3Works that reduce the use of materials or enable the recovery or recycling of materials.

3 Works that reduce the use of materials or enable the recovery or recycling of materials. late payment fee means an administrative fee that may be retained by a council for late payment of a building upgrade charge; primary parties to a building upgrade agreement means the parties referred to in clause 2(1); relevant land means the land on which is situated a building that is, or is intended to be, the subject of a building upgrade agreement; service fee means a fee that covers any costs incurred by a council in entering into, and administering, a building upgrade agreement; upgrade works in relation to a building means— (a) environmental upgrade works; or (b) works of a kind prescribed by the regulations, but does not include works of a kind excluded from the ambit of this definition by the regulations. (2) In this schedule— (a) common property, community corporation, community lot, community scheme, lot entitlement, owner and strata plan have the same respective meanings as in the Community Titles Act 1996; (b) strata corporation, strata scheme, unit, unit entitlement and unit holder have the same respective meanings as in the Strata Titles Act 1988. (3) In this Schedule, a reference to a building owner is— (a) in the case of a building that is the subject of a community scheme— (i) if the scheme is one under which the land is divided by a strata plan—a reference to the community corporation; or (ii) in any other case—a reference to the owners of the community lots; or (b) in the case of a building that is the subject of a strata scheme—a reference to the strata corporation; or (c) in any other case—subject to subclause (4), a reference to the owner of the relevant land. (4) Despite subclause (3)(c), if, in relation to— (a) dedicated land or Crown leasehold land (both within the meaning of the Crown Land Management Act 2009); or (b) land subject to a licence or Crown condition agreement under the Crown Land Management Act 2009, the Minister responsible for the administration of that Act delegates to the person or body the subject of the dedication, lease, licence or agreement the power to enter into, or to vary or terminate, a building upgrade agreement on behalf of the Crown in respect of a building on the land, a reference to a building owner in this Schedule is a reference to that person or body. (5) A delegation under subclause (4)— (a) must be by instrument in writing; and (b) may be absolute or conditional; and (c) is revocable at will. (6) A power delegated under this section may not be further delegated. 2—Building upgrade agreement (1) Subject to this clause, a council may, in relation to a building situated on land within the area of the council, enter into an agreement (a building upgrade agreement) under which— (a) the building owner agrees to undertake upgrade works in respect of the building; and (b) a finance provider agrees to advance money to the building owner for the purpose of funding those upgrade works; and (c) the council agrees— (i) to levy a charge on the relevant land (a building upgrade charge), to be paid by the building owner, for the purpose of recouping the money advanced by the finance provider for the upgrade works (and any interest or other charges payable to the finance provider under the agreement); and (ii) to pay to the finance provider any money paid to the council by way of the building upgrade charge (other than any service fee or late payment fee that the council is permitted by the agreement to deduct and retain). (2) A building upgrade agreement may only be made in respect of a building of a prescribed kind, the construction of which was completed at least 2 years before the making of the agreement. (3) If a building upgrade agreement includes provision for payment to the finance provider of penalty interest on money advanced by the finance provider under the agreement, the rate of such interest will be— (a) if the regulations provide for the determination of the rate—determined in accordance with the regulations; or (b) if the regulations do not provide for the determination of the rate—determined in accordance with the agreement. (4) If the primary parties to a building upgrade agreement agree, the agreement may be entered into by any other persons that the primary parties consider should be parties to the agreement. (5) A council must not enter into a building upgrade agreement unless— (a) the total amount of taxes, rates, charges and mortgages owing on the relevant land, when added to the total value of the building upgrade charge as set out in the proposed building upgrade agreement, is an amount not exceeding 80% of the capital value of the relevant land prior to any works that would be undertaken as part of the agreement; and (b) the building owner has complied with subclause (6) and with any additional requirements prescribed by the regulations. (6) A building owner who intends to become a primary party to a building upgrade agreement with a council must— (a) give any existing mortgagee in respect of the relevant land written notice— (i) of the building owner's intention to enter into a building upgrade agreement; and (ii) of the particulars of any proposed building upgrade charge that is to be levied by the council under the proposed agreement; and (iii) of any prescribed matters; and (b) provide the council with the following information verified by statutory declaration: (i) particulars of all mortgages (both registered and unregistered) over the relevant land, including— (A) the total amount owing in respect of each mortgage; and (B) if a relevant mortgage is held against 2 or more properties including the relevant land—the proportion of the debt secured by the mortgage that applies to that land calculated in accordance with subclause (7); (ii) particulars of all taxes, rates and charges owing on the relevant land (including the total amount owing in respect of each tax, rate or charge) imposed by or under an Act; (iii) a statement that the building owner has complied with paragraph (a). (7) For the purposes of subclause (6)(b)(i)(B), the proportion of the debt secured by the mortgage that applies to the relevant land must be calculated by distributing the debt between all the properties against which the mortgage is held in proportion to the relative capital values of the properties. 3—Agreement to be made on voluntary basis (1) Entry into a building upgrade agreement is voluntary. (2) A council cannot require any person to enter into a building upgrade agreement, whether as a condition of a development authorisation under the Development Act 1993 or by any other means. 4—Variation or termination of agreement A building upgrade agreement may be varied or terminated by further agreement between the primary parties. 