Several organising legal concepts recur through the Act. Define these first because they structure rights, duties and interactions.

• State owned corporation (SOC): either a company SOC (a company listed in Schedule 1) or a statutory SOC (a corporation listed in Schedule 5) (s 3; s 3A). The class matters because different provisions apply to company SOCs and statutory SOCs (Parts 2 and 3).

• Voting shareholders and eligible Ministers: the Act limits shareholder rights to Ministers nominated by the Premier; voting shareholders exercise the State’s shareholder role (s 3 definitions; Scheds 2, 6). For company SOCs, eligible Ministers are the Treasurer plus four or more Ministers nominated by the Premier; voting shareholders are the Treasurer and one of those eligible Ministers nominated by the Premier (s 3). For statutory SOCs, eligible Ministers are the Treasurer and another Minister nominated by the Premier as the voting shareholder (s 3; s 20H).

• Principal objectives: each SOC must pursue being a successful business, operate efficiently relative to comparables, maximise the net worth of the State’s investment, have social responsibility, and, where relevant, observe ecologically sustainable development principles and regional responsibilities (s 8; s 20E). The Act declares each of these objectives to be of equal importance (s 8(2); s 20E(2).

• Statement of corporate intent (SCI): an annual planning document prepared by the board, negotiated with voting shareholders and laying out objectives, main undertakings, accounting policies, performance targets and information flows for the SOC and its subsidiaries (ss 21-22). The SCI is a central accountability device linking corporate operations to shareholder expectations.

• Ministerial directions and notifications: Ministers have statutory powers to direct SOCs to undertake or cease non‑commercial activities (s 11 for company SOCs; s 20N for statutory SOCs) and, for statutory SOCs, to notify public sector policies (s 20O) or give directions in the public interest where exceptional circumstances exist (s 20P). Directions must generally be in writing and are binding; reimbursement entitlements and procedural preconditions are specified.

• Tax‑equivalents and dividends: SOCs pay tax‑equivalents to the Treasurer as determined by a Tax Assessor (s 15; s 20T). Dividends payable to eligible Ministers are to be paid to the Treasurer for the Consolidated Fund unless applied to share purchases in accordance with agreement (s 14; s 20S).

• Limits on State liability: the State does not guarantee SOC liabilities except by written agreement of the board and voting shareholders (s 16; s 20U). Where guarantees are agreed, the Consolidated Fund meets the liability (s 16(2); s 20U(2)).

• Transaction approvals and thresholds: formation of subsidiaries, acquisitions or disposals of significant fixed assets and sales of main undertakings require prior written approvals by voting shareholders if they breach prescribed thresholds (s 18; s 19; s 20; ss 20W, 20X, 20Y). The “prescribed percentage” is 10 per cent unless regulations provide otherwise (s 19(6); s 20X(6)).

• Legal capacity and third‑party protections for statutory SOCs: statutory SOCs have the legal capacity of a natural person in performing their functions (s 20ZB), but exercise of powers is subject to statutory, constitutional and board limitations (s 20ZC). Third parties dealing with statutory SOCs are entitled to make statutory assumptions about compliance and authority; those assumptions survive fraud unless the third party had actual knowledge of the fraud (ss 20ZD-20ZE).

• Directors’ duties and liabilities: Schedule 10 sets duties for directors and other officers of statutory SOCs (Schedule 10 contains disclosure, voting, honesty, care and diligence obligations, prohibitions on improper use of office and on loans, rules on indemnities and insurance, insolvent trading duties, examination powers and relief provisions). Section 33A gives effect to Schedule 10 and contemplates regulations amending it.

These concepts are interlocked: SCI performance targets feed reporting to voting shareholders and Parliament (Part 4); ministerial directions can require non‑commercial activities but create reimbursement entitlements (ss 11(3)-(5); s 20N(3)-(5)); tax‑equivalents, dividends and guarantees channel money between the SOC and the Consolidated Fund (ss 14-16; ss 20S-20U). The Act balances commercial autonomy for SOC boards with ministerial and shareholder oversight, while embedding statutory safeguards for third parties and duties for officers.

Primary subjects:

• The boards and officers of SOCs: directors, chief executive officers, and other officers of company and statutory SOCs have statutory duties and are accountable to voting shareholders (s 10; s 20J; Schedule 10; s 33A). The Act prescribes appointment, terms, removal, remuneration and limits on indemnities and insurance for officers (Schedule 8, Schedule 9, Schedule 10).

• Voting shareholders and Ministers: eligible Ministers (as defined in s 3) and voting shareholders have explicit powers under the Act , appointing directors, approving major transactions (ss 12-13; ss 18-20; ss 20W-20X), directing boards (ss 11, 20N, 20O, 20P), and receiving financial returns and reports (ss 14-15; ss 21-24). The Premier and Treasurer have special roles, including nominations, approvals and the power to be a voting shareholder (s 3 definitions; ss 10A, 20HA).

