, company or other entity in which a
public enterprise has an interest and for which the public enterprise shall
account for and comply with the provisions of this Act as if that
subsidiary were a public enterprise listed in the Schedule.
PART II - SCHEME OF ACT
3 Effect or application
(1) This Act shall bind the Crown.
(2) All public enterprises shall be subject to this Act.
4 Non-commercial activities
(1) When the Government requires a public enterprise to provide goods or
services to any persons, at a certain price, the Government and the public
enterprise shall enter into an agreement under which the public enterprise
shall provide the goods or services in return for the payment by the
Government of the whole or part of the agreed price.
Public Enterprises Act 2002 Section 5
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(2) An agreement under subsection (1) shall be in writing and disclose the
parties respective financial accounts and shall comply with any enactment
applying to Government contracts and tenders.
5 Additions and deletions of public enterprises from the Schedule
(1) For the purposes of this section “financial assistance” shall exclude a
payment made by the Government to a public enterprise under section 4.
(2) Public enterprises that receive financial assistance from the Government
or have existed for less than three years shall be listed in the First
Schedule.
(3) Public enterprises that do not receive financial assistance from the
Government and have existed for three years or more shall be included in
the Second Schedule.
(4) Public enterprises listed in the First schedule shall comply with all the
provisions of this Act and those listed in the Second Schedule shall be
subject only to sections 4, 6, 7, 8,13,15,16, 19, 20, 21, 22, 24, 25, 26, and
27 of this Act.
(5) The Minister may, with the consent of Privy Council delete or add a
public enterprise from or to the First or Second Schedule.
6 Relationship to the Companies Act
(1) Where a public enterprise is registered under the Companies Act 1995 the
provisions of this Act shall apply in addition to and not in substitution of
the Companies Act.
(2) Subject to the Constitution, where the provisions of this Act conflict with
the provisions of any other enactment, the provisions of this Act shall
prevail.
PART III - FORMATION AND OWNERSHIP OF PUBLIC
ENTERPRISES
7 Transfer of assets
Every asset in a public enterprise vested in or held on behalf of the Government
shall, on the coming into force of this Act, immediately vest in the public
enterprise to which the asset relates and transfer of the asset shall be recorded in
accordance with this Act.
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8 Government to hold interest in public enterprise
(1) The interests of the Government in all public enterprises shall be held in
the name of the Kingdom of Tonga and documents relating to the title in
such interests deposited with the Minister of Finance.
(2) The Minister shall, with the consent of Privy Council, on behalf of the
Government sign all documents relating to the title, transfer, assignment,
or change in status, of any interests in a public enterprise.
9 Role of the Minister
(1) Subject to the provisions of this Act, the Minister shall, with the consent
of Privy Council, exercise all of the rights and powers of the shareholder
and owner of the Government's interests in public enterprises.
(2) The Minister shall be responsible for the exercise or performance of the
powers, duties and functions conferred or imposed on him by this Act.
10 Minister may subscribe or acquire shares in public enterprises
(1) The Minister may, with the approval of Privy Council, subscribe for or
acquire shares in a public enterprise to be formed.
(2) All money required to be paid by the Government in subscribing or
acquiring shares shall be paid out of money appropriated by the
Legislative Assembly for that purpose.
11 Powers of Minister relating to corporate intent
(1) Notwithstanding any other provision of this Act, the Minister may, by
written notice direct the —
(a) board to include in, or omit from, a statement of corporate intent for
that public enterprise any provision or provisions as specified in
section 18(4), (a) - (f);
(b) Chairman of the board to include in the statement of corporate
intent for that public enterprise, such provision as the Minister
considers necessary —
(i) to fulfil any obligation or undertaking arising from any
international convention, agreement or arrangement to which
the Government is a party; or
(ii) to implement any policy of the Government in respect of the
Government's international relations;
Public Enterprises Act 2002 Section 12
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and any board to whom such a notice is given shall comply with the
notice.
(2) The Minister shall, before giving any notice under this section, consult the
board concerned.