5—Contents of agreement (1) A building upgrade agreement must be made in writing and specify— (a) the upgrade works to be undertaken by or on behalf of the building owner under the agreement; and (b) the amount of money to be advanced by the finance provider under the agreement; and (c) the amount of the building upgrade charge to be levied by the council under the agreement; and (d) the schedule for the payment, by the building owner, of a building upgrade charge to the council; and (e) the amount of, or a method for calculating the amount of, any service fee or late payment fee that the council may deduct and retain; and (f) any prescribed matters. (2) A building upgrade agreement may— (a) provide for the early repayment of any amount payable under the agreement; and (b) include such other provisions as may be agreed to by the parties to the agreement. (3) The regulations may provide that certain matters which must be specified in a building upgrade agreement under subclause (1) are to prevail against other matters provided for in the agreement to the extent of any inconsistency. 6—Declaration of building upgrade charge (1) After a council enters into a building upgrade agreement, the council must, in accordance with the terms of the agreement, declare a building upgrade charge in respect of the relevant land (being a charge of the agreed amount specified in the building upgrade agreement). (2) If a council declares a building upgrade charge, the council must within 28 days after the declaration give the building owner written notice specifying— (a) the name and address of the building owner; and (b) a description of the relevant land in respect of which the building upgrade charge is being levied; and (c) the building upgrade agreement under which the building upgrade charge is being levied; and (d) the amount for which the building owner is liable; and (e) the manner of payment of the amount; and (f) the due date for payment of the amount, in accordance with the schedule for the payment of the building upgrade charge to the council (specified in the building upgrade agreement); and (g) the amount of, or method of calculating, any service fee of the council authorised by the building upgrade agreement and any late payment fee that may be imposed by the council if the building owner fails to pay an amount for which the building owner is liable by the due date; and (h) any prescribed matters. (3) A notice under subclause (2) must comply with any requirements prescribed by the regulations. (4) A council must, in relation to each payment in respect of a building upgrade charge for which a building owner is liable, give a notice under subclause (2) to the building owner at least 28 days before the date for payment specified in the notice. 7—Payment of building upgrade charge (1) An amount for which a building owner is liable in respect of a building upgrade charge is due and must be paid by the date specified in the relevant notice under clause 6. (2) On payment of money in respect of a building upgrade charge to a council, the council may deduct and retain any service fee and late payment fee authorised by the building upgrade agreement. (3) Money paid to a council in respect of a building upgrade charge, other than any service fee and late payment fee retained by the council, must— (a) be held by the council on behalf of the finance provider pending payment to the finance provider; and (b) be paid by the council to the finance provider in accordance with the terms of the building upgrade agreement under which the charge was levied. 8—Building upgrade charge is a charge against land (1) A building upgrade charge is, until paid in full, a charge on the relevant land. (2) However, if a building upgrade charge relates to the common property, or part of the common property, of a community scheme or strata scheme, the charge is not a charge on the common property but is, instead, a charge on each of— (a) in the case of a community scheme—the community lots of the community scheme in proportion to the lot entitlements of the respective lots; or (b) in the case of a strata scheme—the units of the strata scheme in proportion to the unit entitlements of the unit holders. 9—Sale of land for non-payment of building upgrade charge (1) Subject to this clause, if an amount for which a building owner is liable in respect of a building upgrade charge remains unpaid for more than 3 years, the council may sell the relevant land in accordance with the regulations. (2) Any money received by the council in respect of the sale of land under this clause will be applied as follows: (a) firstly—in paying the costs of the sale and any other costs incurred in proceeding under this clause; (b) secondly—in discharging any liabilities to the council in respect of the land (other than any building upgrade charge, service fee or late payment fee in relation to a building upgrade charge); (c) thirdly—in discharging any liability to the council for a building upgrade charge, service fee or late payment fee in relation to a building upgrade charge; (d) fourthly—in discharging any liability to the Crown for rates, charges or taxes, or any prescribed liability to the Crown in respect of the land; (e) fifthly—in discharging any liabilities secured by registered mortgages, encumbrances or charges; (f) sixthly—in discharging any other mortgages, encumbrances or charges of which the council has notice; (g) seventhly—in payment to the owner of the land. (3) If the owner cannot be found after making reasonable inquiries as to his or her whereabouts, an amount payable to the owner must be dealt with in accordance with section 6 of the Unclaimed Money Act 2021 as money the owner of which cannot be found. (4) If land is sold in pursuance of this clause, an instrument of transfer or conveyance (as appropriate) under the council's common seal will, on registration, operate to vest title to the land in the purchaser. (5) The title vested in a purchaser under subclause (4) will be free of— (a) all mortgages and charges; and (b) all leases and licences. (6) An instrument of transfer or conveyance in pursuance of a sale under this clause must, when lodged with the Registrar‑General for registration, be accompanied by a statutory declaration made by the chief executive officer of the council stating that the requirements of this clause and the regulations in relation to the sale of the land have been observed. (8) Despite this clause and clause 1(4), nothing in this Schedule authorises the sale of— (a) any estate or interest of the Crown in land; or (b) any interest in Crown land (within the meaning of the Crown Land Management Act 2009). 10—Repayment of advances to finance provider (1) A council is not liable to repay to a finance provider an amount advanced by the finance provider to a building owner under a building upgrade agreement until the amount has been paid to or recovered by the council by way of the building upgrade charge. (2) If a building upgrade agreement is terminated before all the money that the finance provider agreed to advance to the building owner is advanced, the council must— (a) adjust the building upgrade charge to reflect the lower amount advanced to the building owner; and (b) give the building owner written notice of the adjustment. (3) If, as a result of an adjustment being made to a building upgrade charge under this clause— (a) the building owner has made payment in respect of the charge in excess of the adjusted amount; and (b) the excess amount has been paid by the council to the finance provider, (c) the finance provider must repay the excess amount to the council; and (d) the council must refund the building owner the excess amount paid. 11—Liability of council to recover building upgrade charge (1) A council must use its best endeavours to recover a building upgrade charge in accordance with the terms of the building upgrade agreement under which the charge is authorised. (2) However, a council is not liable for any failure by a building owner to pay a building upgrade charge and any such failure does not make the council liable to pay any outstanding amount to the finance provider. 