• The Treasurer and the Consolidated Fund: the Treasurer receives dividends and tax‑equivalent payments (ss 14-15; ss 20S-20T), can advance funds to reimburse SOCs for mandated non‑commercial activities (ss 11(3)-(4); s 20N(3)-(4)), may issue written instruments certifying tax‑exempt matters (ss 17(3); s 20V(3)), and can issue notices exempting SOCs from otherwise applicable transaction‑approval requirements (ss 19(7)-(8); s 20X(7)-(8)).

• Parliament and Parliamentarians: the Act requires a range of corporate documents to be laid before both Houses (s 26), and gives the Public Accounts Committee powers to examine SOC financial reports (s 28). The Auditor‑General has powers to audit SOC financial reports and to present special reports to the Legislative Assembly (ss 24-25).

• SOC employees, including eligible employees transferred from the Public Service: Schedule 4 governs employment and superannuation entitlements for eligible employees when they become employees of a SOC, including continuity of superannuation and leave rights (Sched 4, cls 1-5).

• Third parties contracting with SOCs and purchasers of property: statutory SOCs are given wide legal capacity (s 20ZB) and third parties dealing with statutory SOCs are entitled to rely on assumptions about authority, constitution and compliance (ss 20ZD-20ZE). Those third‑party protections shape market counterparties’ due diligence expectations.

• The courts and regulators: several provisions confer investigative and enforcement roles on courts (Schedule 10 cl 9 examination orders; cl 8 compensation powers). The Act contemplates interaction with Commonwealth corporations law and ASIC via regulation (s 7B; s 20G(4)), and reserves certain public‑sector integrity oversight to ICAC definitions with specific exclusions (s 36(2)).

Who pays and who benefits:

• SOCs themselves bear compliance costs for reporting, audits (s 24), and tax‑equivalents payments (s 15; s 20T). Where Ministers direct non‑commercial activity, SOCs are entitled to reimbursement from Treasurer appropriations (s 11(3); s 20N(3)).
• The Consolidated Fund/State receives dividends, tax‑equivalent payments and, where guarantees are agreed, bears agreed liabilities (ss 14-16; ss 20S-20U).
• Voting shareholders (Ministers) control major corporate decisions; their choices shape transfer of assets and undertakings and financial distributions to the State.

Who decides:

• The board controls day‑to‑day operations subject to SCI and shareholder directions (s 10(1)-(2); s 20L).
• Voting shareholders (subject to Premier nominations and Treasurer functions) decide membership of boards, dividends and approvals for major transactions (s 12; s 19; s 20).
• For statutory SOCs, the portfolio Minister may notify public sector policies and give directions in the public interest with Treasurer approval (ss 20O-20P).

In sum, the Act affects corporate actors (boards, officers, employees), Ministers and Treasury, Parliament and external counterparties; it shifts many commercial risks to SOCs while retaining ministerial control through shareholder powers, directions and financial levers.

The Act allocates duties and rights across boards, officers, voting shareholders, Ministers and third parties. Below are the principal statutory duties and rights, with section references.

Boards and officers

• Duty to pursue principal objectives: boards and directors must steer their SOCs to be successful businesses, operate efficiently and maximise State net worth, while also having regard to social responsibility, environmental principles and regional development (s 8; s 20E). The board is accountable to voting shareholders as set out in Part 4 and in constitutions (s 10(2); s 20J(6)).
• Reporting and planning duties: the board must prepare a draft SCI annually, negotiate changes with voting shareholders, deliver a completed SCI within the statutory timetable, produce half‑yearly and annual reports and provide other information on request (ss 21-24; s 29). Annual reports must identify departures from performance targets and explain reasons (s 24(3A); s 24A(a)-(b)).
• Compliance with ministerial directions: SOCs must comply with written directions to perform or cease non‑commercial activities (s 11(1)-(3); s 20N(1)-(3)). For statutory SOCs, portfolio Minister may notify public sector policies (s 20O) and give directions in public interest (s 20P), with consultation and procedural steps required (ss 20O(3); 20P(3)).
• Directors’ statutory duties: for statutory SOCs Schedule 10 imposes obligations to disclose interests, not to vote on matters where they have a material personal interest, to act honestly and exercise care, not to use position or information improperly, and to avoid prohibited loans and indemnities (Schedule 10 cls 1-6, 11). For company SOCs, s 13 requires that Corporations Law duties be applied taking account of this Act and relevant directions or approvals.
• Insolvency‑related duties: directors and managers face criminal penalties for allowing insolvent trading by the SOC (Schedule 10 cl 7), and courts may order personal compensation if a contravention is proved (Schedule 10 cl 8).

