South-East Queensland Water (Distribution and Retail Restructuring) Regulation 2021
In ForceQLD
Jurisdiction
Queensland
Act Number
88 of 2021
Collection
regulation
Plain English Summary
6/10 complexity
This regulation applies equivalents of certain Corporations Act duties and remedies to boards, officers and employees of South‑East Queensland distributor‑retailers. Mechanically, it imposes civil and criminal obligations (care, good faith, misuse of position/information), restricts indemnities and insurer payments, gives board members access to records, and allows the Supreme Court to declare contraventions and order compensation. It affects distributor‑retailers, their boards and officers, participating local governments and the State because it changes who bears legal risk, compliance costs and insurance exposure.
This regulation transposes and tailors a set of director/officer duties, liability mechanisms and related governance rules to distributor-retailers operating in South‑East Queensland. Its stated purposes are to: (a) provide, in relation to distributor‑retailers and their boards, officers and employees, for particular matters that the Corporations Act provides for corporations; and (b) provide a right to compensation for contraventions of those matters (s 2). Mechanically, the instrument:
Imposes duties of care and diligence, good faith and proper purpose, limits on misuse of position and information, and criminal exposure where recklessness or dishonesty is involved (ss 5-9). Section 5 expressly frames care and diligence as a civil obligation only.
Prescribes relevant contextual factors for assessing care and diligence, including the distributor‑retailer’s geographic area functions, other statutory functions, participation agreements and local government directions (s 5(2)).
Adopts a business‑judgment rule for board members and officers, with conditions for its protection (s 5(3)-(4)).
Extends the Corporations Act reliance and confidentiality concepts: duty of confidentiality analogous to that of a company director (s 11); a statutory safe harbour for reliance on information or expert advice where certain conditions are met (s 12).
Limits indemnities and insurance: distributor‑retailers may not exempt persons from liabilities to the distributor‑retailer, may not indemnify against liabilities owed to the distributor‑retailer or for compensation orders, and must not pay premiums insuring certain willful or contravening conduct (ss 13-15).
Grants board members a right of access to all books and records, including financial records, at reasonable times (s 17).
Current sections
Direct links to the current provisions in South-East Queensland Water (Distribution and Retail Restructuring) Regulation 2021.
31
pt.1
Preliminary
Preliminary
sec.1
Short title
sec.1 Short title
This regulation may be cited as the South-East Queensland Water (Distribution and Retail Restructuring) Regulation 2021 .
sec.2
Main purposes of regulation
sec.2 Main purposes of regulation
The main purposes of this regulation are to do the following—
provide, in relation to distributor-retailers, boards, officers or employees of distributor-retailers, for particular matters that the Corporations Act provides for corporations;
provide for a right to compensation for a contravention of a matter provided for under paragraph (a) .
(a) provide, in relation to distributor-retailers, boards, officers or employees of distributor-retailers, for particular matters that the Corporations Act provides for corporations;
(b) provide for a right to compensation for a contravention of a matter provided for under paragraph (a) .
sec.3
Definitions
sec.3 Definitions
In this regulation—
board member , of a distributor-retailer, means a member of the board of the distributor-retailer.
compensation order see section 22 (1) .
declaration of contravention see section 20 (1) .
officer , of a distributor-retailer, means—
a person who is appointed as an officer of the distributor-retailer; and
anyone else who—
makes, or participates in making, decisions that affect the whole, or a substantial part, of the business of the distributor-retailer; or
has the capacity to affect significantly the distributor-retailer’s financial standing.
(a) a person who is appointed as an officer of the distributor-retailer; and
(b) anyone else who— (i) makes, or participates in making, decisions that affect the whole, or a substantial part, of the business of the distributor-retailer; or (ii) has the capacity to affect significantly the distributor-retailer’s financial standing.
(i) makes, or participates in making, decisions that affect the whole, or a substantial part, of the business of the distributor-retailer; or
(ii) has the capacity to affect significantly the distributor-retailer’s financial standing.
(i) makes, or participates in making, decisions that affect the whole, or a substantial part, of the business of the distributor-retailer; or
(ii) has the capacity to affect significantly the distributor-retailer’s financial standing.
sec.4
References to Corporations Act
sec.4 References to Corporations Act
In this regulation, the information included in square brackets after a section heading is a reference to a similar section of the Corporations Act .
The brackets and information do not form part of this regulation.
(sec.4-ssec.1) In this regulation, the information included in square brackets after a section heading is a reference to a similar section of the Corporations Act .
(sec.4-ssec.2) The brackets and information do not form part of this regulation.
pt.2
Board members and officers
Board members and officers
pt.2-div.1
General duties
General duties
sec.5
Care and diligence—civil obligation only [CA, s 180 ]
sec.5 Care and diligence—civil obligation only [CA, s 180 ]
A board member or an officer of a distributor-retailer must exercise their powers and discharge their duties with the degree of care and diligence that a reasonable person would exercise if they—
were a board member or an officer of a distributor-retailer in the distributor-retailer’s circumstances; and
occupied the office held by, and had the same responsibilities within the distributor-retailer as, the board member or officer.
In deciding the degree of care and diligence required under subsection (1) , regard must be had to—
the distributor-retailer’s geographic area functions; and
the distributor-retailer’s other functions under the Act ; and
the distributor-retailer’s other functions under another Act including, for example, the Financial Accountability Act 2009 , Statutory Bodies Financial Arrangements Act 1982 , Water Act and Water Supply Act ; and
any requirement under the distributor-retailer’s participation agreement; and
any relevant local government direction given to the distributor-retailer.
A board member or an officer of a distributor-retailer who makes a business judgment is taken to meet the requirements of subsection (1) , and their equivalent duties at common law and in equity, in respect of the judgment if they—
make the judgment in good faith for a proper purpose, taking into account any relevant matters mentioned in subsection (2) ; and
do not have a material personal interest in the subject matter of the judgment; and
inform themselves about the subject matter of the judgment to the extent they reasonably believe to be appropriate; and
rationally believe the judgment is in the distributor-retailer’s best interests.
For subsection (3) (d) , the board member’s or the officer’s belief that the judgment is in the distributor-retailer’s best interests is a rational one unless the belief is one that no reasonable person in their position would hold.
In this section—
business judgment means any decision to take or not take action about a matter relevant to the business operations of the distributor-retailer.
functions includes powers.
(sec.5-ssec.1) A board member or an officer of a distributor-retailer must exercise their powers and discharge their duties with the degree of care and diligence that a reasonable person would exercise if they— were a board member or an officer of a distributor-retailer in the distributor-retailer’s circumstances; and occupied the office held by, and had the same responsibilities within the distributor-retailer as, the board member or officer.
(sec.5-ssec.2) In deciding the degree of care and diligence required under subsection (1) , regard must be had to— the distributor-retailer’s geographic area functions; and the distributor-retailer’s other functions under the Act ; and the distributor-retailer’s other functions under another Act including, for example, the Financial Accountability Act 2009 , Statutory Bodies Financial Arrangements Act 1982 , Water Act and Water Supply Act ; and any requirement under the distributor-retailer’s participation agreement; and any relevant local government direction given to the distributor-retailer.
(sec.5-ssec.3) A board member or an officer of a distributor-retailer who makes a business judgment is taken to meet the requirements of subsection (1) , and their equivalent duties at common law and in equity, in respect of the judgment if they— make the judgment in good faith for a proper purpose, taking into account any relevant matters mentioned in subsection (2) ; and do not have a material personal interest in the subject matter of the judgment; and inform themselves about the subject matter of the judgment to the extent they reasonably believe to be appropriate; and rationally believe the judgment is in the distributor-retailer’s best interests.
(sec.5-ssec.4) For subsection (3) (d) , the board member’s or the officer’s belief that the judgment is in the distributor-retailer’s best interests is a rational one unless the belief is one that no reasonable person in their position would hold.
(sec.5-ssec.5) In this section— business judgment means any decision to take or not take action about a matter relevant to the business operations of the distributor-retailer. functions includes powers.
(a) were a board member or an officer of a distributor-retailer in the distributor-retailer’s circumstances; and
(b) occupied the office held by, and had the same responsibilities within the distributor-retailer as, the board member or officer.
(a) the distributor-retailer’s geographic area functions; and
(b) the distributor-retailer’s other functions under the Act ; and
(c) the distributor-retailer’s other functions under another Act including, for example, the Financial Accountability Act 2009 , Statutory Bodies Financial Arrangements Act 1982 , Water Act and Water Supply Act ; and
(d) any requirement under the distributor-retailer’s participation agreement; and
(e) any relevant local government direction given to the distributor-retailer.
(a) make the judgment in good faith for a proper purpose, taking into account any relevant matters mentioned in subsection (2) ; and
(b) do not have a material personal interest in the subject matter of the judgment; and
(c) inform themselves about the subject matter of the judgment to the extent they reasonably believe to be appropriate; and
(d) rationally believe the judgment is in the distributor-retailer’s best interests.
sec.6
Good faith—civil obligations [CA, s 181 ]
sec.6 Good faith—civil obligations [CA, s 181 ]
A board member or an officer of a distributor-retailer must exercise their powers and discharge their duties—
in good faith in the distributor-retailer’s best interests; and
for a proper purpose.
