Public Corporations Act 1993

• Public corporations established under SA statutes: All declared public corporations are subject to the Act's governance framework.
• Directors of public corporations: Subject to statutory duties of care and diligence (s 15) and honesty (s 16), with criminal liability for culpable negligence and civil liability for contraventions.
• Boards of public corporations: Responsible for oversight under section 14.
• Ministers responsible for incorporating Acts: Exercise ministerial control powers under Part 2.
• The Treasurer: Must approve specified financial transactions (guarantees, joint ventures, trust schemes) under Part 5.
• Subsidiaries of public corporations: Subject to the Act's provisions through the obligations on the parent corporation.

Board's general management duties (s 14): The board is responsible to its Minister for overseeing the corporation and its subsidiaries with the goal of securing continuing performance improvements and protecting the long-term viability of the corporation and the Crown's financial interests. The board must ensure appropriate strategic plans, management structures, financial controls, and ethical standards are maintained. The board must also advise the Minister of material developments affecting the corporation's financial position or operations as soon as practicable.

Directors' duties of care and diligence (s 15): Directors must exercise a reasonable degree of care and diligence. This includes taking reasonable steps to inform themselves about the corporation, taking reasonable steps to obtain sufficient information and advice to make conscientious and informed decisions, and exercising an active discretion in board decisions. The required standard of care takes into account the director's skills, knowledge and acumen and the degree of risk involved.

Culpable negligence (s 15(4)): A director who is culpably negligent in the performance of their functions is guilty of a criminal offence (Division 4 fine). Culpable negligence requires conduct that fell sufficiently short of the standards required by the Act to warrant criminal sanction.

Directors' duty of honesty (s 16): Directors must at all times act honestly in the performance of their functions.

Transactions with directors (s 17): The Act regulates transactions between the corporation and its directors or associates.

Conflict of interest (s 19): Directors must disclose conflicts of interest.

Ministerial direction compliance (Part 2): The corporation's board must comply with directions given by the Minister. The corporation must disclose to the Minister any matter subject to a duty of confidence that the director or corporation believes the Minister needs to know.

Charter and performance statement compliance (Part 3): The corporation must have a charter (s 12) and must prepare performance statements (s 13) in accordance with the Act.

Subsidiary and joint venture Treasurer approval (Part 5): A public corporation must not form a subsidiary, give a guarantee for a subsidiary, or establish a trust scheme, partnership, or joint venture, without the Treasurer's approval (ss 23, 26, 27).

Ministerial directions (Part 2, s 8): The Minister may give directions to the corporation's board. The corporation must comply. Disclosures to the Minister are not a breach of any duty of confidence (s 10).

Ministerial representative (s 9): The corporation's Minister or a nominee may attend and participate in board meetings.

Director removal (s 20): Directors may be removed in accordance with the Act.

Civil liability orders (s 21): On conviction for a contravention of Part 4 (other than culpable negligence), the court may order payment to the corporation of any profit made from the contravention, and compensation for loss or damage. The corporation or its Minister may also recover these amounts by civil action (s 21(2)).

Director immunity (s 22): Directors have statutory immunity from personal civil liability for acts or omissions in the performance of their functions in good faith. Liability lies instead with the corporation. This immunity does not apply to Crown or corporation actions in respect of acts not in good faith.

Culpable negligence (s 15(4)): Criminal offence. Division 4 fine.

Dishonesty (s 16): Criminal offence (penalty not specified in the extract but set by the Act or schedule).

Other Part 4 contraventions (ss 17, 18, 19): Criminal penalties plus civil liability under section 21 for profits made and loss or damage caused.

Civil recovery (s 21(2)): The corporation or its Minister may recover profits and compensation from directors for contraventions even without criminal prosecution.

Charter review: Charters must be periodically reviewed to address changing circumstances and reflect best current commercial practices (s 14(2)(d) obligation to review plans regularly).

Performance statement: Annual performance statements are prepared in accordance with Part 3.

Ministerial reporting: The board must ensure the Minister receives regular performance reports and is advised as soon as practicable of material developments.

Director conflict disclosure: Directors must disclose conflicts of interest promptly when they arise.

Corporations Act 2001 (Cth): The Act imports several Corporations Act definitions (managed investment scheme, relevant interest). Where a public corporation is also incorporated under the Corporations Act, both regimes apply.

Individual incorporating Acts: Each public corporation's incorporating Act may impose additional obligations. The Public Corporations Act operates alongside and does not displace the incorporating Act.

Treasurer's approval provisions (Part 5): Subsidiaries and joint ventures require Treasurer's approval, placing these decisions within the State's broader budget and financial control framework.

Culpable negligence is a criminal standard, not just civil: Section 15(4) imposes criminal liability on directors for culpable negligence. Section 15(5) makes clear that conduct must have fallen sufficiently short of required standards to warrant criminal sanction - it is a high threshold. But the existence of criminal liability for governance failures in public corporations is a material risk that private-sector directors moving into public corporation roles may not anticipate.

Director immunity does not protect bad faith conduct: Section 22's immunity only protects good faith acts and omissions in the performance of functions. Directors who act dishonestly or in bad faith lose the immunity and are personally liable.

Ministerial directions are binding and compliance is compulsory: The Minister may direct the corporation's board, and the board must comply. A director who believes a Ministerial direction is improper cannot simply refuse to follow it; they must comply and may take other steps to flag concerns.

Treasurer approval for subsidiaries and joint ventures: Section 27 requires Treasurer's approval for joint ventures, partnerships, trust schemes and arrangements for sharing of profits. Public corporations that establish commercial arrangements without this approval may create invalid commitments.

Direction to comply does not create breach of duty (s 15(6)): A director who acts in accordance with a Ministerial or Treasurer direction does not commit a breach of duty under section 15. This provides protection for directors complying with lawful directions even where they might otherwise have a different view.

Example 1: Board oversight failure. The board of a public corporation fails to ensure appropriate financial monitoring systems are in place, and a major fraud by a senior employee goes undetected for two years. Under section 14, the board was responsible for ensuring appropriate systems for management and financial planning and control. The Minister may take action for breach of the board's obligations, and individual directors may face section 15 liability depending on their conduct.

Example 2: Culpable negligence. A director of a public corporation consistently fails to attend board meetings and does not read board papers. The corporation enters a major transaction that turns out to be loss-making due to inadequate due diligence. Under section 15(4), a director who has failed to exercise a reasonable degree of care and diligence (including failing to prepare for meetings as required by s 15(2)) may be guilty of culpable negligence if the court is satisfied their conduct fell sufficiently short of the required standard to warrant criminal sanction.

Example 3: Transaction with director's associate. A director of a public corporation causes the corporation to enter a supply contract with a company in which the director's spouse holds a relevant interest. Under section 17, this transaction must be regulated in accordance with the Act's provisions. Failure to comply may expose the director to civil and criminal liability.

Example 4: Joint venture without Treasurer approval. A public corporation enters a joint venture arrangement with a private company without obtaining the Treasurer's approval as required by section 27. The arrangement is entered without authorisation. The corporation's board may face liability for breaching the Act's financial provisions.