PART IV - DIRECTORS
12 Directors
(1) A person holding office as a Chairman, Director, Chief Executive Officer
or other officer in a public enterprise immediately before the
commencement of this Act shall continue to hold that position as if that
person had been appointed under this Act subject to termination or
confirmation at a date to be fixed by the Minister.
(2) Where a person has not been appointed to a vacancy created under
subsection (1), the Minister may, with the approval of Privy Council,
appoint a member to fill that vacancy.
(3) The Minister shall, with the consent of Privy Council, fix the amount of
remuneration directors shall receive.
(4) There shall be no less than 3 and no more than 7 directors appointed to a
board, one of whom shall be appointed as Chairman.
13 Directors roles
A director shall act in good faith in the best interests of the public enterprise and
shall —
(a) not act, or agree to the public enterprise acting, in a manner that
contravenes the law or the constitution of the public enterprise;
(b) not agree to, cause or allow the business of the public enterprise to be
carried on in a manner likely to create a substantial risk of serious loss to
the enterprise's creditors;
(c) not agree to the enterprise incurring an obligation unless the director
believes at the time on reasonable grounds that the enterprise shall be able
to perform the obligation when it is required to do so.
Section 14 Public Enterprises Act 2002
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14 Appointment and termination of directors to boards of public
enterprises
(1) The Minister shall, with the consent of Privy Council, appoint directors to
the boards.
(2) The Minister may, with the consent of Privy Council, appoint any person
as a director by virtue of his holding a specific public office and where
that person ceases to hold such office he shall be replaced by the person
assuming that office.
(3) Each director shall be appointed for a term of 3 years and may be re-
appointed.
(4) A director may be removed from a board by the Minister for
incompetence, incapacity, bankruptcy, neglect of duty, or misconduct on
the advice of and after investigation by the Attorney General.
(5) Where a public enterprise fails to comply with its obligations under Part
IV and Part V a director, as a member of the board of the enterprise
concerned, may be removed from the board by the Minister.
15 Board meetings and quorum
(1) A board shall meet at least once every two months and at such other times
as the Chairman may require.
(2) A board meeting shall have a quorum of the Chairman and at least half of
the other members.
16 Powers of board
(1) A board shall have all of the powers provided for in the public enterprise's
governing Act or in its constitution and the Companies Act 1995, which
shall include the power:
(a) to hold, improve, manage, develop, alter, extend, equip, furnish,
repair and maintain that public enterprise;
(b) to enter into any covenants or agreements in respect of the public
enterprise;
(c) to sell or dispose of, turn to account or otherwise deal with any
property vested in the public enterprise;
(d) to direct the board of a subsidiary where it has a controlling interest,
by written notice to amend the statement of corporate intent to be
consistent with that of the public enterprise.
(e) in a subsidiary where the public enterprise has a controlling interest
determine by written notice the amount of dividend payable by that
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subsidiary in respect of any financial year or years and a subsidiary
to whom such notice is given shall comply with the notice;
(f) to exercise any functions or rights and undertake and perform any
liability in respect of or in connection with the public enterprise as
if the public enterprise were a natural person;
(g) to borrow money for the purposes of the commercial enterprise; and
(h) to do all such other things as are incidental or conducive to the
exercise of the power of the public enterprise.
(2) Before giving any notice under subparagraphs (d) and (e) a board shall:
(a) except in the case of an emergency consult with the board of the
subsidiary, if that board has members other than members of the
board of the public enterprise as to the matters to be referred to in
the notice;
(b) send a copy within 14 days after it is given to the Minister who
shall transmit a copy of the notice to Cabinet within 14 days.
PART V - ACCOUNTABILITY
17 Balance sheet
(1) The Chairman of the board shall, within 6 months of the coming into force
of this Act, deliver to the Minister, in accordance with generally accepted
accounting practice, a balance sheet of the public enterprise that shall
include its estimated value.
(2) The Chairman shall provide, where it is not possible to fix an estimated
value in the public enterprise –
(a) a statement explaining why the estimated value cannot be fixed;
and
(b) a statement advising within what period the Chairman expects to be
able to provide the estimated value of the public enterprise or
Government's interest in the public enterprise.
