Welcome to Directors Australia’s blog

Directors Australia works with the boards, directors and executive managers of organisations to achieve the highest standards of corporate governance. Our aim is to improve board and organisational performance, and on this blog we’ll be posting regular articles on issues of relevance to directors, boards and senior management. We welcome thoughtful comments on the topics raised as well as suggestions on any topics you would like covered via This email address is being protected from spambots. You need JavaScript enabled to view it.

Disclaimer: This blog site has been prepared by Directors Australia for the purposes of providing general information only. Nothing on this blog site should  be used or relied on for legal or other advice by any party. Each party's individual circumstances may change the effect and relevance of any matters discussed.

In November 2013, the Assistant Treasurer released a discussion paper entitled 'Better regulation and governance, enhanced transparency and improved competition in superannuation' for public consultation. The paper is in accordance with the Government's election commitments to improve governance, increase transparency of information provided by super funds, and boost competition and transparency in the selection process of default super funds in modern awards.

The paper has again raised the issue of the ideal composition of superannuation boards with the Government pushing for all such boards to have a majority of independent trustee directors. 

Industry superannuation boards have traditionally been comprised of an equal number of employer and employee nominated trustee directors. However, a 2010 review recommended that one third of superannuation boards should be independent directors.

Media reports regarding submissions to the discussion paper indicate that legislative amendments to allow up to a third of industry fund board seats to be held by independent trustee directors is now likely to be supported by industry super funds despite previous opposition to the concept. Difficulties in finding suitably skilled directors has apparently led to the change of stance.

There is also reportedly support for the superannuation industry to adopt the ASX Corporate Governance Principles and Recommendations which, among matters, state that boards should have a majority of independent directors. Compliance with the ASX Principles is not mandated but rather on an 『if not, why not’ basis.

Submissions on the draft paper closed on 12 February 2014.


The Federal Government has announced that the Australian Charities and Not-for-profits Commission (ACNC) will be abolished and replaced with a Centre of Excellence which will have innovation and advocacy functions. The Australian Securities and Investments Commission (ASIC) and the Australian Taxation Office (ATO) will resume regulatory functions regarding charities. 

The Minister for Social Services, Hon Kevin Andrews, has also flagged the possibility of a self-regulatory model for the not-for-profit sector whereby an independent (non-government) entity reports on various aspects of not-for-profit organisations.  Such a charity evaluator model is the US-based Charity Navigator.

Until such time as amendments abolishing the ACNC are passed by Parliament, charities are required to comply with the requirements currently in force. These requirements include lodging Annual Information Statements and meeting the Governance Standards in order to remain registered.

The Federal Government has made a raft of other announcements that also impact on the not-for-profit sector including that the Government:

  • intends to repeal the statutory definition of 『charity’ and 『charitable purposes’ for all Commonwealth purposes (repeal of the definitions, which came into effect on 1 January 2014, will mean reversion to the common law), and
  • does not intend to proceed with its Unrelated Business Income Tax (UBIT).

Many boards are refocussing their efforts on safety governance following the introduction of national workplace health and safety legislation in Australia, which includes a positive duty of due diligence for directors and officers.

Here we provide a handy ‘due diligence’ check list to assist directors and officers fulfil their legislative duties.
Governance of workplace health and safety has come to the fore of directors’ minds since the introduction of the national harmonised work health and safety (WHS) laws in January 2012.  The new WHS legislation has been enacted in all states and territories except Victoria and WA, who still continue with their previous OHS legislation.

Key aspects of the new WHS legislation include:

  • a primary duty of care requiring persons conducting a business or undertaking (PCBU) to ensure, so far as is reasonably practicable, the health and safety of workers and other persons who may be affected by the carrying out of work
  • a positive personal duty on officers of the PCBU to exercise due diligence to ensure the PCBU complies with their duties and obligations under the WHS Act
  • significant penalties for breaches for officers and PCBUs.

Due diligence within the harmonised legislation can be summarised as taking reasonable steps to:

  • acquire and keep up-to-date knowledge of WHS matters
  • understand the nature of the business, hazards and risks
  • ensure the PCBU use resources and processes to eliminate or minimise WHS risks
  • ensure the PCBU has processes for receiving, considering can responding to information on incidents, hazards and risks
  • ensure the PCBU implements processes for complying with duties and obligations under the WHS Act
  • verify the provision and use of the above resources and processes

Guidelines on how to meet due diligence and interpret ‘reasonably practicable’ have been released by Safe Work Australia and the state and territory WHS regulators.  There have been no prosecutions in Queensland under the new WHS legislation to date, which will in the future help to guide business decision-making as precedents are set.