12—Recovery of contribution towards building upgrade charge from lessee (1) Subject to this clause, a provision of a lease may require a lessee to pay to the lessor a contribution towards a building upgrade charge payable under a building upgrade agreement that relates to premises that are the subject of the lease. (2) A lessor is not entitled to recover a contribution from a lessee towards a building upgrade charge payable under a building upgrade agreement unless— (a) if the lessee requests a copy of the agreement, the lessor has provided the lessee with a copy of the upgrade agreement; and (b) the lessor has given the lessee— (i) written notice of— (A) the amount of the contribution that the lessee will be required to pay; and (B) the period within which the contribution will be required to be paid, and the lessee consents to the payment of the contribution; or (ii) at least 30 days before payment of the first contribution by the lessee is due, written notice of— (A) the amount of the contribution that the lessee will be required to pay; and (B) the period within which the contribution will be required to be paid; and (C) a reasonable estimate (calculated in accordance with an approved methodology) of cost savings that may be made by the lessee, as a consequence of the upgrade works provided for by the building upgrade agreement, during the period to which the contribution relates (a reasonable estimate); and (D) evidence of the calculations made in accordance with the particular approved methodology used to calculate the reasonable estimate, and the contribution specified in the notice does not exceed the reasonable estimate. (3) The regulations may make further provision in relation to the recovery under a lease of a contribution from a lessee towards a building upgrade charge payable under a building upgrade agreement (including provisions relating to the entitlement of a lessor to recover such contributions and provisions that impose further requirements on a lessor or lessee in relation to the recovery of such contributions). (4) This clause applies subject to the operation of section 73 of the Residential Tenancies Act 1995 (so that a lessee who is a tenant under a residential tenancy agreement (within the meaning of that Act) cannot be required to pay a contribution under this clause). (5) This clause applies despite section 13 of the Retail and Commercial Leases Act 1995 and, to avoid doubt, a contribution under this clause— (a) is to be taken to be an outgoing for the purposes of that Act; and (b) in the case of a lease to which that Act applies entered into prior to the execution of a building upgrade agreement relating to premises the subject of the lease—may be recovered (despite section 26 of the Retail and Commercial Leases Act 1995) whether or not the contribution is disclosed in a disclosure statement given to the lessee in accordance with Part 3 of that Act. 13—Register of building upgrade agreements (1) A council must keep a register of building upgrade agreements. (2) The register must include the information prescribed by the regulations. (3) The register must be available for inspection (without charge) by a member of the public at the principal office of the council during ordinary office hours. (4) A person is entitled to an extract from the register (without charge). 14—Minister may require council to report on building upgrade agreements The Minister may require a council to provide a report containing the information specified by the Minister relating to building upgrade agreements entered into by the council. 15—Regulations The Governor may, by regulation, make further provision in relation to building upgrade agreements. Schedule 2—Provisions applicable to subsidiaries Part 1—Subsidiaries established by one council 1—Application for Ministerial approval (1) A council proposing to establish a subsidiary of the council under this Act must apply to the Minister under this Part. (2) An application by a council for the approval of the Minister to establish a subsidiary must— (a) be in a form approved by the Minister; and (b) be accompanied by information required by the Minister; and (c) be accompanied by a copy of the proposed charter for the subsidiary (see clause 3). (3) A subsidiary comes into existence if or when the Minister, by notice in the Gazette, signifies his or her approval of the establishment of the subsidiary. (4) The council must, in conjunction with the publication of a notice under subclause (3), ensure that a copy of the charter of the subsidiary is published in the Gazette. 2—Corporate status A subsidiary established under this Part— (b) has the name assigned to it by its charter; and (c) has the powers, functions and duties specified in its charter; and (d) holds its property on behalf of the council. 3—Charter of subsidiary (1) A charter must be prepared for a subsidiary by the council. (2) The charter must address— (a) the purpose for which the subsidiary is established; (b) the constitution of a board of management as the subsidiary's governing body; (c) whether board members will be required to submit returns under Chapter 5 Part 4 Division 1 Subdivision 2; (d) the powers, functions and duties of the subsidiary; (e) the nature and scope of any activities that will be undertaken outside the area of the council; (f) staffing issues, including whether the subsidiary may employ staff and, if so, the process by which conditions of employment will be determined; (g) whether the subsidiary is intended to be partially or fully self-funding, and other relevant arrangements relating to costs and funding; (h) any special accounting, internal auditing or financial systems or practices to be established or observed by the subsidiary; (i) the acquisition or disposal of assets; (j) the manner in which surplus revenue is to be dealt with by the subsidiary; (k) the nature and scope of any investment which may be undertaken by the subsidiary; (l) the subsidiary's obligations to report on its operations, financial position and other relevant issues; (m) other matters contemplated by this Part or prescribed by the regulations. (3) The council may include in the charter other matters that it considers to be appropriate. (4) The charter may be reviewed by the council at any time and must be reviewed by the council whenever it is relevant to do so because of a review of the council's strategic management plans. (5) The council must, if it amends a charter— (a) furnish a copy of the charter, as amended, to the Minister; and (b) ensure that a copy of the charter, as amended, is published on a website determined by the chief executive officer; and (c) ensure that notice of the fact of the amendment and a website address at which the charter is available for inspection is published in the Gazette. 