The NCSC – Corporate Governance

Corporate Governance refers to the complete processes, customs, policies, legislation, institutions and audit systems which serve for the organization’s management and audits. Corporate Governance also defines the relations between the stakeholders, as well as the governance objectives of the organization enterprise. The main stakeholders include shareholders, company management and the board of directors. Additional stakeholders are employees, suppliers, clients, banks and other loaners, regulators and the community in which the organization operates. Appropriate Corporate Governance is the basis for the business’ ethical conduct and values relating to social responsibility.

Corporate Governance in the Israeli National Coal Company

The Israeli National Coal Company attributes key importance to the appropriate conduct of the Board of Directors, as well as to regulation compliance – legislation, guidelines and other rules. As part of the Board of Directors responsibility and commitment to proper corporate governance, it must be capable of leading the enterprise in all areas, including those related to promoting corporate responsibility, ensuring continuous auditing of the organization, avoiding conflict of interest and upholding the highest professional standards.

Relations with the Israeli Electric Corporation

As the sole owner of the Israeli National Coal Company, the Israel Electric Corporation is a major stakeholder in the strategic and operational environment of the Israeli National Coal Company. The Israel Electric Corporation’s fuel mix stipulates the coal reserve objectives of the Israeli National Coal Company. Additionally, the coal criteria specifying the composition requirements for the purchased coal (source, quality and other criteria) is coordinated with the Israel Electric Corporation.

The relations between the two companies also pertain to the field of corporate governance, since some of NCSC’s Directors are employees of the Israel Electric Corporation.

Coal Stockpile at a Power Station

Coal Stockpile at a Power Station


Regulation

As a subsidiary state-owned company in charge of an area of national importance, which has an immense impact on the Israeli economy, the Israeli National Coal Company must comply with various rules and regulations (on the national and municipal level) and its activities include many interfaces with regulatory entities.

The key regulatory entities which impact company activity include:

  • The Government Companies Authority (GCA) – NCSC is operating by the Government’s Companies Law and in addition’ The GCA occasionally publishes regulations and guidelines which obligate the company to meet changing or new regulation.
  • The Environmental Protection Ministry – Monitors environmentalism-related company issues, and demands standards compliance in use of coal, e.g. a standard for using coal ash.
  • The Public Utility Authority  – Electricity (The Electricity Authority ) – Electricity rates, which are set by the Electricity Authority, impact the mix of fuels purchased by the Israel Electric Corporation, thereby influencing the activity of the Israeli National Coal Company.
  • Ad-Hoc Ministerial Committees – These committees influence the structure of the company and its responsibilities in the electricity market. For example, in 2001, a ministerial committee decided to privatize the company by selling all its state-owned shares to the Israeli Electric Corporation.
  • Fuel and Gas Administration – Coal import to Israel requires a license issued by the Fuel Administration in the National Infrastructure Ministry.
Pipelines serving the electricity production process

Pipelines serving the electricity production process

 

The rules and regulations forming the regulatory environment of the company include:

  • Corporate by-laws and the governmental decision which established the company
  • The  Israeli Government Companies Law – 1975 and other regulations or guidelines which  the  Government Companies Authority issuing from time to time (regarding appointments for the Board of Directors, internal auditor, risk management, etc.)
  • Rules and regulations pertaining to the ownership structure of the company and the structure of the electricity market in Israel
  • The Tender Obligation Act
  • SOX implementation regulation, articles 302, 404
  • Environmentalism-related legislation, which involves restrictions on certain types of coal and requirements for an extremely low average sulfur level, setting a standard for using coal ash and keeping water clean and contamination-free.