Kitney Occupational Health and Safety suggests key considerations for officers to meet due diligence.  First and foremost is a look at the organisational structure and a clear understanding of who the duty holders are (the officers and the PCBUs) and their duties.  The size and structure of the organisation will determine whether there are a group of officers (such as the CEO, Company Secretary and Board) or an individual officer who may also be the business owner and PCBU.

Having established who the duty holders are, considerations for meeting due diligence include:

  • ensuring a good understanding of the legislation and obligations
  • being aware of the hazards and risks of the organisation
  • including WHS within strategy, business planning and budgeting
  • ensuring the PCBU has an effective WHS management system that meets legal requirements and provides the controls needed to manage the hazards and risks of the organisation
  • ensuring the organisation has access to WHS knowledge and expertise that is relevant to the industry and business activities
  • including WHS within Board and/or management meetings
  • receiving and reviewing WHS performance reports.

Officers need to ensure that the PCBU has assessed the circumstances, hazards and risks of the organisation and taken action based on what they are reasonably able to do, along with periodically reviewing risk controls.
Key documents needed by officers to assist them in meeting due diligence include a hazard and risk register for the organisation, a legal or external references register, WHS strategy and plans, budgets that include WHS and WHS performance reports.

Along with the actions above, support that officers can give to the PCBU to meet their obligations include a visible interest and commitment to WHS.  This may be during meetings, visits within the organisation and during contact with key stakeholders.

Clear and visible commitment to WHS sets the tone and culture for the organisation and will strongly influence the behaviours of managers and workers.  It is the combination of systems and culture that will ensure the duties of the PCBU are met and thus the due diligence of officers.

For further information regarding safety governance in your organisation, contact Directors Australia at 07 3221 5107 or Kitney Occupational Health and Safety at www.kitney.com or 07 3910 1117.


A long-awaited parliamentary committee inquiry into family businesses has made 21 recommendations to bolster this significant sector in the Australian economy. It is estimated that 70% of Australian businesses are family businesses.

A key recommendation of the inquiry is establishment of an inter-departmental committee (IDC) to identify policy issues for family businesses that are not adequately captured within the existing policy framework and with existing Australian Bureau of Statistics (ABS) data collection. The IDC would also develop a formal definition of a family business.

The committee also recommended that ASIC consult with family businesses to gauge their understanding of the Corporations Act 2001, in particular directors’ duties and liabilities.  

Other recommendations of the inquiry include:

  • including the family business sector in current review processes regarding the operation of trust tax rules
  • reviewing the operation of the 80 year rule which limits the lifespan of the family trading trust
  • reviewing the 50 non-employee shareholder maximum for proprietary limited companies, which can readily be exceeded in family businesses forcing them to become unlisted public companies with enhanced reporting obligations.

The inquiry also identified the need for the IDC to consider various issues regarding succession planning in family businesses and the policy implications for the economy. In this regard, a recent BDO report found that only 39% of family businesses have a succession plan which nominates a successor for the CEO role.

The full report of the Parliamentary Joint Committee on Corporations and Financial Services regarding Family Businesses in Australia – different and significant: why they shouldn’t be overlooked can be accessed here.

The BDO report Family Business: Wealth & Knowledge Transfer Report can be accessed here.


A new statutory definition of charity will come into effect on 1 January 2014 replacing reliance on hundreds of years of common law for the meaning of charity and charitable purpose.

Under the new Charities Act 2013, ‘charitable purpose’ means any of the following:

a) advancing health
b) advancing education
c) advancing social or public welfare
d) advancing religion
e) advancing culture
f) promoting reconciliation, mutual respect and tolerance between groups of individuals that are in
g) promoting or protecting human rights
h) advancing the security or safety of Australia or the Australian public
i) preventing or relieving the suffering of animals
j) advancing the natural environment
k) any other purpose beneficial to the general public that may reasonably be regarded as
    analogous to, or within the spirit of, any of the purposes mentioned in paragraphs (a) to (j)
l) promoting or opposing certain changes to matters established by law, policy or practice in the  
   Commonwealth, a State or a Territory or another country, if:
     (i)  in the case of promoting a change—the change is in furtherance or in aid of one or more of
           the purposes mentioned in paragraphs (a) to (k); or
     (ii)  in the case of opposing a change—the change is in opposition.

The Act is intended to bring together all of the common law developments which have emerged as charities have evolved, and put them in clear, modern and accessible language.

However, there has been an underlying concern that the danger of a statutory definition is inadvertent omission of a purpose which should be charitable in nature.
A copy of the new Act can be accessed here.