Voting shareholders and Ministers

• Appointment and removal powers: voting shareholders appoint boards and directors and may remove Chairpersons and directors as permitted (s 10; Sched 8 cls 2, 7). The Premier may direct transfers of shares issued to Ministers (s 3 definitions; Scheds 2, 6).
• Approval and control over major transactions: voting shareholders must approve formation of subsidiaries, acquisitions/disposals above specified thresholds, and sale of main undertakings (ss 18-20; ss 20W-20Y). Voting shareholders may direct inclusion or omission of matters in the SCI (s 21(7)).
• Direction rights: the Act explicitly gives Ministers powers to direct SOCs to undertake non‑commercial activities with Treasurer approval (s 11; s 20N), to notify policies and give directions in the public interest for statutory SOCs (ss 20O-20P). Voting shareholders may direct not to dispose of specified assets (s 19(9); s 20X(9)).

Financial rights and obligations

• Dividend rights: voting shareholders and boards may agree on dividend application to share purchases or require that dividends payable to eligible Ministers be paid to the Treasurer for the Consolidated Fund (s 14; s 20S).
• Tax‑equivalent obligations: SOCs must pay amounts determined by the Tax Assessor equivalent to Commonwealth taxes, subject to agreements and finality of determinations (s 15; s 20T). These payments are for the Consolidated Fund.
• Reimbursement rights of SOCs: where a Minister requires non‑commercial activities, the SOC is entitled to reimbursement from money advanced by the Treasurer or appropriated by Parliament for net costs including cost of capital; timing and amounts are as agreed or determined by a qualified person nominated by the Premier (s 11(3)-(4); s 20N(3)-(4)).

Third parties and counterparties

• Reliance on statutory assumptions for statutory SOCs: persons dealing with statutory SOCs are entitled to assume compliance with foundation charters and constitutions, authority of apparent officers, validity of seals and proper performance of duties; assertions to the contrary by the SOC are disregarded in proceedings unless the person had actual knowledge the assumption was incorrect (ss 20ZD(1)-(4)).
• Limitations on State liability: SOCs are not representatives of the State and do not expose the State to the SOC’s debts unless an express agreement provides otherwise (s 9; s 20F). Guarantees require agreement and are met from the Consolidated Fund (s 16(1)-(2); s 20U(1)-(2)).

Procedural and constitutional rights

• Entrenchment and Act prevailing: Constitutions of SOCs and subsidiaries must contain specific provisions and may not be altered inconsistently with the Schedules unless both Houses pass resolutions (s 12(1); s 20Q(6); Scheds 2, 3, 6, 7). The Act prevails over inconsistent constitutional provisions (Scheds 2 cl 2; 6 cl 2).

These duties and rights allocate day‑to‑day managerial autonomy to boards while reserving strategic control, financial entitlements, and accountability to the State through voting shareholders, Ministers and Parliament. Many rights (for example reimbursement, tax‑equivalents, dividend application) are clarifying mechanisms that convert political directions into financial entitlements or obligations (ss 11(3)-(6); ss 15(1)-(6)).

The Act contains multiple enforcement levers, criminal and civil penalties, investigatory powers and declaratory mechanisms. Enforcement and penalty provisions are concentrated in Schedule 10 and Part 5 provisions, and the Act also prescribes procedural paths for offences.

Criminal and monetary penalties

• Schedule 10 sets out penalties for statutory SOC officers:

  • Failure to disclose interests: maximum 100 penalty units (Sched 10 cl 1).
  • Voting by interested director where prohibited: maximum 100 penalty units (Sched 10 cl 2).
  • Dishonesty: up to 500 penalty units or imprisonment for 5 years if committed with intent to deceive or defraud; otherwise 100 penalty units (Sched 10 cl 3(2)).
  • Failure to exercise care and diligence: maximum 100 penalty units (Sched 10 cl 3(3)).
  • Improper use of position or information: up to 500 penalty units or 5 years imprisonment (Sched 10 cl 3(4)-(5)).
  • Loans to directors: contravening director knowingly concerned commits offence , maximum 100 penalty units (Sched 10 cl 4(3)).
  • Insolvent trading: maximum 100 penalty units or imprisonment for 1 year (Sched 10 cl 7(1)).
  • Examination offences (failure to attend, swear, answer, produce documents): varying maximums up to 200 penalty units or 2 years (Sched 10 cl 9(5)-(9)).
  • Knowingly false statements at an examination: 500 penalty units or imprisonment for 5 years (Sched 10 cl 9(11)).
  • False or misleading information and documents by officers: penalties up to 500 penalty units or 5 years where committed with fraudulent intent; otherwise 100 penalty units (Sched 10 cl 11).