4—Appointment of board of management (1) Subject to the charter of the subsidiary, the membership of a board of management of a subsidiary will be determined by the council and may consist of, or include, persons who are not members of the council. (2) A board member will be appointed by the council for a term, not exceeding 4 years, specified in the instrument of appointment and, at the expiration of a term of office, is eligible for reappointment. (3) The office of board member becomes vacant if the board member— (c) resigns by written notice to the council; or (d) becomes a bankrupt or applies for the benefit of a law for the relief of insolvent debtors; or (e) fails to submit a return for the purposes of a Register of Interests in accordance with this Act if such returns are required by the charter; or (f) is removed from office by the council by written notice. (4) A board member must be appointed to chair meetings of the board of management. (5) On the office of a board member becoming vacant, a person may be appointed in accordance with this clause to the vacant office. (6) The council may appoint a suitable person to be a deputy of a board member during a period of absence of the board member and a reference in this Act to a board member will be taken to include, unless the contrary intention appears, a reference to a deputy while acting as a board member. (7) If a member or employee of the council is appointed as a board member, he or she is not to be taken to have vacated his or her office as a member of the council, or of the staff of the council or to have been invalidly appointed to the board of management because— (a) the potential exists for the duties of the two offices to be in conflict; or (b) the duties of either office require, by implication, the person's full time attention. (8) The council may give directions in relation to an actual or potential conflict of duty and duty between offices held concurrently, or in relation to some other incompatibility between offices held concurrently and, if the person concerned complies with those directions, he or she is excused from any breach that would otherwise have occurred. 5—Proceedings of board of management (1) A quorum of a board of management will be determined by the charter of the subsidiary. (2) The board member appointed to chair the board of management will preside at meetings of the board of management at which he or she is present and, if that board member is absent from a meeting, another board member chosen by the board members present at the meeting will preside. (3) A decision carried by a majority of the votes cast by board members at a meeting is a decision of the board of management. (4) Each board member present at a meeting of the board of management has one vote on a question arising for decision and, if the votes are equal, the board member presiding at the meeting may exercise a casting vote. (5) A telephone or video conference between board members will, for the purposes of this clause, be taken to be a meeting of the board of management at which the participating board members are present if— (a) notice of the conference is given to all board members in the manner determined by the board of management for that purpose; and (b) each participating board member is capable of communicating with every other participating board member during the conference. (6) A proposed resolution of the board of management becomes a valid decision of the board of management despite the fact that it is not voted on at a meeting if— (a) notice of the proposed resolution is given to all board members in accordance with procedures determined by the board of management; and (b) a majority of the board members express their concurrence in the proposed resolution by letter, email or other written communication setting out the terms of the resolution. (7) Unless otherwise determined by the charter of the subsidiary, Chapter 6 Part 3 extends to a subsidiary as if— (b) the board members of the subsidiary were members of the council. (8) A person authorised in writing by the council for the purposes of this clause may attend (but not participate in) a meeting of the board of management and may have access to papers provided to board members for the purpose of the meeting. (9) If a board of management considers that a matter dealt with at a meeting attended by a representative of the council should be treated as confidential, the board of management may advise the council of that opinion, giving the reason for the opinion, and the council may, subject to subclause (10), act on that advice as the council thinks fit. (10) If the council is satisfied on the basis of the board of management's advice under subclause (9) that the subsidiary owes a duty of confidence in respect of a matter, the council must ensure the observance of that duty in respect of the matter, but this subclause does not prevent a disclosure as required in the proper performance of the functions or duties of the council. (11) The board of management must cause accurate minutes to be kept of its proceedings. (12) Subject to this clause, and to a direction of the council, the board of management may determine its own procedures. 6—Specific functions of board of management (1) The board of management of a subsidiary is responsible for the administration of the affairs of the subsidiary. (2) The board of management of a subsidiary must ensure as far as practicable— (a) that the subsidiary observes all plans, targets, structures, systems and practices required or applied to the subsidiary by the council; and (b) that all information furnished to the council is accurate; and (c) that the council is advised, as soon as practicable, of any material development that affects the financial or operating capacity of the subsidiary or gives rise to the expectation that the subsidiary may not be able to meet its debts as and when they fall due. (3) Anything done by the board of management in the administration of the affairs of the subsidiary is binding on the subsidiary. 