(a) in good faith in the distributor-retailer’s best interests; and
(b) for a proper purpose.
sec.7
Use of position—civil obligations [CA, s 182 ]
sec.7 Use of position—civil obligations [CA, s 182 ]
A board member or an officer of a distributor-retailer must not improperly use their position to—
gain an advantage for themselves or someone else; or
cause detriment to the distributor-retailer.
(a) gain an advantage for themselves or someone else; or
(b) cause detriment to the distributor-retailer.
sec.8
Use of information—civil obligations [CA, s 183 ]
sec.8 Use of information—civil obligations [CA, s 183 ]
A board member or an officer of a distributor-retailer must not use information, obtained because they are or have been a board member or an officer, to improperly—
gain an advantage for themselves or someone else; or
cause detriment to the distributor-retailer.
(a) gain an advantage for themselves or someone else; or
(b) cause detriment to the distributor-retailer.
sec.9
Good faith, use of position and use of information—criminal offences [CA, s 184 ]
sec.9 Good faith, use of position and use of information—criminal offences [CA, s 184 ]
A board member or officer of a distributor-retailer commits an offence if they—
are reckless or are intentionally dishonest; and
fail to exercise their powers and discharge their duties—
in good faith in the best interests of the distributor-retailer; or
for a proper purpose.
Maximum penalty—20 penalty units.
A board member or officer of a distributor-retailer commits an offence if they use their position—
dishonestly with the intention of directly or indirectly gaining an advantage for themselves, or someone else, or causing detriment to the distributor-retailer; or
recklessly as to whether the use may result in themselves or someone else directly or indirectly gaining an advantage, or in causing detriment to the distributor-retailer.
Maximum penalty—20 penalty units.
A person who obtains information because they are, or have been, a board member or officer of a distributor-retailer commits an offence if they use the information—
dishonestly with the intention of directly or indirectly gaining an advantage for themselves, or someone else, or causing detriment to the distributor-retailer; or
recklessly as to whether the use may result in themselves or someone else directly or indirectly gaining an advantage, or in causing detriment to the distributor-retailer.
Maximum penalty—20 penalty units.
(sec.9-ssec.1) A board member or officer of a distributor-retailer commits an offence if they— are reckless or are intentionally dishonest; and fail to exercise their powers and discharge their duties— in good faith in the best interests of the distributor-retailer; or for a proper purpose. Maximum penalty—20 penalty units.
(sec.9-ssec.2) A board member or officer of a distributor-retailer commits an offence if they use their position— dishonestly with the intention of directly or indirectly gaining an advantage for themselves, or someone else, or causing detriment to the distributor-retailer; or recklessly as to whether the use may result in themselves or someone else directly or indirectly gaining an advantage, or in causing detriment to the distributor-retailer. Maximum penalty—20 penalty units.
(sec.9-ssec.3) A person who obtains information because they are, or have been, a board member or officer of a distributor-retailer commits an offence if they use the information— dishonestly with the intention of directly or indirectly gaining an advantage for themselves, or someone else, or causing detriment to the distributor-retailer; or recklessly as to whether the use may result in themselves or someone else directly or indirectly gaining an advantage, or in causing detriment to the distributor-retailer. Maximum penalty—20 penalty units.
(a) are reckless or are intentionally dishonest; and
(b) fail to exercise their powers and discharge their duties— (i) in good faith in the best interests of the distributor-retailer; or (ii) for a proper purpose.
(i) in good faith in the best interests of the distributor-retailer; or
(ii) for a proper purpose.
(i) in good faith in the best interests of the distributor-retailer; or
(ii) for a proper purpose.
(a) dishonestly with the intention of directly or indirectly gaining an advantage for themselves, or someone else, or causing detriment to the distributor-retailer; or
(b) recklessly as to whether the use may result in themselves or someone else directly or indirectly gaining an advantage, or in causing detriment to the distributor-retailer.
(a) dishonestly with the intention of directly or indirectly gaining an advantage for themselves, or someone else, or causing detriment to the distributor-retailer; or
(b) recklessly as to whether the use may result in themselves or someone else directly or indirectly gaining an advantage, or in causing detriment to the distributor-retailer.
sec.10
Interaction of ss 6 – 10 with other laws etc. [CA, s 185 ]
sec.10 Interaction of ss 6 – 10 with other laws etc. [CA, s 185 ]
Sections 6 to 10 —
have effect in addition to, and not in derogation of, any law relating to the duty or liability of a person because of their office or employment in relation to a distributor-retailer; and
do not prevent the commencement of civil proceedings for a breach of a duty or in respect of a liability mentioned in paragraph (a) .
However, subsection (1) does not apply to section 6 (3) , (4) and (5) to the extent to which those subsections operate on the duties at common law and in equity that are equivalent to the requirements under section 6 (1) .
(sec.10-ssec.1) Sections 6 to 10 — have effect in addition to, and not in derogation of, any law relating to the duty or liability of a person because of their office or employment in relation to a distributor-retailer; and do not prevent the commencement of civil proceedings for a breach of a duty or in respect of a liability mentioned in paragraph (a) .
(sec.10-ssec.2) However, subsection (1) does not apply to section 6 (3) , (4) and (5) to the extent to which those subsections operate on the duties at common law and in equity that are equivalent to the requirements under section 6 (1) .
(a) have effect in addition to, and not in derogation of, any law relating to the duty or liability of a person because of their office or employment in relation to a distributor-retailer; and
(b) do not prevent the commencement of civil proceedings for a breach of a duty or in respect of a liability mentioned in paragraph (a) .
sec.11
Duty of confidentiality
sec.11 Duty of confidentiality
A board member of a distributor-retailer owes a duty of confidentiality to the distributor-retailer to the same extent as if the distributor-retailer was a company registered under the Corporations Act and the board member was a director of the company.
sec.12
Reliance on information or advice provided by others [CA, s 189 ]
sec.12 Reliance on information or advice provided by others [CA, s 189 ]
This section applies if—
a board member of a distributor-retailer relies on information, or professional or expert advice, given or prepared by—
an officer or an employee of the distributor-retailer whom the board member believes on reasonable grounds to be reliable and competent in relation to the matters concerned; or
a professional adviser or expert relating to matters the board member believes on reasonable grounds to be within the person’s professional or expert competence; or
another board member relating to matters within the board member’s authority; or
a committee of board members on which the board member did not serve relating to matters within the committee’s authority; and
the reliance was made—
in good faith; and
after making an independent assessment of the information or advice, having regard to the board member’s knowledge of the distributor-retailer and the complexity of the structure and operations of the distributor-retailer; and
the reasonableness of the board member’s reliance on the information or advice arises in proceedings brought to decide whether a board member has performed a duty under this part or an equivalent general law duty.
The board member’s reliance on the information or advice is taken to be reasonable unless the contrary is proved.
(sec.12-ssec.1) This section applies if— a board member of a distributor-retailer relies on information, or professional or expert advice, given or prepared by— an officer or an employee of the distributor-retailer whom the board member believes on reasonable grounds to be reliable and competent in relation to the matters concerned; or a professional adviser or expert relating to matters the board member believes on reasonable grounds to be within the person’s professional or expert competence; or another board member relating to matters within the board member’s authority; or a committee of board members on which the board member did not serve relating to matters within the committee’s authority; and the reliance was made— in good faith; and after making an independent assessment of the information or advice, having regard to the board member’s knowledge of the distributor-retailer and the complexity of the structure and operations of the distributor-retailer; and the reasonableness of the board member’s reliance on the information or advice arises in proceedings brought to decide whether a board member has performed a duty under this part or an equivalent general law duty.
(sec.12-ssec.2) The board member’s reliance on the information or advice is taken to be reasonable unless the contrary is proved.
(a) a board member of a distributor-retailer relies on information, or professional or expert advice, given or prepared by— (i) an officer or an employee of the distributor-retailer whom the board member believes on reasonable grounds to be reliable and competent in relation to the matters concerned; or (ii) a professional adviser or expert relating to matters the board member believes on reasonable grounds to be within the person’s professional or expert competence; or (iii) another board member relating to matters within the board member’s authority; or (iv) a committee of board members on which the board member did not serve relating to matters within the committee’s authority; and
(i) an officer or an employee of the distributor-retailer whom the board member believes on reasonable grounds to be reliable and competent in relation to the matters concerned; or
(ii) a professional adviser or expert relating to matters the board member believes on reasonable grounds to be within the person’s professional or expert competence; or
(iii) another board member relating to matters within the board member’s authority; or
(iv) a committee of board members on which the board member did not serve relating to matters within the committee’s authority; and
(b) the reliance was made— (i) in good faith; and (ii) after making an independent assessment of the information or advice, having regard to the board member’s knowledge of the distributor-retailer and the complexity of the structure and operations of the distributor-retailer; and
(i) in good faith; and
(ii) after making an independent assessment of the information or advice, having regard to the board member’s knowledge of the distributor-retailer and the complexity of the structure and operations of the distributor-retailer; and
(c) the reasonableness of the board member’s reliance on the information or advice arises in proceedings brought to decide whether a board member has performed a duty under this part or an equivalent general law duty.