• Part 5 offences: s 33B provides procedural limits , proceedings for an offence under the Act must be instituted within 3 years after the alleged commission and are to be disposed of summarily in Local Court or the Supreme Court in its summary jurisdiction. The Local Court’s maximum penalty is 50 penalty units or imprisonment for 12 months, or both (s 33B).

Civil recovery and court powers

• Schedule 10 cl 3(6) allows the SOC to recover as a debt any profit obtained by an officer through contravention or loss/damage suffered by the SOC because of contravention; recovery may proceed without a criminal conviction (Sched 10 cl 3(6)-(7)).
• Courts may order compensation in relation to insolvent trading offences: Supreme Court may declare a person personally responsible to satisfy part of the SOC’s debts (Sched 10 cl 8(1)). This is a civil declaration of personal liability without limiting other rights to indemnity or contribution (Sched 10 cl 8(2)).
• Schedule 10 cl 10 permits the Supreme Court or District Court to grant relief to officers in negligence/default/breach cases where it appears they acted honestly and ought fairly to be excused; the court may relieve in whole or part and on terms (Sched 10 cl 10).

Investigatory powers and parliamentary reporting

• The Auditor‑General may make special reports and must present them to the Legislative Assembly (s 25). The Auditor‑General also audits company SOC financial reports and has the powers of a registered company auditor under the Corporations Act for that purpose (s 24(1)-(5)).
• The Attorney‑General can seek court orders for examinations of persons who may have been guilty of fraud, negligence or misconduct in relation to a statutory SOC (Sched 10 cl 9(1)-(4)); courts can require attendance, oaths, production of documents and impose penalties for non‑compliance (Sched 10 cl 9(5)-(11)).

Limitations and defences

• The Act contains defences, for example in insolvent trading prosecutions: proof that debt was incurred without person’s authority, that the director had no reasonable cause to suspect insolvency, that reasonable steps to prevent debt were taken, or that director was not participating in management due to illness or other good cause (Sched 10 cl 7(2)).
• Section 33AA limits personal liability for directors and officers, shielding them from personal liability for compliance in good faith by the board with obligations to ensure compliance with ministerial directions, notifications or information supply obligations under ss 20O, 20P and s 29 respectively (s 33AA(2)-(3)).

Procedural enforcement and jurisdiction

• The Act contemplates regulations to amend Schedule 10 and to confer jurisdiction on courts and prescribe penalties up to 500 penalty units or 5 years imprisonment (s 33A(2)-(3)).
• Proceedings under the Act are to be summary, with three‑year time limit for prosecution (s 33B).

In practice, enforcement blends criminal sanctions for wilful or fraudulent conduct, civil recovery for financial consequences, statutory examination powers for investigation, and parliamentary oversight via Auditor‑General reports and laying requirements (s 26). The Act also builds in protective measures for directors who follow good‑faith directions from voting shareholders or Ministers (s 33AA), affecting enforcement exposure for decision‑makers.

The Act includes detailed cross‑references and express rules for interaction with Commonwealth corporations law, State tax law, planning law, employment law and integrity regimes. These interactions define which external legal rules apply, which are displaced, and how constitutional or practical conflicts are to be treated.

Corporations legislation and ASIC

• The Act allows regulations to declare matters relating to company SOCs to be “excluded matters” for the purposes of s 5F of the Corporations Act 2001 (Cth) so that specified Corporations legislation will not apply in the State (s 7B). For statutory SOCs, s 20G declares statutory SOCs to be excluded matters under s 5F of the Corporations Act in relation to the whole of the Corporations legislation, subject to enumerated exceptions (s 20G(1)). The regulations may instead declare statutory SOCs to be applied Corporations legislation matters under State law by reference under the Corporations (Ancillary Provisions) Act 2001 (s 20G(2)-(4)). Where Corporations provisions are applied, modifications are permitted to treat SOCs as public companies and to adjust interpretative provisions (s 20G(3)-(4)).
• For company SOCs, s 13 directs that in assessing the degree of care and diligence under Corporations Law, courts must have regard to this Act and relevant State directions (s 13). Equivalent provisions apply to subsidiaries (s 14).

State taxation and stamp duty

• Sections 17 and 20V declare that certain matters (formation of companies in anticipation of company SOCs, transfers of assets from the State to SOCs, issue or transfer of shares to eligible Ministers) are exempt from State tax (s 17(2); s 20V(2)). The Treasurer or an authorised person can certify exempt matters and those certificates are conclusive for all purposes unless the contrary is established (s 17(3)-(4); s 20V(3)-(4)).