7—Board members' duty of care etc (1) A board member must at all times act with reasonable care and diligence in the performance and discharge of official functions and duties, and (without limiting the effect of the foregoing) for that purpose— (a) must take reasonable steps to inform himself or herself about the subsidiary and relevant aspects of the operations and activities of the council; and (b) must take reasonable steps through the processes of the board of management to obtain sufficient information and advice about matters to be decided by the board of management or pursuant to a delegation to enable him or her to make conscientious and informed decisions; and (c) must exercise an active discretion with respect to all matters to be decided by the board of management or pursuant to a delegation. (2) A board member is not bound to give continuous attention to the affairs of the subsidiary but is required to exercise reasonable diligence in attendance at and preparation for meetings of the board of management. (3) In determining the degree of care and diligence required to be exercised by a board member, regard must be had to the skills, knowledge or acumen possessed by the board member and the degree of risk involved in a particular circumstance. (4) A board member does not commit a breach of duty under this clause by acting in accordance with a direction from the council. 8—Business plans (1) A subsidiary must, in consultation with the council, prepare and adopt a business plan consistent with its charter. (2) A subsidiary and the council must ensure that the first business plan of the subsidiary is prepared within six months after the subsidiary is established. (3) A business plan of a subsidiary continues in force for the period specified in the plan or until the earlier adoption by the subsidiary of a new business plan. (4) A subsidiary must, in consultation with the council, review its business plan on an annual basis. (5) A subsidiary may, after consultation with the council, amend its business plan at any time. (6) A business plan must set out or include— (a) the performance targets that the subsidiary is to pursue; and (b) a statement of the financial and other resources, and internal processes, that will be required to achieve the subsidiary's performance targets; and (c) the performance measures that are to be used to monitor and assess performance against targets. 9—Budget (1) A subsidiary must have a budget for each financial year. (2) Each budget of a subsidiary— (a) must deal with each principal activity of the subsidiary on a separate basis; and (b) must be consistent with its business plan and the council's strategic management plans; and (c) must comply with standards and principles prescribed by the regulations; and (d) must be adopted after 31 May for the ensuing financial year, and before a date fixed by the council; and (e) must be provided to the council in accordance with the regulations. (3) A subsidiary may, with the approval of the council, amend its adopted budget for a financial year at any time before the year ends. (4) A subsidiary may incur, for a purpose of genuine emergency or hardship, spending that is not authorised by its budget. (5) A subsidiary may, in a financial year, after consultation with the council, incur spending before adoption of its budget for the year, but the spending must be provided for in the appropriate budget for the year. 10—Subsidiary subject to direction by council (1) A subsidiary is subject to the direction and control of the council. (2) A direction given by the council under this clause must be in writing, and a copy of any direction must be available at the principal office of the council. 11—Provision of information (1) A subsidiary must, at the request of the council, furnish to the council information or records in the possession or control of the subsidiary as the council may require in such manner and form as the council may require. (2) If the board of management of the subsidiary considers that information or a record furnished under this clause contains matters that should be treated as confidential, the board of management may advise the council of that opinion giving the reason for the opinion and the council may, subject to subclause (3), act on that advice as the council thinks fit. (3) If the council is satisfied on the basis of the board of management's advice that the subsidiary owes duty of confidence in respect of a matter, the council must ensure the observance of that duty in respect of the matter, but this subclause does not prevent a disclosure as required in the proper performance of the functions or duties of the council. 12—Reporting (1) A subsidiary must, at the request of the council, report to the council on any matter, and on any basis, specified by the council. (2) A subsidiary must, on or before a day determined by the council, furnish to the council a report on the work and operations of the subsidiary for the preceding financial year. (3) A report under subclause (2) must— (a) incorporate the audited financial statements of the subsidiary for the relevant financial year; and (b) contain any other information or report required by the council or prescribed by the regulations. (4) A report under subclause (2) must be incorporated into the annual report of the council. 13—Internal audit (1) A subsidiary must establish and maintain effective auditing of its operations. (2) A subsidiary must establish an audit committee. (3) Subject to the regulations, an audit committee will comprise persons determined or approved by the council (and may include persons who are members of the relevant audit and risk committee). (4) The functions of an audit committee include— (a) reviewing annual financial statements to ensure that they provide a timely and fair view of the state of affairs of the subsidiary; and (b) liaising with external auditors; and (c) reviewing the adequacy of the accounting, internal auditing, reporting and other financial management systems and practices of the subsidiary on a regular basis. 14—Liabilities (1) Liabilities incurred or assumed by a subsidiary are guaranteed by the council. (2) A borrowing of a subsidiary requires the approval of the council (which may be absolute or conditional). 15—Principles of competitive neutrality If a subsidiary is declared by its charter to be involved in a significant business activity, the charter must also specify the extent to which the principles of competitive neutrality1 are to be applied to the activities of the subsidiary and, to the extent that may be relevant, the reasons for any non-application of these principles. 1 See Part 4 of the Government Business Enterprises (Competition) Act 1996. 16—Winding-up (1) A subsidiary may be wound up— (a) by the Minister acting at the request of the council; or (b) by the Minister on the ground that there has been a failure to comply with a requirement of the Minister under section 275 and that the circumstances are, in the opinion of the Minister, sufficiently serious to justify the taking of action to wind up the subsidiary. (2) A subsidiary is wound up by the Minister publishing a notice in the Gazette. (3) Any assets or liabilities of the subsidiary at the time of winding-up vest in or attach to the council on the winding-up. Part 2—Regional subsidiaries established by two or more councils 17—Application for Ministerial approval (1) Two or more councils proposing to establish a regional subsidiary under this Act must apply to the Minister under this Part. (2) An application by two or more councils for the approval of the Minister to establish a regional subsidiary must— (a) be in a form approved by the Minister; and (b) be accompanied by information required by the Minister; and (c) be accompanied by a copy of the proposed charter for the subsidiary (see clause 19). (3) A subsidiary comes into existence if or when the Minister, by notice in the Gazette, signifies his or her approval of the establishment of the subsidiary. (4) The constituent councils must, in conjunction with the publication of a notice under subclause (3), ensure that a copy of the charter of the subsidiary is published in the Gazette. 