(i) an officer or an employee of the distributor-retailer whom the board member believes on reasonable grounds to be reliable and competent in relation to the matters concerned; or
(ii) a professional adviser or expert relating to matters the board member believes on reasonable grounds to be within the person’s professional or expert competence; or
(iii) another board member relating to matters within the board member’s authority; or
(iv) a committee of board members on which the board member did not serve relating to matters within the committee’s authority; and
(i) in good faith; and
(ii) after making an independent assessment of the information or advice, having regard to the board member’s knowledge of the distributor-retailer and the complexity of the structure and operations of the distributor-retailer; and
pt.2-div.2
Restrictions on indemnities and insurance
Restrictions on indemnities and insurance
sec.13
Indemnification and exemption of board member or officer [CA, s 199A ]
sec.13 Indemnification and exemption of board member or officer [CA, s 199A ]
A distributor-retailer must not exempt a person (whether directly or through an interposed entity) from a liability to the distributor-retailer incurred as a board member or an officer of the distributor-retailer.
A distributor-retailer must not indemnify a person against any of the following liabilities incurred as a board member or an officer of the distributor-retailer—
a liability owed to the distributor-retailer;
a liability for a compensation order;
a liability that is owed to someone, other than the distributor-retailer, that did not arise out of conduct in good faith.
Subsection (2) does not apply to a liability for legal costs.
A distributor-retailer must not indemnify a person against legal costs incurred in defending an action for a liability incurred as a board member or an officer of the distributor-retailer if the costs are incurred—
in defending or resisting proceedings in which the person is found to have a liability for which they could not be indemnified under subsection (2) ; or
in defending or resisting criminal proceedings in which the person is found guilty.
For subsection (4) , the outcome of proceedings is the outcome of the proceedings and any appeal in relation to the proceedings.
In this section—
indemnify , a person, includes—
indemnify the person by agreement; and
indemnify the person by making a payment to the person; and
directly indemnify the person; and
indirectly indemnify the person through an interposed entity.
(sec.13-ssec.1) A distributor-retailer must not exempt a person (whether directly or through an interposed entity) from a liability to the distributor-retailer incurred as a board member or an officer of the distributor-retailer.
(sec.13-ssec.2) A distributor-retailer must not indemnify a person against any of the following liabilities incurred as a board member or an officer of the distributor-retailer— a liability owed to the distributor-retailer; a liability for a compensation order; a liability that is owed to someone, other than the distributor-retailer, that did not arise out of conduct in good faith.
(sec.13-ssec.3) Subsection (2) does not apply to a liability for legal costs.
(sec.13-ssec.4) A distributor-retailer must not indemnify a person against legal costs incurred in defending an action for a liability incurred as a board member or an officer of the distributor-retailer if the costs are incurred— in defending or resisting proceedings in which the person is found to have a liability for which they could not be indemnified under subsection (2) ; or in defending or resisting criminal proceedings in which the person is found guilty.
(sec.13-ssec.5) For subsection (4) , the outcome of proceedings is the outcome of the proceedings and any appeal in relation to the proceedings.
(sec.13-ssec.6) In this section— indemnify , a person, includes— indemnify the person by agreement; and indemnify the person by making a payment to the person; and directly indemnify the person; and indirectly indemnify the person through an interposed entity.
(a) a liability owed to the distributor-retailer;
(b) a liability for a compensation order;
(c) a liability that is owed to someone, other than the distributor-retailer, that did not arise out of conduct in good faith.
(a) in defending or resisting proceedings in which the person is found to have a liability for which they could not be indemnified under subsection (2) ; or
(b) in defending or resisting criminal proceedings in which the person is found guilty.
(a) indemnify the person by agreement; and
(b) indemnify the person by making a payment to the person; and
(c) directly indemnify the person; and
(d) indirectly indemnify the person through an interposed entity.
sec.14
Insurance premiums for certain liabilities of board members [CA, s 199B ]
sec.14 Insurance premiums for certain liabilities of board members [CA, s 199B ]
A distributor-retailer must not pay, or agree to pay, a premium for a contract insuring a person who is or has been a board member of the distributor-retailer against a liability (other than one for legal costs) arising out of—
conduct involving a wilful breach of duty to the distributor-retailer; or
a contravention of section 8 or 9 .
This section applies to a premium whether it is paid directly or through an interposed entity.
(sec.14-ssec.1) A distributor-retailer must not pay, or agree to pay, a premium for a contract insuring a person who is or has been a board member of the distributor-retailer against a liability (other than one for legal costs) arising out of— conduct involving a wilful breach of duty to the distributor-retailer; or a contravention of section 8 or 9 .
(sec.14-ssec.2) This section applies to a premium whether it is paid directly or through an interposed entity.
(a) conduct involving a wilful breach of duty to the distributor-retailer; or
(b) a contravention of section 8 or 9 .
sec.15
Effect of div 2 [CA, s 199C ]
sec.15 Effect of div 2 [CA, s 199C ]
This division does not authorise anything that would otherwise be unlawful.
Anything that purports to indemnify or insure a person against a liability, or exempt them from a liability, is void to the extent that it contravenes this division.
(sec.15-ssec.1) This division does not authorise anything that would otherwise be unlawful.
(sec.15-ssec.2) Anything that purports to indemnify or insure a person against a liability, or exempt them from a liability, is void to the extent that it contravenes this division.
pt.2-div.3
Appointment of board members
Appointment of board members
sec.16
Effectiveness of acts by board members [CA, s 201M ]
sec.16 Effectiveness of acts by board members [CA, s 201M ]
An act done by a board member of a distributor-retailer is effective even if their appointment, or the continuance of their appointment, is invalid because the distributor-retailer or board member did not comply with a provision of the Act or a participation agreement.
However, an act done by a board member is not effective if, when the act is done, the members of the board know the board member’s appointment, or the continuance of the board member’s appointment, is invalid.
Subsection (1) does not deal with the question of whether an effective act by a board member—
binds the distributor-retailer in its dealings with other people; or
makes the distributor-retailer liable to another person.
(sec.16-ssec.1) An act done by a board member of a distributor-retailer is effective even if their appointment, or the continuance of their appointment, is invalid because the distributor-retailer or board member did not comply with a provision of the Act or a participation agreement.
(sec.16-ssec.2) However, an act done by a board member is not effective if, when the act is done, the members of the board know the board member’s appointment, or the continuance of the board member’s appointment, is invalid.
(sec.16-ssec.3) Subsection (1) does not deal with the question of whether an effective act by a board member— binds the distributor-retailer in its dealings with other people; or makes the distributor-retailer liable to another person.
(a) binds the distributor-retailer in its dealings with other people; or
(b) makes the distributor-retailer liable to another person.
pt.2-div.4
Access to distributor-retailer’s books and records
Access to distributor-retailer’s books and records
sec.17
Access to distributor-retailer’s books and records
sec.17 Access to distributor-retailer’s books and records
A board member of a distributor-retailer has a right of access to all of the distributor-retailer’s books and records, including financial records, at all reasonable times.
pt.3
Assumptions people dealing with distributor-retailers are entitled to make
Assumptions people dealing with distributor-retailers are entitled to make
sec.18
Entitlement to make assumptions [CA, ss 128 and 129 ]
sec.18 Entitlement to make assumptions [CA, ss 128 and 129 ]
A person is entitled to make the following assumptions (the assumptions ) relating to dealings with a distributor-retailer—
the distributor-retailer’s participation agreement and any provisions of the Act that apply to the distributor-retailer relating to the agreement have been complied with;
that a person who appears, from information provided by the distributor-retailer that is available to the public, to be a board member or an officer of the distributor-retailer—
has been duly appointed; and
has authority to perform the functions and exercise the powers of a board member or an officer, under the Act , relating to the distributor-retailer;
that a person who is held out by the distributor-retailer to be an officer or agent of the distributor-retailer—
has been duly appointed; and
has authority to perform the functions and exercise the powers customarily performed or exercised by that kind of officer or agent of a company conducting a business similar to that conducted by the distributor-retailer;
that the board members and agents of the distributor-retailer properly perform their duties to the distributor-retailer;
that a document has been duly executed by the distributor-retailer if the document appears to have been signed under section 52 of the Act ;
that an officer or agent of the distributor-retailer who has authority to issue a document or a certified copy of a document on its behalf also has authority to warrant that the document is genuine or is a true copy.
However, a person is not entitled to make an assumption if at the time of the dealings they knew or suspected that the assumption was incorrect.
The distributor-retailer is not entitled to assert in proceedings in relation to the dealings that any of the assumptions are incorrect.
The assumptions may be made even if a board member or agent of the distributor-retailer acts fraudulently, or forges a document, in connection with the dealings.
(sec.18-ssec.1) A person is entitled to make the following assumptions (the assumptions ) relating to dealings with a distributor-retailer— the distributor-retailer’s participation agreement and any provisions of the Act that apply to the distributor-retailer relating to the agreement have been complied with; that a person who appears, from information provided by the distributor-retailer that is available to the public, to be a board member or an officer of the distributor-retailer— has been duly appointed; and has authority to perform the functions and exercise the powers of a board member or an officer, under the Act , relating to the distributor-retailer; that a person who is held out by the distributor-retailer to be an officer or agent of the distributor-retailer— has been duly appointed; and has authority to perform the functions and exercise the powers customarily performed or exercised by that kind of officer or agent of a company conducting a business similar to that conducted by the distributor-retailer; that the board members and agents of the distributor-retailer properly perform their duties to the distributor-retailer; that a document has been duly executed by the distributor-retailer if the document appears to have been signed under section 52 of the Act ; that an officer or agent of the distributor-retailer who has authority to issue a document or a certified copy of a document on its behalf also has authority to warrant that the document is genuine or is a true copy.
