The State as Public Shareholder

On the management of State owned enterprises

The policy on the management of state holdings is based on the government being an active shareholder. It must protect the public interest and manage social capital responsibly. The necessary preconditions for the policy, however are not always in place. As a result, the government’s influence on state holdings is less than it would like. These findings are presented in our report, The State as Shareholder, on the management of state holdings.


We drew the following conclusions from our audit.

  1. The state does not always have the powers it requires to be an active shareholder. There is a mismatch between the powers granted to shareholders under company law and the powers laid down in the articles of association of the state holdings.
  2. Decisions taken on major investments by state holdings are not always transparent or taken carefully.
  3. The value of the information provided to the House of Representatives on state holdings is open to improvement. The financial information is currently too fragmented. The annual report on the management of state holdings is incomplete and provides little insight owing to the lack of reference values. Information on the costs and risks of major investments made by state holdings is also lacking. Furthermore, the state holdings have not been valued since 2006.


On the basis of our conclusions we made the following recommendations.

  1. Provide the House of Representatives with transparent information on the management of state holdings and the specific measures taken.
  2. Clearly and auditably document the processes in place to assess the investment proposals made by state holdings and check how the public interest is served and what the risks are to the state.
  3. Separate shareholdership from the policy ministry.
  4. Improve the provision of information to the House of Representatives on the management of state holdings in general and of policy-based holdings in particular, and share information on investment decisions and the income received from the holdings in a transparent manner.
  5. Have the choice of instrument periodically evaluated.

Response of the Minister

Response of the Ministers of Finance and of Economic Affairs

The Minister of Finance, the Minister of Economic Affairs and the Minister and State Secretary for Infrastructure and the Environment responded to our draft report on 24 March 2015.

They agreed with our conclusion that decision making must satisfy certain principles when state holdings make major investment proposals. They thought our conclusions on the inadequacy of the information used to assess investment proposals and on the lack of attention paid to the financial consequences of an investment were too resolute.

They thought our recommendation to separate shareholdership from the line ministry was undesirable.

The ministers shared our conclusion that the provision of information to the House of Representatives was open to improvement and undertook to enhance the information value of the annual report on the management of state holdings and to amend the articles of association.

Court of Audit’s afterword

In our afterword we argue that a decision on an investment proposal should be explained to the House of Representatives because any decision would always contain subjective elements.

The subjectivity and, sometimes, the opposing interests involved in a decision on an investment proposal also strengthen us in our belief that shareholdership should be separated from the line ministry. Major investments affect the public interest and can also have financial consequences for the national budget. It is therefore important that more than one minister is involved in the decision-making process.