This page is not a current Christchurch City Council document. Please read our disclaimer.
REPORT OF THE ESTABLISHMENT UNIT
1. ROADING LATE
Officer Responsible Author Director of Operations Warren Brixton Corporate Plan Output: Table III Corporate DevelopmentThe purpose of this report is to inform the Council of additional matters relating to the formation of a roading LATE Roadstone Construction Ltd. Attention was drawn in the March 1996 report of the Establishment Unit of the next steps required to be undertaken by the Establishment Unit before its work was complete, including that of: * Valuation of the undertaking and price to be paid. * Debt securities. * Constitution of the company and statement of corporate intent. * The transfer of the undertaking and its employees. * Appointment of directors for the new company. * Appointment of company general manager. Some of these matters have now been addressed, while others will need to await the appointment of the company directors to carry out the task. Specifically this report addresses: Directors - number of
- selection criteria The procedure for the appointment of directors to a roading LATE are covered in the City Manager's report to the Strategy and Resources Committee of 15 April 1996.
Appointment of company manager DIRECTORS - NUMBER OF
The Establishment Unit has deliberated at some length on the number of directors appropriate to the company's needs even though the original recommendation stated three. There was considerable debate on the matter and the resolution that resulted, while carried, was not universally supported. "That six directors to include the manager of the major strategic alliance partner (Works Operations) and five directors chosen with reference to appropriate skills plus the need for some directors to have had experience of a roading construction business be recommended to the Council, for the Board of Roadstone Construction Limited."
1 Cont'd To explain further: * The minimum legal requirement is three directors. With three only one is permitted to be a Councillor or staff member. As additional directors are added only a maximum of 1/3 are permitted to be Councillors or staff members. * The Director of Operations' view was that the company is of a small nature and its turnover could not support more than three to four directors. Initial business volume is estimated to be $4.5M with a total staff of nine. * From the City Manager's perspective, while acknowledging the small size of the company, in order to provide the business with experience carried forward from Streetworks Management Limited and that of expertise in other fields such as legal, marketing and roading construction industry, four or five (maximum) would be needed. * Others saw accounting experience more than legal as being more important in a company of this size. * The ability of the company to sustain the directors' fees for a larger number of directors was strongly questioned, particularly as the budget provision was $15,000. Even with an increase to $18,000, spread across six directors, the sum available to each might not prove attractive, given also the responsibilities under the Companies Act. * It was considered by all that the current Works Operations Manager should be a member of the Board given the strong synergy that needs to exist between the existing Bitumen Products Plant (now included in the new company) and that of Works Operations. * It was also a strongly held view by some that there should be Councillor representation on the Board and the ratio requirements pointed to there being six as a result. * It was considered that a wider range director experience would enable the growth and expansion of the company to be addressed, while the general manager initially concentrated on the matters associated with getting the company up and running. When all these factors were added up the result pointed to six directors and therefore the recommendation above, but not without some misgivings. The early appointment of directors is however crucial given the 1 July 1996 for the company to be established and the amount of work to be done in regards to this. DIRECTORS - SELECTION CRITERIA The future success of the company is seen in part as ensuring the directors of the company are chosen carefully for their mix of skills and experience. This will enable the company to maintain a strategic focus consistent with the Council's wider objectives for Christchurch as well as being a viable business in its own right. 1 Cont'd The skills which it is seen as being of benefit to the company given its activity in
road construction
road construction tendering
bitumen products maintenance and supply
roading laboratory are Marketing - to enable the company to position itself in the road construction industry as a major player, to effectively market the products of the company to existing and new clients. Financial Management - to have the ability to determine from the company's accounts the direction of the company from a financial viewpoint and the requirements to ensure the company's viability at all times and future growth requirements. Risk Management - To be able to analyse and evaluate the direction and whether or not particular business in pursued. Commercial Experience - Have a proven background of hands-on participation in a successful business(es). Roading Industry - Have knowledge, insight or experience of the roading industry including plant and other resource utilisation. Joint Venture/Strategic Alliances - Have the ability to foster and maintain effective relationships that will enhance the company's operations. APPOINTMENT OF COMPANY GENERAL MANAGER A job description has been prepared for this position and public advertising commenced. It is expected that a short list of applicants will be drawn up ready for the company directors' consideration once appointed. NAME OF COMPANY The proposed name of the company, Roadstone Construction Ltd, is being submitted to the Registrar of Companies for approval. Advice is awaited of this and therefore at this stage no company name has been incorporated in the Establishment Plan. FUNDING To facilitate the capital funding of the LATE a loan raising resolution is required to be passed. An appropriate notice of motion forms a later part of the Council agenda. 1 Cont'd Chairman's
Recommendation: 1. That six directors be appointed to the Board of the new roading LATE. 2. That of the two elected member positions available one of those positions be for the current Works Operations Manager. 3. That the selection of directors be in accordance with the procedures as detailed in the City Manager's report to the Strategy and Resources Committee of 15 April 1996 and the criteria contained within this report.