Government Sector Finance and audit

• Statutory SOCs are GSF agencies under the Government Sector Finance Act 2018 as noted in s 24A note; annual reporting information prepared under that Act must include departures from performance targets (s 24A). Section 24 requires Auditor‑General audits for company SOCs (s 24(1)(b)-(c)) and gives the Auditor‑General powers similar to a registered company auditor (s 24(5)).

Planning and environmental regulation

• Section 37A modifies the application of the Environmental Planning and Assessment Act 1979 in relation to development carried out by a company SOC; where the Minister administering the Planning Act certifies a project as State or regional significance, Part 5 applies in lieu of Part 4 and the company SOC can be directed to obtain an EIS and approval under Part 5 (s 37A(3)-(5)). Development prohibited by environmental planning instruments cannot be included (s 37A(6)).

Employment and industrial relations

• Schedule 4 preserves superannuation and leave entitlements for eligible employees transferring from the Public Service or declared authorities (Sched 4 cls 1-3), and provides rights to apply for public service employment within three years (Sched 4 cl 5). Section 36(1) excludes Part 7 of Chapter 2 of the Industrial Relations Act 1996 in relation to SOCs (s 36(1)(a)), and Sched 8 excludes Government Sector Employment Act provisions from applying to directors (Sched 8 cl 9(1)).

Integrity oversight

• For the Independent Commission Against Corruption Act 1988, s 36(2) declares SOCs and their subsidiaries to be public authorities and their officers public officials, but excludes operation of s 23 in relation to company SOCs and their subsidiaries (s 36(2)).

Statutory primacy and Commonwealth inconsistency

• The Act contains express limits on requirements of the Act when inconsistent with Commonwealth law or laws of another place where subsidiaries are incorporated (s 33(2)-(3)); generally the Act prevails over inconsistent provisions of SOC constitutions (Scheds 2 cl 2; 6 cl 2).

Legal capacity and third‑party protections

• Division 3 for statutory SOCs reforms the ultra vires doctrine: statutory SOCs have full legal capacity and acts are not invalid merely because they contravene restrictions on powers; third parties are entitled to make protective assumptions about the SOC’s authority and constitution (ss 20ZA-20ZD). These provisions reduce counterparties’ exposure to defects in SOC internal authority.

Miscellaneous interactions

• The Act creates the Ministerial Holding Corporation to hold State assets and manage transfers (s 37B), and allows regulations to address savings and transitional issues consequent on other State Acts (Sched 11). It also allows the Treasurer and Premier substantial discretion (certificates, nominations, notices) in interacting with other regimes (ss 17, 19(7)-(8), 20I).

Overall, the Act deliberately calibrates where Commonwealth corporations law applies, where State law overrides constitutions, how tax exemptions operate, and how domestic planning and employment regimes apply to corporatised State undertakings. It provides both inclusionary mechanisms (applying Corporations Act provisions as State law where helpful) and exclusionary mechanisms (declaring matters excluded from Commonwealth law) to control regulatory overlap.

The text contains editorial notes and amendment citations embedded in the provisions. The Act has been amended repeatedly; the instrumented text includes specific insertion and amendment citations which indicate the major points of legislative change. Key amendment signposts in the source include:

• 1995 overhaul and insertion of statutory SOC regime: many provisions were inserted or substantially reworked by the State Owned Corporations Amendment Act 1995 (for example the insertion of Part 3 establishing statutory SOCs, s 3A, and changes to Schedules) as indicated by numerous “Ins 1995 No 32, Sch 1” annotations (see s 3A, pt 2 heading, s 20A, s 20E and related notes).

• 2001 consequential amendments tied to Commonwealth Corporations Act reform: the inter‑relationship provisions (s 7B; s 20G) were inserted or substituted in 2001 (see “Ins 2001 No 34, Sch 4.58” and “Subst 2001 No 34, Sch 4.58”). Those changes accommodate application or exclusion of Commonwealth Corporations legislation and reference the Corporations (Ancillary Provisions) Act 2001.

• 2000-2001 Ministerial authorisations: sections permitting Ministers to act on behalf of voting shareholders (s 10A; s 20HA) were inserted in 2000 and amended in 2001 (s 10A Ins 2000 No 93; s 20HA Ins 2000 No 93; subsequent am 2001 No 34).

• 2005 State revenue amendments: tax‑equivalents provisions and related validation appear to have been amended by State Revenue Legislation Amendment Act 2005 (noted in s 15, s 20T and Sched 11 Part 4 references, including “Am 2005 No 51, Sch 6”). Section 5 of Schedule 11 validates tax‑equivalent payments relating to the 2005 amendments.

• 2008-2013 targeted amendments: Schedule 10 and other governance provisions were amended in 2008 and 2010 (e.g. Schedule 10 am 2008 No 23; 2010 No 19), and staff director amendments were effected in 2013 (see Sched 11 Part 5 and notes “State Owned Corporations Legislation Amendment (Staff Directors) Act 2013”).