(3) The Chairman of the board shall provide a full valuation of the public
enterprise within 12 months of the coming into force of this Act.
(4) The Minister shall within 14 days after the balance sheet is provided, table
a copy in Cabinet.
Section 18 Public Enterprises Act 2002
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18 Statement of corporate intent
(1) The Chairman of the board shall deliver to the Minister a draft statement
of corporate intent not later than 1 month before the commencement of
each financial year.
(2) The board shall cause a subsidiary, in which the public enterprise has a
controlling interest, to deliver its draft statement of corporate intent to the
board in sufficient time to enable the board to consider, review and submit
that draft statement together with the public enterprise's draft statement in
accordance with subsection (1).
(3) Where it is not practicable for a board to supply a draft statement in
accordance with subsection (1), the Chairman of the board shall provide to
the Minister its reasons for not doing so in writing.
(4) Each statement of corporate intent shall specify, in respect of the next
financial year —
(a) the objectives of the public enterprise;
(b) the nature and scope of the activity to be undertaken;
(c) the performance targets and other measures by which the
performance of the public enterprise may be judged in relation to its
objectives;
(d) a statement of financial performance;
(e) a statement of financial position;
(f) a statement of anticipated borrowing;
(g) a statement of the principles adopted in determining the annual
dividend;
(h) any activity from which the public enterprise seeks compensation
from the Government;
(i) such other matters as are agreed by the Minister and the board; and
(j) a projection of corporate intent for the following two years.
(5) Each statement of corporate intent shall also include the estimates of the
current commercial value of the Government's investment in the public
enterprise and a statement of the manner in which the value was assessed.
(6) A board shall consider any comments made on the draft statements of
corporate intent by the Minister no later than 14 days before the
commencement of the financial year, and shall deliver the completed
statement of corporate intent to the Minister on or before the
commencement of the financial year or such later date as the Minister may
determine.
(7) A statement of corporate intent may be modified at any time by the board
provided —
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(a) that the Minister has received written notice of the proposed
modification; and
(b) the Minister's comments made thereon have been conveyed to the
board within 1 month of the date from which the notice was given.
19 Half-yearly reports
(1) The Chairman of the board shall deliver to the Minister a report of the
operations of the public enterprise within 2 months after the end of the
first half of each financial year.
(2) The report required under subsection (1) shall include the information to
be provided in the statement of corporate intent required under this Act.
20 Annual report and accounts
(1) The Chairman of the board shall deliver to the Minister —
(a) a report of the operations of the public enterprise and the
consolidated financial statements for that financial year consisting
of statements of financial position, financial performance, changes
in financial position, and any other necessary statements within 3
months of the end of each financial year; and
(b) an audit report on the financial statements within 6 months of the
end of the financial year.
(2) The reports under subsection 1(a) shall:
(a) contain such information as is necessary to enable an informed
assessment of the operations of the public enterprise including a
comparison of the performance of the public enterprise with the
relevant statement of corporate intent; and
(b) state the dividend payable to the Government by the public
enterprise for the financial year to which the report relates.
21 Dividends
(1) A board shall pay dividends to the Government.
(2) The board shall meet with the Minister six months after the end of each
financial year and agree upon the principles upon which the dividend for
that year shall be paid.
(3) The dividend shall be paid into the General Revenue Account.
Section 22 Public Enterprises Act 2002
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22 Information to be presented to the Legislative Assembly
(1) The Minister shall table in Privy Council and the Legislative Assembly,
within 28 days of receiving them and if the Legislative Assembly is not in
session forthwith at the next ensuing session, the following documents in
respect of each public enterprise —
(a) the annual report; and
(b) the half yearly report.
(2) The Minister shall within 1 week of tabling them before the Legislative
Assembly publish a notice in the Gazette where the documents can be
inspected and the prescribed fee.
23 Other information
(1) Subject to subsection (2), the board shall supply to the Minister or any
other person, such information relating to the affairs of the public
enterprise as the Minister shall direct.
(2) The Chairman of any board may direct an officer or employee of a
subsidiary over which it holds a controlling interest, or in any other case
with the consent of the board of the subsidiary, to comply with a direction
under subsection (1).