18—Corporate status A regional subsidiary established under this Part— (b) has the name assigned to it by its charter; and (c) has the powers, functions and duties specified in its charter; and (d) holds its property on behalf of the constituent councils. 19—Preparation of charter (1) A charter must be prepared for a regional subsidiary by the constituent councils. (2) The charter must address— (a) the purpose for which the subsidiary is established; (b) the constitution of a board of management as the subsidiary's governing body and, in respect of the board of management— (i) the method by which board members will be appointed, and their terms of office determined; (ii) the conditions of appointment, or the method by which those conditions will be determined; (iii) the appointment of a board member to chair meetings; (iv) the appointment of deputies to board members; (c) whether board members will be required to submit returns under Chapter 5 Part 4 Division 1 Subdivision 2; (d) the powers, functions and duties of the subsidiary; (e) the nature and scope of any activities that will be undertaken outside the area of the constituent councils; (f) staffing issues, including whether the subsidiary may employ staff and, if so, the process by which conditions of employment will be determined; (g) whether the subsidiary is intended to be partially or fully self-funding, or to have the ability to raise revenue, and other relevant arrangements relating to costs and funding, including the financial contributions to be made by the constituent councils; (h) any special accounting, internal auditing or financial systems or practices to be established or observed by the subsidiary; (i) the acquisition or disposal of assets; (j) the manner in which surplus revenue is to be dealt with by the subsidiary; (k) the nature and scope of any investment which may be undertaken by the subsidiary; (l) the subsidiary's obligations to report on its operations, financial position and other relevant issues, and processes for other forms of reporting to the constituent councils; (m) the process or mechanism by which the subsidiary will be subject to direction by the constituent councils; (n) the manner in which disputes between the constituent councils relating to the subsidiary will be resolved; (o) issues surrounding a council becoming a constituent council, or ceasing to be a constituent council; (p) the manner in which the property of the subsidiary is to be distributed in the event of a winding up; (q) the proportions in which the constituent councils are to be responsible for the liabilities of the subsidiary in the event of its insolvency; (r) other matters contemplated by this Part or prescribed by the regulations. (3) The constituent councils may include in the charter other matters that the councils consider to be appropriate. (4) The charter may be reviewed by the constituent councils at any time but must in any event be reviewed at least once in every 4 years. (5) The constituent councils must, if they amend a charter— (a) furnish a copy of the charter, as amended, to the Minister; and (b) ensure that a copy of the charter, as amended, is published on a website (or websites) determined by the chief executive officers of the constituent councils; and (c) ensure that a notice of the fact of the amendment and a website address at which the charter is available for inspection is published in the Gazette. 20—Appointment of board of management (1) Subject to the charter of the subsidiary, the membership of a board of management of a regional subsidiary will be determined by the constituent councils and may consist of, or include, persons who are not members of a council. (2) A board member is, at the expiration of a term of office, eligible for reappointment. (3) The office of board member becomes vacant if the board member— (c) resigns by written notice addressed to the constituent councils and served on any of them; or (d) becomes a bankrupt or applies for the benefit of a law for the relief of insolvent debtors; or (e) fails to submit a return for the purposes of a Register of Interests in accordance with this Act if such returns are required by the charter; or (f) is removed from office by the constituent councils by written notice, or in any other manner specified by the charter. (4) On the office of a board member becoming vacant, a person may be appointed in accordance with the charter to the vacant office. (5) A reference in this Act to a board member will be taken to include, unless the contrary intention appears, a reference to a deputy while acting as a board member. (6) If a member or employee of a constituent council is appointed as a board member, he or she is not taken to have vacated his or her office as a member of the council, or of the staff of the council, or to have been invalidly appointed to the board of management because— (a) the potential exists for the duties of the two offices to conflict; or (b) the duties of either office require, by implication, the person's full time attention. (7) A council may give directions in relation to an actual or potential conflict of duty and duty between offices held concurrently, or in relation to some other incompatibility and, if the person concerned complies with those directions, he or she is excused from any breach that would otherwise have occurred. 21—Proceedings of board of management (1) A quorum of a board of management will be determined by the charter of the subsidiary. (2) The board member appointed to chair the board of management will preside at meetings of the board of management at which he or she is present and, if that board member is absent from a meeting, another board member chosen by the board members present at the meeting will preside. (3) A decision carried by a majority of the votes cast by board members at a meeting is a decision of the board of management. (4) Each board member present at a meeting of the board of management has one vote on a question arising for decision and, if the votes are equal, the board member presiding at the meeting does not have a second or casting vote. (5) A telephone or video conference between board members will, for the purposes of this clause, be taken to be a meeting of the board of management at which the participating board members are present if— (a) notice of the conference is given to all board members in the manner determined by the board of management for that purpose; and (b) each participating board member is capable of communicating with every other participating board member during the conference. (6) A proposed resolution of the board of management becomes a valid decision of the board of management despite the fact that it is not voted on at a meeting if— (a) notice of the proposed