1. Australian Governance Standards
Associate Professor Rosemary Teele Langford, Melbourne Law School

2. Broader Context Spotlight on governance in Australia
Banking Royal Commission
Brought to light poor governance in financial institutions and urged the regulator (ASIC) to take a ‘Why not litigate?’ approach
Global implosion in trust in institutions
Release of ASX Corporate Governance Principles and Recommendations –
These were somewhat controversial because the consultation draft contained text on the importance of an entity’s social licence to operate, which was subsequently removed
Review of the Australian Charities and Not-for-Profit Commission (ACNC)

3. Australian regulatory and governance framework
Constitutional aspects
Australian Charities and Not-for-Profit Commission Act 2012
Australian Charities and Not-for-Profits Commission Regulations 2013
Governance standards
Other layers of regulation

4. Overview of governance standards
1. Purpose and not-for-profit nature of a registered entity
2. Accountability to members
3. Compliance with Australian laws
4. Suitability of responsible persons
5. Duties of responsible persons (referred to as ‘responsible entities’)

5. Governance Standard 5(2)
A registered entity must take reasonable steps to ensure that its responsible entities are subject to, and comply with, the following duties:
To exercise the responsible entity’s powers and discharge the responsible entity’s duties with the degree of care and diligence that a reasonable individual would exercise if they were a responsible entity of the registered entity;
To act in good faith in the registered entity’s best interests, and to further the purposes of the registered entity;
Not to misuse the responsible entity’s position;
Not to misuse information obtained in the performance of the responsible entity’s duties as a responsible entity of the registered entity;
To disclose perceived or actual material conflicts of interest of the responsible entity …
To ensure that the registered entity’s financial affairs are managed in a responsible manner;
Not to allow the registered entity to operate while insolvent…

6. Appraisal of the Governance Standards
ACNC Review:
The system is ‘complex and confusing’ and it is ‘unreasonable to expect volunteer directors working within the sector to understand and comply with multiple jurisdictional and sometimes inconsistent governance requirements’.
Accountability and Enforcement Issues
Duties are imposed on the entity rather than on individuals
Some duties in the Corporations Act have been turned off
Interaction with associations legislation is complex
Detection and sanctions
Anecdotal Evidence

7. Overall The governance standards per se are not problematic
Problems with application
Constitutional issues in Australia
Need for simplification
Note also AICD NPF Principles