(sec.18-ssec.2) However, a person is not entitled to make an assumption if at the time of the dealings they knew or suspected that the assumption was incorrect.
(sec.18-ssec.3) The distributor-retailer is not entitled to assert in proceedings in relation to the dealings that any of the assumptions are incorrect.
(sec.18-ssec.4) The assumptions may be made even if a board member or agent of the distributor-retailer acts fraudulently, or forges a document, in connection with the dealings.
(a) the distributor-retailer’s participation agreement and any provisions of the Act that apply to the distributor-retailer relating to the agreement have been complied with;
(b) that a person who appears, from information provided by the distributor-retailer that is available to the public, to be a board member or an officer of the distributor-retailer— (i) has been duly appointed; and (ii) has authority to perform the functions and exercise the powers of a board member or an officer, under the Act , relating to the distributor-retailer;
(i) has been duly appointed; and
(ii) has authority to perform the functions and exercise the powers of a board member or an officer, under the Act , relating to the distributor-retailer;
(c) that a person who is held out by the distributor-retailer to be an officer or agent of the distributor-retailer— (i) has been duly appointed; and (ii) has authority to perform the functions and exercise the powers customarily performed or exercised by that kind of officer or agent of a company conducting a business similar to that conducted by the distributor-retailer;
(i) has been duly appointed; and
(ii) has authority to perform the functions and exercise the powers customarily performed or exercised by that kind of officer or agent of a company conducting a business similar to that conducted by the distributor-retailer;
(d) that the board members and agents of the distributor-retailer properly perform their duties to the distributor-retailer;
(e) that a document has been duly executed by the distributor-retailer if the document appears to have been signed under section 52 of the Act ;
(f) that an officer or agent of the distributor-retailer who has authority to issue a document or a certified copy of a document on its behalf also has authority to warrant that the document is genuine or is a true copy.
(i) has been duly appointed; and
(ii) has authority to perform the functions and exercise the powers of a board member or an officer, under the Act , relating to the distributor-retailer;
(i) has been duly appointed; and
(ii) has authority to perform the functions and exercise the powers customarily performed or exercised by that kind of officer or agent of a company conducting a business similar to that conducted by the distributor-retailer;
pt.4
Contravention and compensation
Contravention and compensation
sec.19
Declaration of contravention [CA, s 1317E ]
sec.19 Declaration of contravention [CA, s 1317E ]
Any of the following may apply to the Supreme Court for a declaration (a declaration of contravention ) that a board member of a distributor-retailer has contravened section 6 , 7 , 8 or 9 —
a distributor-retailer;
a participating local government;
the State.
If the court is satisfied a board member of a distributor-retailer has contravened section 6 , 7 , 8 or 9 , it must make a declaration of contravention.
A declaration of contravention must state the following—
the board member who contravened section 6 , 7 , 8 or 9 ;
the conduct that constituted the contravention;
the provision that was contravened.
(sec.19-ssec.1) Any of the following may apply to the Supreme Court for a declaration (a declaration of contravention ) that a board member of a distributor-retailer has contravened section 6 , 7 , 8 or 9 — a distributor-retailer; a participating local government; the State.
(sec.19-ssec.2) If the court is satisfied a board member of a distributor-retailer has contravened section 6 , 7 , 8 or 9 , it must make a declaration of contravention.
(sec.19-ssec.3) A declaration of contravention must state the following— the board member who contravened section 6 , 7 , 8 or 9 ; the conduct that constituted the contravention; the provision that was contravened.
(a) a distributor-retailer;
(b) a participating local government;
(c) the State.
(a) the board member who contravened section 6 , 7 , 8 or 9 ;
(b) the conduct that constituted the contravention;
(c) the provision that was contravened.
sec.20
Declaration of contravention is conclusive evidence [CA, s 1317F ]
sec.20 Declaration of contravention is conclusive evidence [CA, s 1317F ]
A declaration of contravention is conclusive evidence of the matters referred to in section 20 (3) .
sec.21
Compensation orders [CA, s 1317H ]
sec.21 Compensation orders [CA, s 1317H ]
Any of the following may apply to the Supreme Court for an order (a compensation order ) requiring a board member of a distributor-retailer to pay the applicant or another person an amount as compensation for damage suffered by the applicant or the other person because the board member has contravened section 6 , 7 , 8 or 9 —
the distributor-retailer;
a participating local government;
the State.
An application for a compensation order may be made whether or not a declaration of contravention has been made for the matter the subject of the application.
The court may order the board member to pay to the applicant or other person, as compensation, an amount, decided by the court, if the court is satisfied—
the board member has contravened section 6 , 7 , 8 or 9 ; and
the applicant or other person has suffered damage because of the contravention.
The order must state the amount of the compensation.
The court may relieve the board member either wholly or partly from paying the compensation if the court is satisfied—
the board member acted honestly; and
having regard to all the circumstances of the contravention, the board member ought fairly to be excused for the contravention.
A compensation order may be enforced as if it were a judgment of the court.
(sec.21-ssec.1) Any of the following may apply to the Supreme Court for an order (a compensation order ) requiring a board member of a distributor-retailer to pay the applicant or another person an amount as compensation for damage suffered by the applicant or the other person because the board member has contravened section 6 , 7 , 8 or 9 — the distributor-retailer; a participating local government; the State.
(sec.21-ssec.2) An application for a compensation order may be made whether or not a declaration of contravention has been made for the matter the subject of the application.
(sec.21-ssec.3) The court may order the board member to pay to the applicant or other person, as compensation, an amount, decided by the court, if the court is satisfied— the board member has contravened section 6 , 7 , 8 or 9 ; and the applicant or other person has suffered damage because of the contravention.
(sec.21-ssec.4) The order must state the amount of the compensation.
(sec.21-ssec.5) The court may relieve the board member either wholly or partly from paying the compensation if the court is satisfied— the board member acted honestly; and having regard to all the circumstances of the contravention, the board member ought fairly to be excused for the contravention.
(sec.21-ssec.6) A compensation order may be enforced as if it were a judgment of the court.
(a) the distributor-retailer;
(b) a participating local government;
(c) the State.
(a) the board member has contravened section 6 , 7 , 8 or 9 ; and
(b) the applicant or other person has suffered damage because of the contravention.
(a) the board member acted honestly; and
(b) having regard to all the circumstances of the contravention, the board member ought fairly to be excused for the contravention.
sec.22
Time limit for application for a declaration or order [CA, s 1317K ]
sec.22 Time limit for application for a declaration or order [CA, s 1317K ]
A proceeding for a declaration of contravention or a compensation order may be commenced no later than 6 years after the day of the contravention.
sec.23
Repeal
sec.23 Repeal
The South-East Queensland Water (Distribution and Retail Restructuring) Regulation 2010, SL No. 141 is repealed.
Source text: opening excerpt
Sourced from Queensland Legislation (legislation.qld.gov.au), CC BY 4.0.
pt.1 Preliminary
Preliminary
sec.1 Short title
sec.1 Short title
This regulation may be cited as the South-East Queensland Water (Distribution and Retail Restructuring) Regulation 2021 .
sec.2 Main purposes of regulation
sec.2 Main purposes of regulation
The main purposes of this regulation are to do the following—
provide, in relation to distributor-retailers, boards, officers or employees of distributor-retailers, for particular matters that the Corporations Act provides for corporations;
provide for a right to compensation for a contravention of a matter provided for under paragraph (a) .
(a) provide, in relation to distributor-retailers, boards, officers or employees of distributor-retailers, for particular matters that the Corporations Act provides for corporations;
(b) provide for a right to compensation for a contravention of a matter provided for under paragraph (a) .
sec.3 Definitions
sec.3 Definitions
In this regulation—
board member , of a distributor-retailer, means a member of the board of the distributor-retailer.
compensation order see section 22 (1) .
declaration of contravention see section 20 (1) .
officer , of a distributor-retailer, means—
a person who is appointed as an officer of the distributor-retailer; and
anyone else who—
makes, or participates in making, decisions that affect the whole, or a substantial part, of the business of the distributor-retailer; or
has the capacity to affect significantly the distributor-retailer’s financial standing.
(a) a person who is appointed as an officer of the distributor-retailer; and
(b) anyone else who— (i) makes, or participates in making, decisions that affect the whole, or a substantial part, of the business of the distributor-retailer; or (ii) has the capacity to affect significantly the distributor-retailer’s financial standing.
(i) makes, or participates in making, decisions that affect the whole, or a substantial part, of the business of the distributor-retailer; or
(ii) has the capacity to affect significantly the distributor-retailer’s financial standing.
(i) makes, or participates in making, decisions that affect the whole, or a substantial part, of the business of the distributor-retailer; or
(ii) has the capacity to affect significantly the distributor-retailer’s financial standing.
sec.4 References to Corporations Act
Prescribes assumptions third parties may rely on in dealings with a distributor‑retailer (s 18), and provides statutory remedies: declarations of contravention (s 19), conclusive effect of declarations (s 20), and compensation orders enforceable as judgments (s 21), subject to a six‑year limitation (s 22).