resolution is given to all board members in accordance with procedures determined by the board of management; and (b) a majority of the board members express their concurrence in the proposed resolution by letter, email or other written communication setting out the terms of the resolution. (7) Unless otherwise determined by the charter of the subsidiary, Chapter 6 Part 3 extends to a subsidiary as if— (b) the board members of the subsidiary were members of the council. (8) A person authorised in writing by a constituent council for the purposes of this clause may attend (but not participate in) a meeting of the board of management and may have access to papers provided to board members for the purpose of the meeting. (9) If a board of management considers that a matter dealt with at a meeting attended by a representative of a constituent council should be treated as confidential, the board of management may advise the council of that opinion, giving the reason for the opinion, and the council may, subject to subclause (10), act on that advice as the council thinks fit. (10) If a council is satisfied on the basis of the board of management's advice under subclause (9) that the subsidiary owes a duty of confidence in respect of a matter, the council must ensure the observance of that duty in respect of the matter, but this subclause does not prevent a disclosure as required in the proper performance of the functions or duties of the council. (11) The board of management must cause accurate minutes to be kept of its proceedings. (12) Subject to this clause, and to a direction of the constituent councils, the board of management may determine its own procedures. 22—Specific functions of board of management (1) The board of management of a regional subsidiary is responsible for the administration of the affairs of the subsidiary. (2) The board of management of a regional subsidiary must ensure as far as practicable— (a) that the subsidiary observes all plans, targets, structures, systems and practices required or applied to the subsidiary by the constituent councils; and (b) that all information furnished to a constituent council is accurate; and (c) that the constituent councils are advised, as soon as practicable, of any material development that affects the financial or operating capacity of the subsidiary or gives rise to the expectation that the subsidiary may not be able to meet its debts as and when they fall due. (3) Anything done by the board of management in the administration of the affairs of the subsidiary is binding on the subsidiary. 23—Board members' duty of care etc (1) A board member must at all times act with reasonable care and diligence in the performance and discharge of official functions and duties, and (without limiting the effect of the foregoing) for that purpose— (a) must take reasonable steps to inform himself or herself about the subsidiary and relevant aspects of the operations and activities of the constituent councils; and (b) must take reasonable steps through the processes of the board of management to obtain sufficient information and advice about matters to be decided by the board of management or pursuant to a delegation to enable him or her to make conscientious and informed decisions; and (c) must exercise an active discretion with respect to all matters to be decided by the board of management or pursuant to a delegation. (2) A board member is not bound to give continuous attention to the affairs of the subsidiary but is required to exercise reasonable diligence in attendance at and preparation for meetings of the board of management. (3) In determining the degree of care and diligence required to be exercised by a board member, regard must be had to the skills, knowledge or acumen possessed by the board member and the degree of risk involved in a particular circumstance. (4) A board member does not commit a breach of duty under this clause by acting in accordance with a direction from the constituent councils. 24—Business plans (1) A regional subsidiary must, in consultation with the constituent councils, prepare and adopt a business plan. (2) A subsidiary and the constituent councils must ensure that the first business plan of the subsidiary is prepared within six months after the subsidiary is established. (3) A business plan of a subsidiary continues in force for the period specified in the plan or until the earlier adoption by the subsidiary of a new business plan. (4) A subsidiary must, in consultation with the constituent councils, review its business plan on an annual basis. (5) A subsidiary may, after consultation with the constituent councils, amend its business plan at any time. (6) A business plan must set out or include— (a) the performance targets that the subsidiary is to pursue; and (b) a statement of the financial and other resources, and internal processes, that will be required to achieve the subsidiary's performance targets; and (c) the performance measures that are to be used to monitor and assess performance against targets. 25—Budget (1) A regional subsidiary must have a budget for each financial year. (2) Each budget of a subsidiary— (a) must deal with each principal activity of the subsidiary on a separate basis; and (b) must be consistent with its business plan; and (c) must comply with standards and principles prescribed by the regulations; and (d) must be adopted after 31 May for the ensuing financial year, and before a date fixed by the constituent councils; and (e) must be provided to the constituent councils in accordance with the regulations. (3) A subsidiary may, with the approval of the constituent councils, amend its adopted budget for a financial year at any time before the year ends. (4) A subsidiary may incur, for a purpose of genuine emergency or hardship, spending that is not authorised by its budget. (5) A subsidiary may, in a financial year, after consultation with the constituent councils, incur spending before adoption of its budget for the year, but the spending must be provided for in the appropriate budget for the year. 26—Subsidiary subject to direction by councils A regional subsidiary is subject to the joint direction and control of the constituent councils. 27—Provision of information (1) A regional subsidiary must, at the written request of a constituent council, furnish to the council information or records in the possession or control of the subsidiary as the council may require in such manner and form as the council may require. (2) If the board of management of the subsidiary considers that information or a record furnished under this clause contains matters that should be treated as confidential, the board of management may advise the council of that opinion giving the reason for the opinion and the council may, subject to subclause (3), act on that advice as the council thinks fit. (3) If the council is satisfied on the basis of the board of management's advice that the subsidiary owes a duty of confidence in respect of a matter, the council must ensure the observance of that duty in respect of the matter, but this subclause does not prevent a disclosure as required in the proper performance of the functions or duties of the council. 