Corporate Governance Practice

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Corporate Governance Practice
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Introduction

• The Briefing will address the following aspects
  of Corporate Governance.
• An overview of key corporate governance
  legislative requirements and concepts, together
  with features of good corporate governance and
• practical tips for fulfilling corporate
  governance obligations.

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Concepts

• Corporate governance can be described as
• the process by which organisations are directed
  and controlled.
• It encompasses authority, accountability,
  stewardship, leadership, direction and control.

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Importance of Corp Gov

• Assists an organisation to achieve its
• outcomes and obligations through sound planning
  and risk management
• provides a means to assist in decision making and
  to improve accountability
• establishes a framework for responsibility to the
  organisations members.

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Features of Good Corporate Governance

• Strategy setting planning
• Risk management
• Consultation
• Roles and responsibilities
• Skills independence and resources

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Features of Good Corporate Governance

• Conduct ethics
• Performance
• Financial operational reporting
• Specific Roles Responsibilities of Board Members

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Strategy Setting Planning

• Establish goals in conjunction with management
• Plan should be owned by the organisation
• Active involvement of Board members is critical
• Consultation with key stakeholders

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Risk Management

• Identify risks - what can happen when?
• Analyse risks - determine controls liklihood of
  consequences
• Assess prioritise risks - determine acceptable
  level of risk
• Treat risks - identify treatment prepare
  implementation plan.
• Continuous monitoring - as well as amend.

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Consultation -Internal External

• Consultation with key stakeholders is
  essential
• Assists stakeholders to work with the
  organisation
• If effective consultation should assist in
  creating an environment of mutual respect and
  trust
• Working together and with stakeholders will
  maximise the benefits of the relationship

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Roles Responsibilities

• Clearly understand your position under relevant
  legislation and rules of incorporation
• Documented organisational policies describing the
  roles of Board members should be understood and
  adhered to
• Concerns relating to roles should be discussed
  with Chair and if necessary raised at Board level.

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Skills, Independence and Resources

• Any Board should have the right mix of skills to
  manage the organisations affairs.
• Skills should usually cover
• finance, marketing, service management - add
  extra for CQUSA as determined.
• Board members should be able to provide a
  balanced, objective representation at Board
  level
• This ensure Boards do not make emotive decisions.

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Skills, Independence and Resources

• Board members need to have access to adequate and
  appropriate resources either internal and/or
  external
• An induction process should ensure Board members
  are aware of their roles and responsibilities and
  the organisations objectives.

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Conduct Ethics

• The tone set by the Board has a major influence
  on the organisations integrity, ethics and values
  - (see squabbling in NRMA and Nick Whitlam)
• A code of conduct should be developed with
  management staff and cover
• principles of responsibilities and duties of
  Board members, management and staff and
• guidance for interpreting the principles.

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Performance

• A means of assessing the performance of Board
  members should be in place
• If Board members are volunteers any assessment
  process should not be oppressive or onerous
• The roles of individual Board members should be
  defined - from that the expectation of their
  contribution can be determined and measured.

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Financial Operational Planning

• Timely financial and operational reporting is
  important in ensuring that
• the organisations objectives are being met
• assist in decision making
• If you can not understand any reports ask! You
  are the responsible person.
• Reporting should be comprehensive enough to
  ensure Board members are well informed but to so
  complex that they confuse.

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Specific Roles Responsibilities of Board
Members

• It is important to be aware of the legal
  framework under which the organisation is
  registered
• Legislation regarding Associations Incorporation
  may be different in various states
• Minimum standards exist for Board members
• Breaches could lead to both civil criminal
  action against Board members.

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Corporation Law

• The following illustrates the general
  responsibilities of directors under Corporations
  Law
• Annual report
• a financial report and Board directors report
  must be prepared each year
• Accounting records - maintained for 7 years
• a company must keep written financial records
  that correctly record and explain its
  transactions, financial position and performance.

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Corporation Law

• Care Diligence - Civil Obligation.
• Board members must exercise their powers and
  discharge their duties with reasonable care and
  diligence
• Good Faith - Civil Obligation.
• Board members must exercise their powers and
  discharge their duties in good faith and in the
  interests of the company.

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Corporation Law

• Use of Position and Information - Civil
  Obligation
• A Board member must not improperly use their
  position or use information to gain an advantage
  or cause detriment to the company or another
  person
• Use of Position - Criminal Offence
• A Board member commits an offence if they use
  their position dishonestly or recklessly and fail
  to exercise their duties in good faith and in the
  best interests of the company.

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Corporation Law

• Reliance on Other Information.
• A Board member may rely on expert advice where
  the reliance is made in good faith
• A Board member needs to make a judgement on
  reasonable grounds, in good faith and after
  making proper inquiry.
• Material Personal Interest
• A Board member has the responsibility to inform
  other Board members of material personal
  interests.

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Corporation Law

• Disqualification of Board Members.
• A Board member may be disqualified if they
• are convicted of an offence that concerns the
  company
• found to be in contravention of the Corporations
  Law
• are a bankrupt or have not been discharged from
  their deed of arrangement under the Bankruptcy
  Act.

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Corporation Law

• Duty to Prevent Insolvent Trading
• failure to prevent insolvent trading may result
  in personal liability for debts where
• the person was a Board member when the dept was
  incurred
• the company was inslovent at the time
• at the time there was reasonable grounds to
  suspect the company was insolvent.

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General

• Board of Directors Vs. Board of Management.
• Directors direct - Managers manage.
• Contentious Issue should be debated at Board
  level
• Once agreed Board members should show solidarity
  and support decision
• The authority of the company is vested in the
  Board, not any individual.

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Conclusion

• The Corporate Governance briefing session has
  addressed the following issues
• An overview of key corporate governance
  legislative requirements and concepts, together
  with features of good corporate governance and
• practical tips for fulfilling corporate
  governance obligations.

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Conclusion

• It has also addressed a number of functions
  relating to Directors responsibilities, which
  included
• Strategy setting planning
• Risk management
• Consultation
• Roles and responsibilities
• Skills independence and resources
• Conduct ethics

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Conclusion

• Performance
• Financial operational reporting
• The session concluded with a discussion on the
  specific roles and responsibilities of Board
  members as well as some general comments.