Repeals the 2010 regulation it replaces (s 23).
The regulation cross‑references the Corporations Act in headings and adopts similar formulations; it also states these provisions operate in addition to, and not in derogation of, other law, with a limited exception (s 10). It therefore creates a bespoke governance and liability regime for distributor‑retailers that borrows structure and language from corporate law but adapts tests and contextual factors to the water sector (see s 4 for the bracketed references to the Corporations Act).
Main concepts
The instrument relies on a small set of definitional and structural concepts that determine scope and operation.
Distributor‑retailer: the regulation repeatedly targets duties and rights to persons serving on or acting for a distributor‑retailer. The text presumes the existence of a distributor‑retailer entity under the Act; the regulation does not itself define that entity in more detail within the supplied text, but treats it as the corporate actor subject to participation agreements and local government directions (s 5(2), s 18(1)(a)).
Board member and officer: “board member” is defined as a member of the board of the distributor‑retailer (s 3). “Officer” encompasses anyone appointed as an officer plus anyone who either makes or participates in decisions affecting the whole or a substantial part of the business, or has capacity to affect the entity’s financial standing (s 3). The officer definition is deliberately broad and captures de facto decisionmakers.
Business judgment: any decision to take or not take action about a matter relevant to business operations (s 5, definition). The business‑judgment rule creates a statutory presumption of compliance with the care and diligence duty where specified procedural and substantive conditions are met (s 5(3)-(4)).
Participation agreement and local government direction: the regulation requires regard be had to the distributor‑retailer’s participation agreement and any local government directions when assessing duties (s 5(2)(d)-(e)). Those instruments therefore form part of the compliance landscape.
Assumptions and third‑party reliance: third parties dealing with a distributor‑retailer are statutorily entitled to assume compliance with participation agreements and appointment and authority of persons who appear from publicly available information to be board members or officers, among other things (s 18). The distributor‑retailer cannot assert those assumptions are incorrect in proceedings relating to the dealings (s 18(3)).
Declarations, compensation orders and limitation: designated applicants (the distributor‑retailer, a participating local government, or the State) may apply to the Supreme Court for declarations and compensation orders against board members who contravene ss 6-9 (ss 19-21). Declarations are conclusive evidence of the matters they state (s 20); compensation orders are enforceable as court judgments (s 21(6)); claims must commence within six years (s 22).
Restrictions on indemnities and insurance: distributor‑retailers are prohibited from exempting persons from liabilities owed to the distributor‑retailer, from indemnifying against certain liabilities (including for compensation orders), and from paying premiums for insurance covering liabilities arising from wilful breaches or contraventions of ss 8 or 9 (ss 13-14). The text treats indemnity by interposed entity and premium payment through an interposed entity as within the prohibition (ss 13(1), 13(6), 14(2)).
These concepts structure obligations, defences (reliance on advice, business‑judgment protection), third‑party reliance, remedies and limits on corporate risk transfer via indemnity or insurance.
Who it affects
Primary actors affected:
Board members and officers of distributor‑retailers. Duties in ss 5-9 apply directly to these persons. The officer definition is functionally wide and captures de facto decisionmakers (s 3), so senior staff or influential officials who are not formally appointed can be caught.
Distributor‑retailers themselves. They must not enter into indemnity arrangements or insurance premium payments that contravene the restrictions (ss 13-14), must provide board members with access to books and records (s 17), and are the entity that third parties assume is compliant with participation agreements and statutory provisions for the purposes of dealings (s 18(1)(a)).
Participating local governments and the State. Both are expressly able to apply to the Supreme Court for declarations of contravention and compensation orders (ss 19-21). They are also listed as contextual factors the board must have regard to (s 5(2)(e)).
Third parties dealing with distributor‑retailers (contractors, financiers, counterparties, vendors). Section 18 grants them assumptions they are entitled to make about authority, appointment, execution of documents and proper performance of duties, unless they knew or suspected otherwise (s 18(1)-(2)). Those assumptions affect risk allocation in commercial dealings.
Insurers and indemnifiers. The prohibition on payment of certain insurance premiums (s 14) and the restrictions on indemnity (s 13) affect how distributor‑retailers can structure D&O cover and indemnity arrangements , in particular, limitations on coverage for wilful breaches, contraventions of ss 8 or 9 and liabilities to the distributor‑retailer or compensation orders (ss 13-14).
Lawyers, auditors, and professional advisers. The reliance safe harbour (s 12) sets out when board members may rely on advice; advisers should expect their advice to be tested under the reasonableness and competence criteria in s 12(1)(b). Auditors and recordkeepers must recognise that board members have statutory access rights to books (s 17).
Who pays and who decides: affected individuals (board members/officers) bear personal exposure for civil liability (s 5-6) and limited criminal liability (s 9). Distributor‑retailers, participating local governments and the State decide whether to commence enforcement proceedings (ss 19-21), and the Supreme Court decides whether to make declarations and compensation orders (ss 19-21). Insurance markets and indemnity arrangements are constrained for distributor‑retailers, shifting some financial risk back onto individuals or into allowed forms of legal‑costs insurance (s 13(3)).
Behavioural effects likely to arise include more formal appointment and documentation processes (s 16), heightened recordkeeping and transparency to support the assumptions third parties may rely upon (s 18), and tightened governance and compliance functions to manage the contextual factors specified in s 5(2).
Key duties and rights
Duties
Care and diligence: Board members and officers must exercise powers and discharge duties with the degree of care and diligence a reasonable person would exercise in the distributor‑retailer’s circumstances, taking into account specific contextual factors (s 5(1)-(2)). The factors explicitly include geographic area functions, other statutory functions under the Act and other Acts (naming the Financial Accountability Act 2009, Statutory Bodies Financial Arrangements Act 1982, Water Act and Water Supply Act), participation agreements and local government directions (s 5(2)(a)-(e)).
Business judgment protection: A person who makes a business judgment is taken to meet the care and diligence requirement, and equivalent common law/equity duties, if they act in good faith for a proper purpose, have no material personal interest, inform themselves to an appropriate extent, and rationally believe the judgment is in the distributor‑retailer’s best interests (s 5(3)-(4)).
Good faith and proper purpose: A board member or officer must act in good faith in the distributor‑retailer’s best interests and for a proper purpose (s 6).
Use of position and information: Persons must not improperly use their position to gain advantage or cause detriment (s 7), nor use information obtained because of their office for improper advantage or detriment (s 8).
Criminal standard for serious breaches: Sections 6-9 are supported by criminal offences where the contravention is accompanied by recklessness or intentional dishonesty. Those offences carry a maximum of 20 penalty units (s 9).
Rights and protections
Reliance on advice: Section 12 provides that a board member who relies, in good faith and after an independent assessment, on information or professional/expert advice (from reliable officers, professional advisers, other board members or committees) is taken to have reasonable reliance unless proved otherwise. This is a procedural protection for decisionmakers who seek and document appropriate advice.
Access to books and records: Board members have a right to access all distributor‑retailer books and records, including financial records, at all reasonable times (s 17).
Business judgment presumption: As above, the business judgment rule provides substantive protection if procedural requirements are met (s 5(3)).
Ability to be relieved from compensation: A court may relieve a board member wholly or partly from a compensation order if satisfied the person acted honestly and ought fairly to be excused, having regard to all circumstances (s 21(5)).
Limitations on corporate risk shifting
Restrictions on indemnity: Distributor‑retailers must not exempt persons from liabilities to the distributor‑retailer, or indemnify against liabilities owed to the distributor‑retailer, liabilities for compensation orders, or liabilities owed to others that did not arise out of conduct in good faith. Legal costs are excluded from the general prohibition (s 13(1)-(3)). However, legal costs insurance is constrained where the insured is ultimately found liable for an uninsurable liability or convicted (s 13(4)-(5)).
Insurance premium prohibition: Distributor‑retailers must not pay premiums for insurance insuring a board member against liabilities arising from wilful breaches of duty to the distributor‑retailer or contraventions of s 8 or s 9 (s 14). The prohibition reaches premium payments made through interposed entities (s 14(2)).
Third‑party assumptions and effects
Statutory assumptions: Persons dealing with a distributor‑retailer may assume compliance with participation agreements and that those who appear to be board members/officers have been duly appointed and have authority. The distributor‑retailer cannot later assert those assumptions are incorrect in proceedings relating to the dealings (s 18(1)-(4)). Assumptions do not apply where the third party knew or suspected they were incorrect (s 18(2)).
Remedies
Declarations: The Supreme Court must make a declaration if satisfied that a board member has contravened ss 6-9; designated applicants are the distributor‑retailer, participating local governments and the State (s 19).
Compensation orders: The same applicants may seek compensation orders for damage suffered due to contraventions; the court decides the amount and may grant relief if the board member acted honestly and should be excused (s 21).
Penalties and enforcement
Criminal penalties
Section 9 sets out criminal offences tied to breaches of duties in ss 6-8 when the contravention is accompanied by recklessness or intentional dishonesty. A board member or officer who is reckless or intentionally dishonest and fails to exercise powers in good faith or for a proper purpose commits an offence (s 9(1)); using position or information dishonestly or recklessly to gain advantage or cause detriment also creates offences (s 9(2)-(3)). The maximum penalty for each offence is 20 penalty units (s 9).