• 2018 Government Sector Finance Act alignment: s 24A was substituted in 2018 to integrate annual reporting information for statutory SOCs with the Government Sector Finance Act 2018 (noted “Subst 2018 No 70, Sch 4.95”).

• Ongoing schedule updates: Schedule 5 (list of statutory SOCs) and other schedules have many amendment entries up to the annotations showing 2024 No 58 and 2025 No 66 in the schedule note, indicating later additions/changes to the list of statutory SOCs and related provisions.

The Act contains multiple “Ins”, “Subst” and “Am” footnotes that identify the amending instruments and years for each provision (e.g. s 3: “Am 1989 No 135, Sch 1; 1995 No 32, Sch 1 [1]-[5]; 2001 No 34, Schs 2.48 [1], 4.58 [1] [2]”). The Schedules and clauses similarly bear amendment stamps showing the legislative history for specific governance, reporting and duty provisions.

The record in the text shows that the Act has been actively maintained to:

• introduce statutory SOCs (1995),
• integrate with Commonwealth corporations law changes (2001),
• align tax‑equivalent arrangements with State revenue changes (2005),
• adjust director and staff director arrangements (2013),
• align financial reporting to modern GSF arrangements (2018),
• and update the list of statutory SOCs and other operational provisions up to the mid‑2020s.

Readers needing the complete amendment chronology should consult the consolidated Act with marginal notes and the amending Acts referenced in those marginal notes, since the provision‑level annotations in the source identify the amending instruments and years.

The supplied text contains no judicial decisions, case names or litigation outcomes. The Act itself establishes mechanisms that will generate litigation or administrative review in practice, and it identifies courts and procedures for enforcement and relief:

• Courts named for summary proceedings: s 33B specifies Local Court and the Supreme Court in its summary jurisdiction as the forums for summary disposition of offences under the Act, with time limits set for institution of proceedings (three years) and maximum penalties for the Local Court.

• Civil and equity remedies: Schedule 10 cl 8 authorises the Supreme Court to declare a director personally responsible to the extent the court considers proper in relation to insolvent trading liabilities; cl 10 permits courts to relieve officers from liability in negligence/default cases where relief is appropriate.

• Examination powers: the Attorney‑General may apply to the Supreme Court or District Court for orders to examine persons suspected of fraud, negligence or misconduct in relation to a statutory SOC (Sched 10 cl 9). The courts may compel attendance, oaths and production of documents and can punish non‑compliance.

• Auditor‑General and parliamentary remedies: the Auditor‑General can produce special reports to Parliament (s 25), and the Public Accounts Committee can examine SOC financial reports (s 28), providing non‑judicial accountability that may precipitate subsequent litigation or administrative action.

• Interaction with Corporations Act litigation: s 7B and s 20G create a map of excluded versus applied Corporations Act provisions. Where the Corporations Act applies (by Commonwealth law or State application), litigation may proceed under Commonwealth corporations law; where matters are declared excluded, State law governs, potentially changing procedural and substantive remedies available.

Because the source contains no case law, there is no litigation history to summarise beyond these procedural pathways. Practitioners should expect disputes to arise in the following typical areas created by the Act: alleged breaches of directors’ duties (Schedule 10), challenges to voting shareholder approvals or directions, disputes over the interpretation of SCI obligations and performance departures (ss 21-24), claims arising from insolvency or guarantees (ss 16; Sched 10 cl 7-8), and contract disputes where third parties invoke the statutory assumptions in ss 20ZD-20ZE. Any judicial treatment of these provisions will thus be found in external case law databases rather than in the Act text.

The Act contains several provisions that can catch inexperience or poor compliance planning. These are practical traps that practitioners, boards and compliance officers should note and manage actively.

1. Entrenched constitutional provisions and parliamentary override

• Constitutions of SOCs and subsidiaries must include prescribed provisions in Schedules 2, 3, 6 and 7 and cannot be altered inconsistently with those Schedules unless both Houses pass resolutions (s 12(1); s 20Q(6); Scheds 2 cl 1; 3 cl 1; 6 cl 1; 7 cl 1). Boards or advisers who assume they can amend constitutions free of parliamentary involvement may be mistaken.

2. Voting shareholders’ concentrated controls

• Voting shareholders are State Ministers, not a dispersed shareholder base, and only voting shareholders may cast votes (Scheds 2 cl 3(10); 6 cl 3(8)). The Premier can force share transfers for Ministers (Scheds 2 cl 3(5); 6 cl 3(5)). That concentration centralises strategic approvals (subsidiaries, major asset transactions, sale of main undertakings , ss 18-20; ss 20W-20Y), potentially slowing transactions and introducing political timing risk.

