Corporate Governance: Handbook for the board 

• 1.1 Purpose of this Handbook
• 1.2 Target Audience
• 1.3 Handbook Limitations

Company Directors and Committee Members¹ need to demonstrate both educative and technical prowess and moral fibre. Individuals holding these positions require an understanding of what it means to be a Company Director or a Committee Member and the significant legal responsibilities in relation to fulfilling governance obligations on behalf of their organisation.

For the purposes of this Handbook, from time to time, the Handbook will refer collectively to the above titled positions 'Company Directors' and 'Committee Members' as the 'Board' or the Board Members or equivalent. Your organisation may use various terminologies such as the Board, Committee, and Committee of Management, Directors, Board of Directors, Governing Committee or other variations. In addition consistent with common business language the terms 'company' and 'association', may also from time to time be used interchangeably within this Handbook with the terms, 'corporation', 'entity' or 'organisation'.

Being a Company Director or Committee Member is a professional occupation, even though in many cases for funded Not‑For‑Profit organisations such individuals perform their roles voluntarily. Individuals who pursue this profession need to acknowledge and accept the serious nature of the responsibilities and duties that they have given an undertaking to fulfill.

Implementing and maintaining a sound corporate governance framework requires a thorough knowledge of legal requirements and better practice combined with a practical and defensible approach in order to fulfill those requirements.

[ top ]

1.1 Purpose of this Handbook

The purpose of this Handbook is to provide a handy reference guide, to aid readers in understanding the serious commitment of being a Company Director or Committee Member. This Handbook provides the following information:

• A broad overview of key governance legislative requirements for Board Members of companies and incorporated associations;
• An overview of features of good corporate governance practices; and
• ractical ideas and tips for Board Members to consider in fulfilling corporate governance obligations.

1.2 Target Audience

The focus of this Handbook is to assist Company Directors and Committee Members of organisations supported by disability service support and advocacy programs² administered by the Commonwealth Department of Families, Housing, Community Services and Indigenous Affairs. Specifically:

• Directors of companies³ incorporated under the Commonwealth Corporations Act 2001; and
• Committee Members of associations incorporated under the various State and Territory Associations Incorporation Acts.

Governance legal requirements apply regardless of whether or not a Board Member or another Officer performs their roles voluntarily or in a paid capacity.

Other Officers including the Chief Executive Officer or equivalent, Chief Financial Officer or equivalent, other members of senior management and other employees who support Company Directors and Committee Members may also find the Handbook helpful to assist in carrying out their duties.

[ top ]

A recent report⁴ by the Australian Government Productivity Commission noted the following:

"There is a push for greater accountability by NFPs⁵ from governments and the community. Business and other major donors increasingly want evidence of the effectiveness of the activities, and prefer NFPs that can provide robust business cases for the investments they seek...Most NFPs agree that significant financial support warrants accountability (such as audited accounts and business plans) and demonstrable results."

In addition the report noted:

"Boards...need to develop their governance skills as their tasks have become more complex with delivery of government funded services and demands by donors, members and clients for greater accountability."

1.3 Handbook Limitations

This Handbook is not intended to replace existing mechanisms used by Company Directors, Committee Members and other Officers to monitor and act on requirements set down in Statute Law, Common Law (including Equity Law) and Contract Law. Rather, it is a tool to facilitate improved understanding of corporate governance legal obligations and better practices, and present some ideas and resources to contribute to the implementation of effective corporate governance within organisations.

The contents of this Handbook are based on legislative requirements and relevant better practice at the time of the preparation of the Handbook.

1. In this context a Committee Member typically means a member of the Committee of Management or equivalent of an Association registered under the relevant State or Territory Associations Incorporation Act.
   
   
2. At the date of this Handbook the two main disability services programs funded by the Commonwealth Department of Families, Housing, Community Services and Indigenous Affairs are Australian Disability Enterprises and the National Disability Advocacy Program.
   
   
3. Not-For-Profit entities incorporated under the Corporations Act 2001 are registered as Companies Limited by Guarantee and therefore do not have the power to issue shares.
   
   
4. 'Contribution of the Not-for-Profit Sector', Research Report, Australian Government Productivity Commission, January 2010, p.xxx (roman numerals) and p.26.
   
   
5. 'NFPs' means Not-For-Profit organisations.