(3) No person who acts in accordance with this section shall be liable under
any other Act, as a result of complying with a direction under
subsection (1).
24 Audits and the role of the Auditor General
Every public enterprise shall engage, with the approval of the Minister, an
auditor qualified under section 208 of the Companies Act 1995 to audit its
financial statements.
25 Protection from disclosure of sensitive information
(1) Nothing in this Act shall be construed as requiring any public enterprise or
subsidiary of a public enterprise to include in any report required under
this Act any information which in the opinion of the board could damage
the commercial interests of the public enterprise or its subsidiary and
could, except for the provisions of this Act, be properly withheld.
(2) Should the person requiring the information challenge a refusal by the
board to disclose any information, the question may be referred to the
Supreme Court by either party.
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(3) On receipt of a question under subsection (2), the judge shall allow the
parties 14 days to make submissions in writing and shall give his ruling
within 28 days of first receiving the question and such decision shall be
final.
(4) For the determination of any such question, the judge may require the
information from the party refusing disclosure but shall not disclose it to
the other party.
PART VI - CHIEF EXECUTIVE OFFICER
26 Chief Executive Officer
(1) The board shall with the approval of the Minister, appoint a Chief
Executive Officer who shall be responsible for managing the public
enterprise and implementing the decisions of the board.
(2) The Chief Executive Officer shall be employed under a written
performance based contract of employment with the public enterprise
which shall contain the following minimum provisions:
(a) the objectives to be achieved by the public enterprise;
(b) the performance expected of the public enterprise;
(c) a review of the performance of the Chief Executive Officer;
(d) adherence by the Chief Executive Officer to the public enterprise
statement of corporate intent produced under this Act.
27 Support staff
The Chief Executive Officer may, with the approval of the board, employ such
support staff as are necessary for the effective and efficient administration of the
public enterprise.
PART VII - MISCELLANEOUS
28 Transfer of interests
(1) The Minister shall, on behalf of the Government, execute all transfers or
assignments to the public enterprise under section 7.
(2) The transfer or assignment under this section shall not entitle any person
to terminate, alter, or in any way affect the rights or liabilities of the
Section 29 Public Enterprises Act 2002
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public enterprise, the transferee or assignee under any other Act or
agreement.
29 Provision of information by subsidiary to public enterprise
Every subsidiary shall supply to the public enterprise holding the controlling
interest, such information as is necessary to enable the public enterprise to fulfil
and comply with the public enterprise's reporting responsibilities under this Act.
30 Appointments in contravention of this Act
(1) The appointment of a person as director or Chief Executive Officer in
contravention of the provisions of this Act shall be void.
(2) A director appointed in good faith in contravention of this Act shall be
deemed to have resigned his office from the date that he is advised of that
fact by the Minister.
(3) A Chief Executive Officer appointed in good faith in contravention of this
Act shall be deemed to have resigned his office from the date that he is
advised of that fact by the Chairman of the board.
31 Regulations
The Minister may, with the consent of Cabinet, make Regulations for the proper
and efficient administration of this Act.
Passed in the Legislative Assembly this 21st day of October, 2002.
Public Enterprises Act 2002 FIRST SCHEDULE
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FIRST SCHEDULE
(section 5(2))
PUBLIC ENTERPRISES SUBJECT TO ALL OF THE PROVISIONS OF
THIS ACT:
International Dateline Hotel Ltd.
Royal Tongan Airlines Ltd.
Shipping Corporation of Polynesia Ltd.
Tonga Corporation
Tonga Broadcasting Commission
Tonga Electric Power Board
Ports Authority
Tonga Water Board
Leiola Duty Free Ltd.
Tonga Timber Ltd.
Tonga Investment Ltd.
Tonga Development Bank
SECOND SCHEDULE Public Enterprises Act 2002
No. 25 of 2002 Page 18
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SECOND SCHEDULE
(Section 5(3))
PUBLIC ENTERPRISES SUBJECT TO CERTAIN PROVISIONS OF
THIS ACT:
Tonga Communications Corporation Ltd.
