PART 4: FINANCE

Division 1: General Provisions

Initial Capital – Determination

• The initial capital of the corporation shall be as determined in writing by the Minister:

•  
  • as soon as possible after the commencement of this Act;
  • after consultation with the Minister for Finance;
  • taking into account any relevant advice given by the Board;
  • taking into account the determination of assets and liabilities under Division 2.

Form of Initial Capital

• The initial capital of the corporation determined under section 58 shall be deemed to be the equity of the government in the corporation.

Ongoing Capital

• • the capital of the corporation shall be equal to the sum of:
• the initial capital determined under section 58;
• any part of the corporation’s liabilities to the government at the commencement of this Act that is subsequently converted into capital at the direction of the Ministry;
• any amount paid to the corporation by the government after the commencement of this Act for the purpose of providing capital less any amount repaid to the government by the corporation at the direction of the Ministry:
• any part of the corporation’s reserves that are converted into capital at the direction of the Ministry.

•  
  • In making a direction under this section, the Ministry shall have regard to the advice of the Board;
  • Any direction under this section shall be in writing.

Payment of Dividends

• The corporation may pay dividends to the government on its capital, as determined by the Ministry having regard to the advice of the Board and in accordance with normal commercial practice.

Financial Objective – Initial

• For the first three years after the vesting date the corporation shall generate sufficient revenue to cover all of its operating expenditure and the capital expenditure required to maintain and develop existing operations.

Financial Objective – Ongoing

• From the fourth year of operation, the corporation taking one year with another, shall generate sufficient profits to pay dividends to the Government at a normal commercial rate of return as determined by the Ministry and subject to section 64.

Financial Objective – Community Service Obligation Adjustment

• The calculation of a dividend under section 63 may be adjusted to take into account the costs of providing uneconomical services to meet the community service obligation in section 10.

Expenditure

• Expenditure may be incurred by the operation only in the performance of its functions and shall be properly authorized in accordance with procedures approved by the Board.

Use of Funds Not immediately Required

• The Board shall determine in writing a policy for the investment of funds not immediately required and to be invested under subsection 13(12).

Accounting System

• An accounting system in accordance with generally applicable commercial accounting standards shall be maintained.

Financial Year

• The financial year shall commence on 1 January or as otherwise determined by the Ministry of Finance.

Audit

• The Auditor General or a person authorized in writing by him shall audit the accounts of the corporation.

Auditor’s Certificate

• • Each year within 6 weeks of the submission of the annual accounts for audit the auditor shall provide to the Board a certificate stating whether in his opinion:
• the accounts of the corporation give a true and fair view of its transaction during the period of audit and its current financial situation;
• whether the books of the corporation have been kept in accordance with this Act and the relevant accounting standards;
• whether or not the transactions of the corporation have been within the powers of the corporation;
• any other matter which he considers should be brought to the attention of the Board.

•  
  • The auditor may at any time during the year prepare and submit to the Board a supplementary audit report.

Conducts of Audits

• For the purposes of audit the auditor may:

•  
  • have access for examination to all accounts, records, documents, stocks and premises of the corporation at any reasonable time;
  • require any person to furnish him such information and explanation as he may require.

Provision of Information to the Auditor

• A person shall not refuse or fail to comply with a request of the auditor under section 71 or provide false or misleading information on purporting to comply with such a request.

Maximum Penalty: one year imprisonment or equivalent fine.

Cost of Audits

• The cost of audits shall be borne by the corporation unless otherwise determined by the Ministry of Finance.

Provident Fund

• The corporation shall have the power to establish a provident fund scheme for its employees, or to contribute to a scheme or fund established by others for this purpose.

Gratuity Fund

• The corporation shall establish a Gratuity Fund for its employees and the fund shall be operated and maintained as follows:

•  
  • Funds from the general revenues of the corporation shall be contributed to the Fund so that its balance at any time equals or exceeds the liability of the corporation if all of its employees were to separate at that time;
  • Funds of the Fund may be invested in accordance with a policy determined by the Board but not in the assets or operations of the corporation;
  • The Board may appoint a person to manage the Fund on its behalf in accordance with the policy in subsection(2);
  • Payments from the Fund may only be made for the operating expenses to the fund including the fees of any person appointed under subsection (3), and to employees on separation.

Taxation

• • The corporation shall be exempted from all taxes and duties for the first three years from the vesting date ;
  • After the expiration of three years from the vesting date the corporation shall pay taxes on the same basis as a company under the Companies Act 1989 as amended or replaced from time to time.

Division 2: Transitional Provisions

Transfer of Assets and Liabilities

• The Ministry of Finance shall transfer, or caused to be transferred, all of the assets and liabilities of the department in respect of postal services into the name of the corporation.

Definition of Assets and Liabilities

• For the purposes of section 77, the assets and liabilities of the department shall include, for example:

•  
  • all land, buildings, vehicles, plant, equipment, stores, and any other thing, employed in respect of the postal service;
  • any cash on hand, cash at bank, security, or other financial entitlement of the postal service;
  • any building under construction or item for which an order has been placed but not yet fulfilled where that building or item is intended for the use of the postal service;
  • any debt or financial obligation under contract or otherwise.

Method of Valuation of Assets and Liabilities

• • all tangible assets and liabilities shall be valued at book value for the purposes of determining the initial capital of the corporation;
  • all intangible assets shall be valued on actuarial principles;
  • the initial value of depreciated assets shall be the original purchase price;
  • where capital expenditure has been incurred on an asset during its life, that capital expenditure shall be treated as a separate asset purchased at the date of the expenditure for the purpose of determining the book value of the asset;
  • the rate of depreciation used for determining book value shall be the standard rates of depreciation prescribed in the Financial Manual 1988 as amended from time to time.
  • any building or item described under section 78(3) shall be paid for by the Government when payment is due and valued at the total purchase price paid by the Government.

Date of Effect

• The date of effect of the transfer of assets and liabilities shall be the vesting date.

Certificate of Transfer of Assets and Liabilities

• The Ministry of Finance or an officer of the Government authorized by it in writing may certify that a particular asset or liability transferred under section 77 has been so transferred and judicial notice shall be taken of such a certificate not withstanding that any other document or certificate of title has not been amended or re-issued to show the change in ownership.

Contracts and Arrangements

• Contracts and other arrangements in force for the department immediately prior to the vesting day shall continue to have effect from the vesting day as if the corporation had entered into the contract or made the arrangement.

Provident Funds

• At the vesting date the corporation shall assume all of the responsibilities, liabilities and duties of the department and the Government towards the Royal Insurance Corporation Provident Fund in respect of officers of the department who transfer as employees of the corporation.