3. Thresholds, approvals and Treasurer discretion

• The prescribed percentage threshold for prior approvals is 10 per cent unless the regulations say otherwise (s 19(6); s 20X(6)). However, the Treasurer may issue a written notice disapplying these requirements where application would be inappropriate (s 19(7)-(8); s 20X(7)-(8)). Boards must provide prescribed information to secure approvals (ss 18(3); 19(5); 20X(5)), creating disclosure burdens and potential confidentiality concerns.

4. Reimbursement mechanics for non‑commercial directions

• While SOCs are entitled to reimbursement for net costs of non‑commercial activities (s 11(3); s 20N(3)), payment depends on money being advanced by the Treasurer or appropriated by Parliament and the timing/amounts are subject to agreement or determination by a qualified person nominated by the Premier (s 11(4); s 20N(4)). Practically this can create cash‑flow timing risks for SOCs obliged to comply before reimbursement is secured.

5. Finality of Tax Assessor determinations

• Determinations of the Tax Assessor as to tax‑equivalents are final and binding, and the Treasurer and SOC must implement payments and refunds to give effect to the determination (s 15(6); s 20T(6)). The Premier nominates the Tax Assessor (s 15(7); s 20T(7)). The finality clause can limit SOCs’ ability to litigate tax‑equivalents determinations.

6. Limits on indemnities and insurance

• Statutory SOCs cannot indemnify officers against liabilities incurred as officers, subject to limited exceptions for civil liabilities not involving lack of good faith and for costs in successful defences; indemnities require prior voting shareholder approval (Sched 10 cl 5(1)-(5)). SOCs cannot pay premiums for certain liabilities arising from wilful breaches (Sched 10 cl 6). This can complicate recruitment or retention of senior officers who may expect contractual indemnities or D&O insurance.

7. Third‑party assumptions and fraud

• Third parties dealing with statutory SOCs can rely on statutory assumptions (ss 20ZD-20ZE), and those assumptions are not defeated by fraud unless the third party had actual knowledge. While third parties benefit, SOCs must manage internal controls because external dealings may bind the SOC notwithstanding internal breaches.

8. Director exposure and limited shield for compliance with directions

• Section 33AA protects directors and officers from personal liability for compliance in good faith with specific obligations (public policy directions and information requests) but does not protect against other liabilities for decisions inconsistent with duties under Schedule 10. Directors must still manage conflicts, insolvency duties and duty of care exposures (Sched 10 cl 3; cl 7).

9. Timing and secrecy in SCI process

• The board must submit a draft SCI within one month after the financial year starts, consider shareholder comments within two months, and deliver the completed SCI within three months (s 21(1)-(3)). The SCI may not be published before being laid before both Houses unless approved by board and voting shareholders (s 21(4)), creating timing constraints on market communications.

10. Inconsistencies with Commonwealth or foreign law

• Requirements to include certain provisions in constitutions do not have effect to the extent inconsistent with Commonwealth law or the laws of a place where a subsidiary is incorporated outside NSW (s 33(2)-(3)). Practitioners operating cross‑jurisdictional subsidiaries must map conflicts carefully.

11. Limited offences time frame and summary jurisdiction

• Prosecutions under the Act must be commenced within three years and proceed summarily (s 33B). Some serious conduct may therefore be addressed under other regimes (e.g. Corporations Act, criminal fraud statutes), but reliance on State summary enforcement can limit remedies.

These “gotchas” are not speculative; the text sets up each mechanism. Boards and counsel should map approval chains, timetable obligations, budgeting for reimbursements, tax‑equivalent processes, director insurances/indemnities, and constitutional entrenchments against likely transactions and corporate changes.

Practical compliance requires aligning constitutions, board practices, reporting processes, transaction approvals and ministerial engagement with the statutory framework. The following is a pragmatic compliance checklist grounded in the Act.

1. Constitutions and entrenchment (s 12; s 20Q; Scheds 2, 3, 6, 7)

• Ensure the SOC’s constitution contains the provisions required by the relevant Schedule (company SOCs Sched 2 & 3; statutory SOCs Sched 6 & 7) and that amendments comply with the entrenchment rules (cannot be altered inconsistently without resolutions of both Houses). Keep a schedule of constitution change approvals and Parliament laying obligations required under s 26.

2. Statement of corporate intent and reporting (ss 21-24; s 24A; s 26)

• Institute a production timetable to meet SCI deadlines: draft within one month of financial year start, consult and finalise within three months (s 21(1)-(3)). Maintain a standard SCI template that covers objectives, main undertakings, scope of activities, accounting policies, performance targets and information flows (s 22).
• Prepare half‑yearly reports consistent with SCI information requirements (s 23).
• For company SOCs, arrange for audited financial reports, Auditor‑General audit engagement and inclusion of an Auditor‑General’s report in the annual report (s 24(1)-(3), (5)-(6)). Ensure annual reports include departures from SCI targets and explanations (s 24(3A); s 24A).
• Implement procedures for timely laying before Parliament and consider confidential redactions permitted for commercially sensitive information (s 26(4)). Use s 27 procedure when Parliament is not sitting.