Civil enforcement and remedies
Declaration of contravention: The Supreme Court must make a declaration if satisfied that a board member has contravened ss 6-9 when an application is made by a distributor‑retailer, a participating local government, or the State (s 19(1)-(2)). A declaration must identify the board member, the conduct constituting the contravention and the provision contravened (s 19(3)).
Conclusive evidence: A declaration of contravention is conclusive evidence of the matters referred to in the section (s 20). The text stages the consequences of a declaration as having conclusive evidentiary effect for specified matters (s 20).
Compensation orders: The Supreme Court may order a board member to pay compensation for damage suffered because of a contravention of ss 6-9 if satisfied the contravention occurred and damage resulted (s 21(3)). Applicants are the distributor‑retailer, participating local governments, and the State (s 21(1)). Applications may be made whether or not a declaration has already been made (s 21(2)).
Relief from compensation: The court has discretion to relieve the board member wholly or partly if satisfied the board member acted honestly and, in all circumstances of the contravention, ought fairly to be excused (s 21(5)). This provides a route for equitable mitigation.
Enforcement: A compensation order may be enforced as if it were a judgment of the court (s 21(6)). That means standard judgment enforcement mechanisms apply.
Procedural limits and time bar
Limitation period: Proceedings for a declaration or compensation order must be commenced no later than six years after the day of the contravention (s 22). This is a strict time frame for bringing claims and affects evidence preservation and risk assessment.
Other enforcement‑relevant rules
Effectiveness of acts by board members: An act done by a board member is effective even if their appointment or continuation is invalid, unless the other board members know the appointment is invalid when the act is done (s 16). This affects third‑party enforcement and challenges to acts taken by improperly appointed persons.
Interaction with other laws: Sections 6-10 operate in addition to other laws relating to duties or liabilities of persons because of their office; they do not prevent civil proceedings for breaches of other duties, subject to a limited exception regarding s 6(3)-(5) and equivalent common law/equitable duties (s 10).
Who may commence actions
The distributor‑retailer itself, participating local governments, and the State have standing for declarations and compensation orders (ss 19-21). The regulation does not confer standing on private third parties to seek such remedies.
How it interacts with other laws
Referencing and alignment with the Corporations Act
The regulation intentionally mirrors and cross‑references parts of the Corporations Act. Section 4 explains that bracketed information after a section heading is a reference to a similar section of the Corporations Act; the brackets themselves are not part of the regulation (s 4). Many sections reproduce or adapt Corporations Act formulations (for example, care and diligence, good faith, use of position/information, indemnity/insurance restrictions).
Section 10 clarifies that ss 6-10 have effect in addition to, and not in derogation of, any law relating to duties or liabilities by reason of office or employment in relation to a distributor‑retailer, and do not prevent civil proceedings for breaches of those duties or liabilities (s 10(1)). However, s 10(2) contains a carve‑out: subsection (1) does not apply to s 6(3)-(5) to the extent those subsections operate on duties at common law and in equity that are equivalent to s 6(1). That indicates the drafters intended to preserve existing common law/equitable duties while importing the statutory business‑judgment protections and related formulations.
The regulation explicitly directs that relevant statutory duties are to be assessed in the context of other statutory obligations that distributor‑retailers have, naming the Financial Accountability Act 2009, Statutory Bodies Financial Arrangements Act 1982, Water Act and Water Supply Act (s 5(2)(c)). Those Acts therefore inform the standard of care and duties for director/officer conduct in this sector.
Interaction with participation agreements and local government directions
The regulation requires regard to participation agreements and local government directions in assessing care and diligence (s 5(2)(d)-(e)). Section 18 entitles third parties to assume compliance with participation agreements and other Act provisions that apply to the distributor‑retailer (s 18(1)(a)), and prevents the distributor‑retailer from later asserting those assumptions are incorrect in proceedings related to the dealings (s 18(3)). This creates a legal interplay between private participation agreements and public duties: participation agreements both inform the internal duty standard and create reliance rights for outsiders.
Indemnity and insurance limits relative to other laws
The regulation’s prohibitions on indemnities and insurance are modelled on provisions of the Corporations Act (see ss 13-15 and bracketed references). Section 15 states the division does not authorise anything otherwise unlawful and voids arrangements to the extent they contravene the division (s 15). This means indemnity or insurance arrangements must be evaluated under the regulation and any other applicable law; prohibited arrangements are void to the extent of inconsistency (s 15(2)).
Procedural and evidentiary consequences
Declarations are conclusive evidence of the matters stated (s 20). That conclusive effect may interact with other litigation or statutory regimes where findings about director conduct are relevant.
The effectiveness of acts by board members (s 16) overlaps with corporate law doctrines on apparent authority and agency, and affects third‑party rights in transactions undertaken by board members whose appointment is defective, except where other board members knew the appointment was invalid (s 16(2)). This reduces transactional risk for counterparties in certain circumstances, subject to the knowledge caveat.
No displacement of general law claims
The regulation expressly preserves other causes of action and duties (s 10(1)). It does not limit criminal laws outside its own provisions, nor does it replace common law or statutory causes of action for third parties seeking redress other than the limited compensation order regime, where standing is restricted to specified public bodies (ss 19-21).
In short, the instrument operates alongside corporate, statutory and common law duties, brings sector‑specific factors into the duty analysis, constrains indemnity/insurance practices, and creates limited public standing for declaratory and compensatory enforcement, while enabling third‑party commercial reliance on specified assumptions.
Amendment history
The regulation text provided contains only a single explicit historical change: it repeals the South‑East Queensland Water (Distribution and Retail Restructuring) Regulation 2010, SL No. 141 (s 23). The repeal indicates this 2021 instrument supersedes the 2010 regulation.
No other amendments, historical notes, commencement dates, transitional provisions, or amendment schedules are included in the supplied text. The regulation refers repeatedly to corresponding Corporations Act provisions in bracketed headings (for example [CA, s 180] at s 5), but it does not provide amendment chronology of how the 2021 text diverges from the 2010 instrument or earlier materials within the supplied excerpt.
Implications of the repeal (practical):
Entities and individuals who previously relied on the 2010 regulation must examine the 2021 text for any substantive differences in duties, remedies, indemnity/insurance restrictions and procedural mechanisms. The 2021 instrument retains the same structural categories of director/officer duties and liability mechanics but embeds sector‑specific contextual factors and explicit third‑party assumption rules.
The repeal suggests an intention to refresh or reframe the regulatory regime; practitioners should check official commencement instruments and any explanatory memoranda or second‑reading speeches not included here for legislative intent and transitional rules. The regulation as presented contains no transitional clauses; absence of transitional provisions in this excerpt means one must consult the full statutory instrument for commencement and transitional detail.
Because the supplied material contains no further amendment entries or dates, a comprehensive amendment history cannot be reconstructed from this text alone. Users should consult legislative registers and the consolidated regulation for the date of repeal and any transitional provisions that accompany the enactment.
Litigation history
The supplied regulation text does not refer to any judicial authorities, past rulings, or specific litigation applying its provisions. It reproduces and adapts language from the Corporations Act (the bracketed references in headings, s 4) but does not cite any cases, nor does it provide examples, decided interpretations, or guidance from courts.
What the text does provide that is litigation‑relevant:
It creates a statutory right for distributor‑retailers, participating local governments, and the State to apply to the Supreme Court for declarations of contravention and for compensation orders (ss 19-21). This establishes the Supreme Court as the forum for enforcement under these provisions.
Declarations are conclusive evidence of certain matters (s 20). That statutory conclusive effect is an evidentiary rule that will determine how courts and later litigants treat prior declarations, but the text offers no judicial interpretation of its scope.
The regulation mirrors provisions of the Corporations Act (see the bracketed references). Pre‑existing Corporations Act case law on the business‑judgment rule, duty of care and diligence, improper use of position or information, and the interplay between statutory duties and common law may be persuasive, but the regulation itself does not discuss or adopt such cases.
In practice, enforcement under this instrument will generate litigation that will clarify:
The scope of the officer definition in s 3 and who is captured as an officer for the purposes of ss 5-9.
The application of the business‑judgment presumption in s 5(3) within the water sector, especially how the specified contextual factors in s 5(2) influence what a “reasonable person in the distributor‑retailer’s circumstances” would have done.
The boundary between civil obligations (s 5 labelled as “civil obligation only”) and criminal liability under s 9, particularly the thresholds for recklessness and intentional dishonesty.
The extent of the conclusive evidentiary effect of declarations (s 20), and whether that precludes relitigation of facts in related proceedings.
Because the text includes no reported litigation, practitioners must treat questions about interpretation and enforcement as open and watch for future case law interpreting these customized provisions.
Gotchas
Several provisions carry consequences or traps that practitioners and corporate officers should note precisely as written.
Officer definition is wide (s 3). The regulation includes not only formally appointed officers but also anyone who makes or participates in decisions affecting the whole or a substantial part of the business, or who can significantly affect financial standing. De facto decisionmakers who are not formally appointed may nonetheless be captured, increasing personal exposure.
Care and diligence tailored to sector functions (s 5(2)). The duty test expressly requires regard to distributor‑retailer geographic functions, statutory functions under the Act and other Acts, participation agreements, and local government directions. That means standards of care differ from general corporate settings: compliance with sector‑specific statutory and contractual obligations is part of the care assessment.
