Why is governance important?
The basic foundations of good governance are imperative for all organisations, whether large corporations, family businesses, not-for-profit or associations. Ensuring all stakeholders have clear directions, understand their responsiblities and the role of the organisation they work for, all while minimising the risk profile of the business and those leading it, requires disciplined processes.
Director and Officer duties and liabilities
An important place to start is the role and responsibility of the Board of Directors. The duties and liabilities for directors and officers are governed by the Corporations Act 2001 which sets out the way in which the company is run, including financial accounting, decisions being made in good faith, with due diligence and care for the business they are making it for. Directors have four basic duties that include:
- Duty of care and diligence
- Duty of good faith
- Duty not to improperly use position
- Duty to not improperly use information.
In addition to these four basic duties above, there are also other director duties under the Corporations Act that you need to be aware of. Some of these include:
- Insolvent trading
- Financial information
- Disclosing directors' interests
Not-for-profit and associations have important differences to their corporate counterparts when is comes to governance. It is important for these type of businesses to have optimal processes and documentation when it comes to Board meetings and AGMs so the risk profile can be carefully managed for all involved.
There are many types of directors that exist within a business, such as de facto and shadow directors. Regardless of the title the duties and liabilities are the same as appointed directors. If you hold a director or officer role in an organisation it is imperative to know the liabilities you could be personally responsible for and do what it takes to protect yourself and the business. Having a Deed of Indemnity is a good place to start.
Taking the role of a Director should not be taken lightly. Understand the role and responsibilities of directors and what they should be aware of with Iain Rennie and Suzie Leask in this short video on Director Insights.
The role of Boards and Annual General Meetings
Good governance and board room tools are an essential component of running a business, no matter how many stakeholders are involved. The cost of getting it wrong for corporations and individuals are significant. The process of running a Board meeting or the Annual General Meeting (AGM) is governed by legislation. What is required for a valid AGM , understanding who may call a meeting and how it is run are all basics that every business should establish with clear processes and best practice documentation. COVID-19 has seen the Federal Government temporarily modify the provisions of the Corporations Act 2001to permit virtual company meetings, electronic notices of meetings and the electronic signing of company documents.
To help your businesses maintain compliance, ABLA has created the essential Board and AGM Pack that contains 30 pages of documents and templates to guide your business. These are available in a Company Pack or an Association Pack, with nuances set out in each. These packs will provide your business with the best practice documentation and processes to effectively run Board meetings and AGMs and have suitable protection in place for the business and those involved. Should your business have unusual circumstances in which you are operating we recommend seeking legal advice to ensure these documents and packs are tailored for your business structure.
These packs represent exceptional value for money. Full details are available below.