Part 4Duties and liabilities of board and directors

Part 4—Duties and liabilities of board and directors 14—General management duties of board (1) The board of a public corporation is responsible to its Minister for overseeing the operations of the corporation and its subsidiaries with the goal of— (a) securing continuing improvements of performance; and (b) protecting the long term viability of the corporation and the Crown's financial interests in the corporation. (2) Without limiting the effect of subsection (1), the board must for that purpose ensure as far as practicable— (a) that appropriate strategic and business plans and targets are established that are consistent with the corporation's charter and performance statement; and (b) that the corporation and its subsidiaries have appropriate management structures and systems for monitoring management performance against plans and targets and that corrective action is taken when necessary; and (c) that appropriate systems and practices are established for management and financial planning and control, including systems and practices for the maintenance of accurate and comprehensive records of all transactions, assets and liabilities and physical and human resources of the corporation and its subsidiaries; and (d) that all such plans, targets, structures, systems and practices are regularly reviewed and revised as necessary to address changing circumstances and reflect best current commercial practices; and (e) that the corporation and its subsidiaries operate within the limits imposed by the corporation's incorporating Act and charter and comply with the requirements imposed by or under this or any other Act or law; and (f) that the corporation and its subsidiaries observe high standards of corporate and business ethics; and (g) that the corporation's Minister receives regular reports on the performance of the corporation and its subsidiaries and on the initiatives of the board; and (h) that the corporation's Minister is advised, as soon as practicable, of any material development that affects the financial or operating capacity of the corporation or any of its subsidiaries or gives rise to an expectation that the corporation or any of its subsidiaries may not be able to meet its debts as and when they fall due; and (i) that all information furnished to the corporation's Minister by the corporation or any of its subsidiaries is accurate and comprehensive. 15—Directors' duties of care etc (1) A director of a public corporation must at all times exercise a reasonable degree of care and diligence in the performance of his or her functions, and (without limiting the effect of the foregoing) for that purpose— (a) must take reasonable steps to inform himself or herself about the corporation and its subsidiaries, their businesses and activities and the circumstances in which they operate; and (b) must take reasonable steps through the processes of the board to obtain sufficient information and advice about all matters to be decided by the board 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 or pursuant to a delegation. (2) A director is not bound to give continuous attention to the affairs of the corporation but is required to exercise reasonable diligence in attendance at and preparation for board meetings. (3) In determining the degree of care and diligence required to be exercised by a director, regard must be had to the skills, knowledge or acumen possessed by the director and to the degree of risk involved in any particular circumstances. (4) If a director of a public corporation is culpably negligent in the performance of his or her functions, the director is guilty of an offence. (5) A director is not culpably negligent for the purposes of subsection (4) unless the court is satisfied the director's conduct fell sufficiently short of the standards required under this Act of the director to warrant the imposition of a criminal sanction. (6) A director of a public corporation does not commit any breach of duty under this section by acting in accordance with a direction or requirement of the Minister or the Treasurer under this Act. 16—Director's duty to act honestly (1) A director of a public corporation must at all times act honestly in the performance of the functions of his or her office, whether within or outside the State. (2) Subsection (1) does not apply to conduct that is merely of a trivial character and does not result in significant detriment to the public interest. 17—Transactions with directors or associates of directors (1) Neither a director of a public corporation nor an associate of a director of a public corporation may, without the approval of the corporation's Minister, be directly or indirectly involved in a transaction with the corporation or a subsidiary of the corporation. (2) A person will be treated as being indirectly involved in a transaction for the purposes of subsection (1)— (a) if the person initiates, promotes or takes any part in negotiations or steps leading to the making of the transaction with a view to that person or an associate of that person gaining some financial or other benefit (whether immediately or at a time after the making of the transaction); and (b) despite the fact that neither that person nor an agent, nominee or trustee of that person becomes a party to the transaction. (3) Subsection (1) does not apply— (i) the receipt by the corporation or a subsidiary of the corporation of deposits of money or investments; (ii) the provision of loans or other financial accommodation by the corporation or a subsidiary of the corporation for domestic or non-commercial purposes; (iii) the provision of accident, health, life, property damage or income protection insurance or insurance against other risks (excluding credit or financial risks) by the corporation or a subsidiary of the corporation; (iv) the provision of services (other than financial or insurance services) by the corporation or a subsidiary of the corporation, (ab) to the employment of a person under a contract of service with the corporation or a subsidiary of the corporation or to a transaction that is ancillary or incidental to such employment; or (b) to transactions of a prescribed class. (4) If a transaction is made with a public corporation or a subsidiary of a public corporation in contravention of subsection (1), the transaction is liable to be avoided by the corporation or by the corporation's Minister. (5) A transaction may not be avoided under subsection (4) if a person has acquired an interest in property the subject of the transaction in good faith for valuable consideration and without notice of the contravention. (6) A director of a public corporation must not counsel, procure, induce or be in any way (whether by act or omission or directly or indirectly) knowingly concerned in, or party to, a contravention of subsection (1). 