28—Reporting (1) A regional subsidiary must, on or before a day determined by the constituent councils, furnish to the constituent councils a report on the work and operations of the subsidiary for the preceding financial year. (2) A report under subclause (1) must— (a) incorporate the audited financial statements of the subsidiary for the relevant financial year; and (b) contain any other information or report required by the council or prescribed by the regulations. (3) A report under subclause (1) must be incorporated into the annual report of each constituent council. 29—Council becoming or ceasing as a constituent council A council may, in accordance with the charter of the subsidiary and with the approval of the Minister— (a) become a constituent council of a regional subsidiary; (b) cease to be a constituent council of a regional subsidiary. 30—Internal audit (1) A regional subsidiary must establish and maintain effective auditing of its operations. (2) A regional subsidiary must, unless exempted by regulation, establish an audit committee. (3) Subject to the regulations, an audit committee will comprise persons determined or approved by the constituent councils (and may include persons who are members of a regional audit and risk committee established by any of the constituent councils (with 1 or more other councils, whether constituent councils or otherwise) or a council audit and risk committee established by any of the constituent councils). (4) The functions of an audit committee include— (a) reviewing annual financial statements to ensure that they provide a timely and fair view of the state of affairs of the subsidiary; and (b) liaising with external auditors; and (c) reviewing the adequacy of the accounting, internal auditing, reporting and other financial management systems and practices of the subsidiary on a regular basis. 31—Liabilities (1) Liabilities incurred or assumed by a regional subsidiary are guaranteed by the constituent councils. 32—Principles of competitive neutrality If a regional subsidiary is declared by its charter to be involved in a significant business activity, the charter must also specify the extent to which the principles of competitive neutrality1 are to be applied to the activities of the subsidiary and, to the extent that may be relevant, the reasons for any non-application of these principles. 1 See Part 4 of the Government Business Enterprises (Competition) Act 1996. 33—Winding-up (1) A regional subsidiary may be wound up— (a) by the Minister acting at the request of the constituent councils; or (b) by the Minister on the ground that there has been a failure to comply with a requirement of the Minister under section 275 and that the circumstances are, in the opinion of the Minister, sufficiently serious to justify the taking of action to wind up the subsidiary. (2) A subsidiary is wound up by the Minister publishing a notice in the Gazette. (3) Any assets or liabilities of the subsidiary at the time of winding-up vest in or attach to the constituent councils on the winding-up in accordance with the charter. Part 3—Common matters 34—Board members' duties of honesty (1) A board member of a subsidiary must at all times act honestly in the performance and discharge of official functions and duties. (2) A board member or former board member of a subsidiary must not, whether within or outside the State, make improper use of information acquired by virtue of his or her position as a board member to gain, directly or indirectly, an advantage for himself or herself or for another person or to cause detriment to the subsidiary or a council. (3) A board member of a subsidiary must not, whether within or outside the State, make improper use of his or her position as a board member to gain, directly or indirectly, an advantage for himself or herself or for another person or to cause detriment to the subsidiary or a council. 35—Disclosure (1) If a subsidiary discloses to a person in pursuance of this Schedule a matter in respect of which the subsidiary owes a duty of confidence, the subsidiary must give notice of the disclosure to the person to whom the duty is owed. (2) A member of the board of management of a subsidiary does not commit a breach of duty by reporting a matter relating to the affairs of the subsidiary to a council or otherwise in accordance with the provisions of this Act. 36—Power of delegation (1) A subsidiary may delegate a power or function vested or conferred under this or another Act. (a) to a committee; or (b) to an employee of the subsidiary or of the council or of a constituent council; or (c) to a person for the time being occupying a particular office or position. (a) is subject to conditions and limitations determined by the subsidiary or specified by the regulations; and (b) is revocable at will and does not prevent the subsidiary from acting in a matter. (4) This clause does not limit or affect a power of delegation under another Act. 37—Common seal and execution of documents (1) The common seal of a subsidiary must not be affixed to a document except in pursuance of a decision of the board of management, and the affixing of the seal must be attested by the signatures of two board members. (2) The board of management may, by instrument under the common seal of the subsidiary, authorise a board member, or other person (whether nominated by name or by office or title) to execute documents on behalf of the subsidiary subject and limitations (if any) specified in the instrument of authority. (3) Without limiting subclause (2), an authority may be given so as to authorise two or more persons to execute documents jointly on behalf of the subsidiary. (4) A document is duly executed by the subsidiary if— (a) the common seal of the subsidiary is affixed to the document in accordance with this clause; or (b) the document is signed on behalf of the subsidiary by a person or persons in accordance with authority conferred under this clause. 38—Protection from liability (1) No civil liability attaches to a board member of a subsidiary for an honest act or omission in the exercise, performance or discharge, or purported exercise, performance or discharge, of the member's or subsidiary's powers, functions or duties. (2) A liability that would, but for this clause, attach to a board member attaches instead to the subsidiary. 39—Interests in companies (1) A subsidiary must not— (a) participate in the formation of a company; or (b) acquire shares in a company. (2) However, subclause (1) does not limit— (a) the investment of money as authorised by the subsidiary's charter; or (b) the ability of a regional subsidiary to participate in the formation of, or to become a member of, a company limited by guarantee established as a national association to promote and advance the interests of an industry in which local government has an interest. 40—Saving provision No act or proceeding of a subsidiary is invalid by reason of— (a) a vacancy or vacancies in the membership of the board of management; or (b) a defect in the appointment of a board member.