Business judgment protection requires procedural steps (s 5(3)). The statutory presumption is conditional. Failure to document or discharge its limbs (proper purpose, no material personal interest, informing oneself, rational belief) will forfeit the presumption. Note the rational‑belief test has an objective threshold: irrational beliefs are excluded (s 5(4)).
Criminal liability threshold (s 9). Although most duties are civil, s 9 imposes criminal offences where conduct is reckless or intentionally dishonest. Recklessness here is a defined fault standard; conduct that is negligent but not reckless may not attract criminal sanction but still expose the person to civil liability or compensation orders.
Distributor‑retailer cannot contract out via indemnity or exemption (s 13(1)). The prohibition extends to indirect arrangements through interposed entities (s 13(6)). Practices that were common,broad indemnities in participation agreements or third‑party guarantors,may be void to the extent they seek to exempt liability to the distributor‑retailer.
Insurance premiums constrained (s 14). Distributor‑retailers must not pay premiums for insurance that covers liabilities arising from wilful breaches or contraventions of s 8 or 9. Payment through an interposed entity is also caught (s 14(2)). Boards must ensure D&O policies and procurement structures do not contravene these limits; otherwise the premium payments may be unlawful.
Legal‑costs protection has limits (s 13(3)-(4)). While indemnification for legal costs is generally excluded from the prohibition (s 13(3)), indemnification cannot apply where the legal costs are incurred defending proceedings that result in a finding of liability that could not be indemnified, or in which the person is found guilty in criminal proceedings (s 13(4)). Outcomes include the appeal process (s 13(5)), so insurers and indemnifiers must consider possibilities of judgments on appeal.
Third‑party assumptions are strong but not absolute (s 18). While third parties may assume appointment and authority from publicly available information and the distributor‑retailer cannot later assert the assumptions are incorrect in related proceedings (s 18(3)), the assumptions do not apply if the third party knew or suspected they were incorrect at the time of the dealing (s 18(2)). That creates risk allocation based on available information and due diligence.
Effectiveness of acts despite invalid appointment (s 16). Acts by a board member are effective even if the appointment or continuance is invalid, except where the board members knew of the invalidity when the act was done (s 16(1)-(2)). However, s 16(3) explicitly does not address whether the act binds the distributor‑retailer in dealings with others or makes the distributor‑retailer liable to another person; that leaves open litigation on transactional consequences.
Standing to commence proceedings is limited (ss 19-21). Only the distributor‑retailer, participating local governments and the State can apply for declarations or compensation orders. Private third parties who suffer damage are not granted standing under these sections to seek compensation orders directly; they must rely on other remedies unless a participating government or the distributor‑retailer acts for them.
Six‑year limitation (s 22). The time bar for commencing proceedings is six years from the day of the contravention. Evidence and records must be preserved accordingly; claims outside that window will be time‑barred.
Division does not authorise unlawful acts; offending provisions void (s 15). Parties should not assume the division validates otherwise unlawful indemnities or insurance; offending terms are void to the extent of contravention.
These are concrete operational pitfalls. Remediation requires governance, policy, and contract review, and careful documentation of decision processes and reliance on advice.
How to comply
Practical compliance steps for distributor‑retailers, board members, officers, participating local governments and advisers, stated in actionable terms that map to the regulation’s sections:
Clarify who is an officer and document appointments
Audit organisational charts and decision‑making processes against the officer definition in s 3. Identify de facto decisionmakers and, where appropriate, formalise appointments or adjust responsibilities to limit unintended officer exposure.
Maintain public records and disclosures (websites, registers) that reflect accurate board member and officer appointments to support third‑party assumptions under s 18.
Strengthen minutes and business‑judgment documentation
For material business judgments, document (a) the proper purpose, (b) absence of material personal interest, (c) the information and advice relied upon, and (d) the rationale showing a reasonable belief the judgment is in the entity’s best interests (s 5(3)-(4)). This evidentiary file supports the statutory presumption and any later relief under s 21(5).
Institutionalise independent advice and reliance processes
Adopt procedures for obtaining and logging professional advice from reliable, competent officers or external advisers, and for recording the board member’s independent assessment of that advice consistent with s 12. Ensure advisers’ scopes and competence are evident in advice documents.
Tailor duty assessments to statutory context
Integrate the statutory contextual factors into the board’s risk and compliance frameworks: geographic area functions, statutory functions under the Act and other Acts named in s 5(2)(c), participation agreements, and local government directions. Ensure board papers address these factors explicitly.
Establish conflict of interest, use‑of‑position and information policies
Create clear conflict‑disclosure registers and protocols to avoid material personal interests in business judgments (s 5(3)(b)). Implement policies and training on use of position and information to reduce risk of contraventions under ss 7-8 and criminal exposure under s 9.
Review indemnity and insurance structures
Audit existing indemnities, guarantees and insurance arrangements against ss 13-15. Remove or renegotiate clauses that purport to exempt persons from liabilities to the distributor‑retailer or to indemnify against liabilities that are prohibited, including indirect indemnities through interposed entities (s 13(1), (6)).
For D&O and similar policies, ensure policy wording and procurement structures do not contravene the premium payment prohibition in s 14. Structure policies to exclude cover for liabilities arising from wilful breaches, contraventions of ss 8 or 9, and liabilities to the distributor‑retailer when required. Seek insurer confirmation in writing of permitted coverage and premium arrangements.
Preserve legal‑cost and defence rights within statutory limits
Recognise legal costs may be indemnified subject to s 13(3), but document conditions under which indemnity will not apply (s 13(4)). Consider separate legal assistance policies and obtain written legal advice when contemplating funding of criminal defences or proceedings that may lead to uninsurable liabilities.
Maintain books and records and provide board access
Ensure robust financial and corporate records are kept and accessible. Implement procedures granting board members access to all books and records at reasonable times, with secure but timely channels for inspection (s 17).
Support third‑party assumptions while managing due diligence
Publish authoritative contact and authority information, properly executed documents and certified copies where required (s 18(1)(e)-(f)). Maintain processes to identify when third parties have actual knowledge or reasonable suspicion to defeat the assumptions (s 18(2)), and record any communications indicating such knowledge.
Prepare for enforcement risk and litigation
Implement retention policies preserving materials for at least six years after relevant acts (s 22). Consider risk transfer strategies that comply with indemnity and insurance restrictions, such as entity‑level insurance for permitted exposures, sponsored legal assistance, or board indemnity funds consistent with the regulation.
Training and governance
Regularly train board members and key officers on the content of ss 5-9, the criminal thresholds in s 9, the reliance protections in s 12, and the limits on indemnity/insurance in ss 13-15. Ensure induction materials for new board members cover access rights (s 17) and participation‑agreement obligations (s 18).
Contract and participation agreement review
Review participation agreements and any terms imposing duties or indemnities inconsistent with this regulation. Because the regulation requires regard to participation agreements when assessing care and diligence (s 5(2)(d)) and allows third parties to assume compliance (s 18(1)(a)), ensure contractual drafting aligns with the statutory regime and does not attempt to contract out of the regulation’s prohibitions.
Coordinate with participating local governments
Since participating local governments and the State have standing to bring declarations and compensation orders (ss 19-21), maintain transparent lines of communication with those bodies, and ensure compliance and reporting obligations under participation agreements or directions are met.
Seek contemporaneous legal advice on thresholds and potential exposures
Where conduct could be characterised as reckless or dishonest, obtain prompt legal advice because criminal exposure under s 9 carries potential penalties and may affect indemnity/insurance availability.
These steps translate statutory requirements into internal controls, documentation practices and contract management changes that reduce legal exposure and enable the operation of the statutory defences and protections the regulation affords.
In this regulation, the information included in square brackets after a section heading is a reference to a similar section of the Corporations Act .
The brackets and information do not form part of this regulation.
(sec.4-ssec.1) In this regulation, the information included in square brackets after a section heading is a reference to a similar section of the Corporations Act .
(sec.4-ssec.2) The brackets and information do not form part of this regulation.
pt.2 Board members and officers
Board members and officers
pt.2-div.1 General duties
General duties
sec.5 Care and diligence—civil obligation only [CA, s 180 ]
sec.5 Care and diligence—civil obligation only [CA, s 180 ]
A board member or an officer of a distributor-retailer must exercise their powers and discharge their duties with the degree of care and diligence that a reasonable person would exercise if they—
were a board member or an officer of a distributor-retailer in the distributor-retailer’s circumstances; and
occupied the office held by, and had the same responsibilities within the distributor-retailer as, the board member or officer.
In deciding the degree of care and diligence required under subsection (1) , regard must be had to—
the distributor-retailer’s geographic area functions; and
the distributor-retailer’s other functions under the Act ; and
the distributor-retailer’s other functions under another Act including, for example, the Financial Accountability Act 2009 , Statutory Bodies Financial Arrangements Act 1982 , Water Act and Water Supply Act ; and
any requirement under the distributor-retailer’s participation agreement; and
any relevant local government direction given to the distributor-retailer.