18—Directors' and associates' interests in corporation or subsidiary (1) Neither a director of a public corporation nor an associate of a director of a public corporation may, without the approval of the corporation's Minister— (a) have or acquire a beneficial interest in shares in, debentures of or managed investment schemes of the corporation or any subsidiary of the corporation; or (b) have or hold or acquire (whether alone or with another person or persons) a right or option in respect of the acquisition or disposal of shares in, debentures of or interests in managed investment schemes of the corporation or any of its subsidiaries; or (c) be a party to, or entitled to a benefit under, a contract under which a person has a right to call for or make delivery of shares in, debentures of or interests in managed investment schemes of the corporation or any of its subsidiaries. (2) A director of a public corporation must not counsel, procure, induce or be in any way (whether by act or omission or directly or indirectly) knowingly concerned in, or party to, a contravention of subsection (1). 19—Conflict of interest (1) A director of a public corporation who has a direct or indirect personal or pecuniary interest in a matter decided or under consideration by the board— (a) must, as soon as reasonably practicable, disclose in writing to the board full and accurate details of the interest; and (b) must not take part in any discussion by the board relating to that matter; and (c) must not vote in relation to that matter; and (d) must be absent from the meeting room when any such discussion or voting is taking place. (2) If a director makes a disclosure of interest and complies with the other requirements of subsection (1) in respect of a proposed contract— (b) the director is not liable to account to the corporation for profits derived from the contract. (3) If a director fails to make a disclosure of interest or fails to comply with any other requirement of subsection (1) in respect of a proposed contract, the contract is liable to be avoided by the corporation or by the corporation's Minister. (4) A contract may not be avoided under subsection (3) if a person has acquired an interest in property the subject of the contract in good faith for valuable consideration and without notice of the contravention. (5) Where a director of a public corporation has or acquires a personal or pecuniary interest, or is or becomes the holder of an office, such that it is reasonably foreseeable that a conflict might arise with his or her duties as a director of the corporation, the director must, as soon as reasonably practicable, disclose in writing to the board of the corporation full and accurate details of the interest or office. (6) A disclosure under this section must be recorded in the minutes of the board and reported to the corporation's Minister. (7) If, in the opinion of the corporation's Minister, a particular interest or office of a director is of such significance that the holding of the interest or office is not consistent with the proper discharge of the duties of the director, the Minister may require the director either to divest himself or herself of the interest or office or to resign from the board (and non-compliance with the requirement constitutes misconduct and hence a ground for removal of the director from the board). (8) Without limiting the effect of this section, a director will be taken to have an interest in a matter for the purposes of this section if an associate of the director has an interest in the matter. (9) This section does not apply in relation to a matter in which a director has an interest while the director remains unaware that he or she has an interest in the matter, but in any proceedings against the director the burden will lie on the director to prove that he or she was not, at the material time, aware of his or her interest. 20—Removal of director Non-compliance by a director of a public corporation with a duty imposed by this Act constitutes a ground for removal of the director from office in accordance with the provisions of the corporation's incorporating Act. 21—Civil liability if director or former director contravenes this Part (1) If a person who is a director or former director of a public corporation is convicted of an offence for a contravention of this Part (other than an offence consisting of culpable negligence), the court by which the person is convicted may, in addition to imposing a penalty, order the convicted person to pay to the corporation— (a) if the court is satisfied that the person or any other person made a profit as a result of the contravention—an amount equal to the profit; and (b) if the court is satisfied that the corporation or a subsidiary of the corporation suffered loss or damage as a result of the contravention—compensation for the loss or damage. (2) If a person who is a director or former director of a public corporation is guilty of a contravention of this Part for which a criminal penalty is fixed (other than a contravention consisting of culpable negligence), the corporation or the corporation's Minister may (whether or not proceedings have been brought for the offence) recover from the person by action in a court of competent jurisdiction— (b) if the corporation or a subsidiary of the corporation suffered loss or damage as a result of the contravention—compensation for the loss or damage. 22—Immunity for directors (1) Subject to this Act, no civil liability attaches to a director of a public corporation for an act or omission in the performance or discharge, or purported performance or discharge, of the director's functions or duties. (2) An action that would, but for subsection (1), lie against the director lies instead against the corporation. (3) This section does not prejudice rights of action of the Crown or the corporation in respect of an act or omission not in good faith.