3. Transaction approvals and governance (ss 18-20; ss 20W-20X; Scheds 2-3 and 6-7)

• Establish an internal approvals matrix: identify transactions that trigger prior written approval by voting shareholders (subsidiary formation, acquisitions/disposals exceeding the 10 per cent threshold, sale of main undertakings) and require the specified supporting information (ss 18(1)-(3); s 19(1)-(5); s 20X(1)-(5)).
• Monitor the 12‑month aggregation rule and profit‑impact tests in s 19(1)(a)-(b) and s 20X(1)(a)-(b). Obtain Treasurer notice or confirmation if a Treasurer exemption is contemplated (s 19(7)-(8); s 20X(7)-(8)).
• Coordinate early with voting shareholders (Ministers) and the Treasurer on expected approvals to avoid late rejections.

4. Ministerial directions and reimbursements (ss 11; 20N; 20O; 20P)

• When a Ministerial direction or notification is probable, seek a written direction that sets out requirements and reimbursement arrangements and secure Treasury confirmation that funds will be advanced or appropriations will be made (ss 11(1)-(4); s 20N(1)-(4)).
• Keep contemporaneous cost accounting to substantiate “net cost” and revenue forgone estimates for reimbursement, and keep records to support claims determined by nominated qualified persons where required (ss 11(3)-(6); s 20N(3)-(5)).

5. Tax‑equivalents and payments to Consolidated Fund (ss 15; 20T; ss 14 & 20S)

• Create a process to interact with the Tax Assessor (Premier‑nominated) and track determinations (s 15(7); s 20T(7)). Maintain transfer pricing, tax accounting and documentation to support tax‑equivalent calculations. Recognise the finality of determinations and provide for prompt payment and refund processing (s 15(6); s 20T(6)-(6A)).
• Account for dividend policy and possible application to share purchases: confirm whether dividends are to be paid into the Consolidated Fund or applied to share purchases as agreed with voting shareholders (s 14; s 20S).

6. Director obligations and risk management (Schedule 10; s 33A; s 33AA)

• Implement a robust conflicts disclosure system for directors (Sched 10 cl 1-2): register of interests, agenda protocol to exclude interested directors from voting, and minute recording.
• Operate compliance programmes to ensure honesty, care and diligence obligations are respected (Sched 10 cl 3). Provide board training on insolvency duties to avoid contraventions of cl 7 and exposure to cl 8 personal liability.
• Review and constrain D&O indemnities and insurance plans against statutory prohibitions (Sched 10 cl 5-6) and obtain voting shareholder approvals where indemnities are permissible under the Act.

7. Third‑party contracting and evidence of authority (ss 20ZD-20ZE)

• For statutory SOCs, maintain public records (notices, officer lists, constitutions) to support third‑party assumptions. For counterparties, perform due diligence but be aware statutory assumptions may preserve transactions even where internal contraventions occurred, unless third party had knowledge of impropriety.

8. Employment transitions and superannuation (Sched 4)

• For eligible employees transferred from the public sector, maintain records to preserve superannuation continuity and leave entitlements and note the right to apply for Public Service employment within three years (Sched 4 cls 2-5).

9. Interaction with Corporations Act and external regulators (s 7B; s 20G)

• Map which Corporations Act provisions apply or are excluded under State regulations. Where Corporations provisions are applied, ensure compliance with any modifications specified in State regulations (s 20G(3)-(4)). Engage with ASIC only where the regulations specify ASIC functions may be engaged (s 20G(4)(b)-(c)).

10. Audit readiness and Parliamentary obligations

• Prepare for Auditor‑General audits and special reports; ensure internal controls meet public sector audit standards (s 24(5); s 25). Create a statutory register and procedures to ensure all materials required by s 26 are produced and laid within 14 sitting days.

11. Legal review and contingency planning

• Maintain legal models for the SCI, constitution amendments and transaction approvals; pre‑clear complex transactions with Crown law/State solicitors where risk of conflict with Commonwealth or foreign law exists (s 33(2)-(3)). Prepare for possible examination orders under Schedule 10 cl 9 and ensure document retention policies support compliance.

This compliance roadmap translates statutory obligations into operational steps that address approval gates, reporting timetables, financial flows, director duties, and interactions with Ministers and the Treasurer. Documented procedures and early engagement with voting shareholders, Treasury and external auditors will materially lower implementation risk.