A board member or an officer of a distributor-retailer who makes a business judgment is taken to meet the requirements of subsection (1) , and their equivalent duties at common law and in equity, in respect of the judgment if they—
make the judgment in good faith for a proper purpose, taking into account any relevant matters mentioned in subsection (2) ; and
do not have a material personal interest in the subject matter of the judgment; and
inform themselves about the subject matter of the judgment to the extent they reasonably believe to be appropriate; and
rationally believe the judgment is in the distributor-retailer’s best interests.
For subsection (3) (d) , the board member’s or the officer’s belief that the judgment is in the distributor-retailer’s best interests is a rational one unless the belief is one that no reasonable person in their position would hold.
In this section—
business judgment means any decision to take or not take action about a matter relevant to the business operations of the distributor-retailer.
functions includes powers.
(sec.5-ssec.1) A board member or an officer of a distributor-retailer must exercise their powers and discharge their duties with the degree of care and diligence that a reasonable person would exercise if they— were a board member or an officer of a distributor-retailer in the distributor-retailer’s circumstances; and occupied the office held by, and had the same responsibilities within the distributor-retailer as, the board member or officer.
(sec.5-ssec.2) In deciding the degree of care and diligence required under subsection (1) , regard must be had to— the distributor-retailer’s geographic area functions; and the distributor-retailer’s other functions under the Act ; and the distributor-retailer’s other functions under another Act including, for example, the Financial Accountability Act 2009 , Statutory Bodies Financial Arrangements Act 1982 , Water Act and Water Supply Act ; and any requirement under the distributor-retailer’s participation agreement; and any relevant local government direction given to the distributor-retailer.
(sec.5-ssec.3) A board member or an officer of a distributor-retailer who makes a business judgment is taken to meet the requirements of subsection (1) , and their equivalent duties at common law and in equity, in respect of the judgment if they— make the judgment in good faith for a proper purpose, taking into account any relevant matters mentioned in subsection (2) ; and do not have a material personal interest in the subject matter of the judgment; and inform themselves about the subject matter of the judgment to the extent they reasonably believe to be appropriate; and rationally believe the judgment is in the distributor-retailer’s best interests.
(sec.5-ssec.4) For subsection (3) (d) , the board member’s or the officer’s belief that the judgment is in the distributor-retailer’s best interests is a rational one unless the belief is one that no reasonable person in their position would hold.
(sec.5-ssec.5) In this section— business judgment means any decision to take or not take action about a matter relevant to the business operations of the distributor-retailer. functions includes powers.
(a) were a board member or an officer of a distributor-retailer in the distributor-retailer’s circumstances; and
(b) occupied the office held by, and had the same responsibilities within the distributor-retailer as, the board member or officer.
(a) the distributor-retailer’s geographic area functions; and
(b) the distributor-retailer’s other functions under the Act ; and
(c) the distributor-retailer’s other functions under another Act including, for example, the Financial Accountability Act 2009 , Statutory Bodies Financial Arrangements Act 1982 , Water Act and Water Supply Act ; and
(d) any requirement under the distributor-retailer’s participation agreement; and
(e) any relevant local government direction given to the distributor-retailer.
(a) make the judgment in good faith for a proper purpose, taking into account any relevant matters mentioned in subsection (2) ; and
(b) do not have a material personal interest in the subject matter of the judgment; and
(c) inform themselves about the subject matter of the judgment to the extent they reasonably believe to be appropriate; and
(d) rationally believe the judgment is in the distributor-retailer’s best interests.
sec.6 Good faith—civil obligations [CA, s 181 ]
sec.6 Good faith—civil obligations [CA, s 181 ]
A board member or an officer of a distributor-retailer must exercise their powers and discharge their duties—
in good faith in the distributor-retailer’s best interests; and
for a proper purpose.
(a) in good faith in the distributor-retailer’s best interests; and
(b) for a proper purpose.
sec.7 Use of position—civil obligations [CA, s 182 ]
sec.7 Use of position—civil obligations [CA, s 182 ]
A board member or an officer of a distributor-retailer must not improperly use their position to—
gain an advantage for themselves or someone else; or
cause detriment to the distributor-retailer.
(a) gain an advantage for themselves or someone else; or
(b) cause detriment to the distributor-retailer.
sec.8 Use of information—civil obligations [CA, s 183 ]
sec.8 Use of information—civil obligations [CA, s 183 ]
A board member or an officer of a distributor-retailer must not use information, obtained because they are or have been a board member or an officer, to improperly—
gain an advantage for themselves or someone else; or
cause detriment to the distributor-retailer.
(a) gain an advantage for themselves or someone else; or
(b) cause detriment to the distributor-retailer.
sec.9 Good faith, use of position and use of information—criminal offences [CA, s 184 ]
sec.9 Good faith, use of position and use of information—criminal offences [CA, s 184 ]
A board member or officer of a distributor-retailer commits an offence if they—
are reckless or are intentionally dishonest; and
fail to exercise their powers and discharge their duties—
in good faith in the best interests of the distributor-retailer; or
for a proper purpose.
Maximum penalty—20 penalty units.
A board member or officer of a distributor-retailer commits an offence if they use their position—
dishonestly with the intention of directly or indirectly gaining an advantage for themselves, or someone else, or causing detriment to the distributor-retailer; or
recklessly as to whether the use may result in themselves or someone else directly or indirectly gaining an advantage, or in causing detriment to the distributor-retailer.
Maximum penalty—20 penalty units.
A person who obtains information because they are, or have been, a board member or officer of a distributor-retailer commits an offence if they use the information—
dishonestly with the intention of directly or indirectly gaining an advantage for themselves, or someone else, or causing detriment to the distributor-retailer; or
recklessly as to whether the use may result in themselves or someone else directly or indirectly gaining an advantage, or in causing detriment to the distributor-retailer.
Maximum penalty—20 penalty units.
(sec.9-ssec.1) A board member or officer of a distributor-retailer commits an offence if they— are reckless or are intentionally dishonest; and fail to exercise their powers and discharge their duties— in good faith in the best interests of the distributor-retailer; or for a proper purpose. Maximum penalty—20 penalty units.
(sec.9-ssec.2) A board member or officer of a distributor-retailer commits an offence if they use their position— dishonestly with the intention of directly or indirectly gaining an advantage for themselves, or someone else, or causing detriment to the distributor-retailer; or recklessly as to whether the use may result in themselves or someone else directly or indirectly gaining an advantage, or in causing detriment to the distributor-retailer. Maximum penalty—20 penalty units.
(sec.9-ssec.3) A person who obtains information because they are, or have been, a board member or officer of a distributor-retailer commits an offence if they use the information— dishonestly with the intention of directly or indirectly gaining an advantage for themselves, or someone else, or causing detriment to the distributor-retailer; or recklessly as to whether the use may result in themselves or someone else directly or indirectly gaining an advantage, or in causing detriment to the distributor-retailer. Maximum penalty—20 penalty units.
(a) are reckless or are intentionally dishonest; and
(b) fail to exercise their powers and discharge their duties— (i) in good faith in the best interests of the distributor-retailer; or (ii) for a proper purpose.
(i) in good faith in the best interests of the distributor-retailer; or
(ii) for a proper purpose.
(i) in good faith in the best interests of the distributor-retailer; or
(ii) for a proper purpose.
(a) dishonestly with the intention of directly or indirectly gaining an advantage for themselves, or someone else, or causing detriment to the distributor-retailer; or
(b) recklessly as to whether the use may result in themselves or someone else directly or indirectly gaining an advantage, or in causing detriment to the distributor-retailer.
(a) dishonestly with the intention of directly or indirectly gaining an advantage for themselves, or someone else, or causing detriment to the distributor-retailer; or
(b) recklessly as to whether the use may result in themselves or someone else directly or indirectly gaining an advantage, or in causing detriment to the distributor-retailer.
sec.10 Interaction of ss 6 – 10 with other laws etc. [CA, s 185 ]
sec.10 Interaction of ss 6 – 10 with other laws etc. [CA, s 185 ]
Sections 6 to 10 —
have effect in addition to, and not in derogation of, any law relating to the duty or liability of a person because of their office or employment in relation to a distributor-retailer; and
do not prevent the commencement of civil proceedings for a breach of a duty or in respect of a liability mentioned in paragraph (a) .
However, subsection (1) does not apply to section 6 (3) , (4) and (5) to the extent to which those subsections operate on the duties at common law and in equity that are equivalent to the requirements under section 6 (1) .
(sec.10-ssec.1) Sections 6 to 10 — have effect in addition to, and not in derogation of, any law relating to the duty or liability of a person because of their office or employment in relation to a distributor-retailer; and do not prevent the commencement of civil proceedings for a breach of a duty or in respect of a liability mentioned in paragraph (a) .
(sec.10-ssec.2) However, subsection (1) does not apply to section 6 (3) , (4) and (5) to the extent to which those subsections operate on the duties at common law and in equity that are equivalent to the requirements under section 6 (1) .
(a) have effect in addition to, and not in derogation of, any law relating to the duty or liability of a person because of their office or employment in relation to a distributor-retailer; and
(b) do not prevent the commencement of civil proceedings for a breach of a duty or in respect of a liability mentioned in paragraph (a) .
sec.11 Duty of confidentiality
sec.11 Duty of confidentiality
A board member of a distributor-retailer owes a duty of confidentiality to the distributor-retailer to the same extent as if the distributor-retailer was a comp
This is an opening excerpt, not the complete document.