Strategic commercial interventions: assurance playbook

Commercial Corporate Governance Principles

Part 1 - Initiating Companies in Public Ownership to Deliver for The Public Good: Standard Operating Procedures

Part 2 - Developing Companies in Public Ownership to Deliver for The Public Good: Standard Operating Procedures

What is it?

Corporate Governance is the system of rules, practices and processes that are put in place to manage and control a company. The Commercial Corporate Governance Principles guidance highlights the areas to consider when establishing and controlling public corporations.

It defines relationships and the distribution of rights and responsibilities among those who work with, and in, the public body, determines the rules and procedures through which objectives are set, and provides the means of attaining those objectives and monitoring performance. Importantly, it defines where accountability lies throughout the public body.

The guidance outlines a framework for developing metrics to measure and monitor compliance, e.g. Operating Cash Flow and Environmental, Social and Governance (ESG), e.g. carbon emissions. Metrics can form key performance indicators (KPIs) for compliance and be included as board agenda items.

What is its purpose?

This guidance, whilst providing high level background to public bodies, is primarily concerned with the establishment and effective control of public corporations and Non-Ministerial Departmental Bodies (NDPBs) to deliver for the public good.

The guidance aligns with the Scottish Public Finance Manual and existing guidance on public bodies, with a focus on sharing practical experience when public corporations and NDPBs should be considered as an effective means to achieve specific policy objectives regarding business intervention, and the critical factors needed to make them a success, with a particular focus on optimising the return on investment.

When should it be used?

This guidance can be applied to circumstances where officials are required to initiate a completely new company as a public corporation or NDPB, or where an existing private company is brought under ministerial control or public ownership and Scottish Government governance and administrative arrangements are to be introduced to appropriately implement such control to ensure the company delivers for the public good. Specifically, it can be used to help guide the following processes:

• Define The Public Sector & Classification of Public Bodies.
• Initiate and Finance a Public Corporation or NDPB.
• Create effective Sponsorship of Public Bodies.
• Understand and draft Articles of Association & Framework Agreements.
• Develop ESG metrics guidance to record and monitor public value.

Useful Resources

Public bodies in Scotland: guide - gov.scot (www.gov.scot)

Business Investment Framework