Tips for corporate governance

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This page was authored by:

Michael Cawthorn
Consultant anthropologist

Strong governance is one indicator of a stable, healthy PBC. Strong governance is reflected in processes, structures, culture and rules that show transparent decision-making and a recognition of regulatory obligations. Governance processes and procedures should clearly outline who is responsible for what, who is accountable for decisions and establish the most effective arrangements for achieving the PBCs aims and objectives. Demonstrating fair and inclusive decision making and appropriate participation by all members of the PBC is a hallmark of effective governance.

Strong governance is also an important factor that funding bodies, donors and investors will consider when making funding decisions (see Guide for Writing Funding Applications). Governance capability is closely aligned with capacity to meet a PBC’s objectives and achieve its aims, and may affect a PBC’s success or failure in attracting funding.

Characteristics of strong governance include:

Accountability

The board has an obligation to report, explain and be answerable for decisions it has made on behalf of its members.

Transparency

People should be able to follow and understand the decision-making process.

Follows the rule of law

Decisions should be consistent with relevant legislation and within the powers of the PBC.

Responsive

The PBC should always try and serve the needs of the members and native title holders.

Equitable and inclusive

A community’s wellbeing results from all its members feeling that their interests have been considered in the decision-making process. This means that all groups should have opportunities to participate.

Effective and efficient

The PBC should implement decisions and follow processes that make the best use of the available people, resources and time to ensure the best results for their members and native title holders.

Participatory

Anyone affected by or interested in a decision should have an opportunity to participate in the process for making that decision.

Adapted from the Victorian Local Governance Association, Good Governance Guide.

Ten tips for corporate governance from ORIC

ORIC provides the following ten practical tips for good corporate governance:

1. Keep your register of members up-to-date

Make sure the register of members has the following information for every person who is or was a member:

  • name and address of the person
  • the date their membership began
  • the date their membership ceased (if applicable)

(Note: the register of members is a continuing record and if kept correctly, it will help to resolve any disputes about who is a member).

2. Know your role and responsibilities

Make sure the directors fully understand their role and responsibilities.

3. Know your rules

Know your rule book (constitution). Encourage your members to learn about it.

4. Know your money position

Make sure you know about the money position, or use your auditor more often (say every three months) to check that your staff are managing the money properly (a good auditor will do this for the directors).

5. Taxes

Make sure that tax matters are handled correctly, in particular the Goods and Services Tax (GST), Pay As You Go (PAYG) and Fringe Benefits Tax (FBT). Make sure the Superannuation Guarantee contributions are paid for all your staff.

6. Attendance

Make sure a director is at every meeting when the funding agency(s) come to visit.

7. Insurance

Make sure the corporation's property is insured. Check that insurance policies are renewed on (or before) the due date.

8. Assets

Be careful to only use the corporation's assets in line with funding conditions (most will say that personal use is not allowed). Better still, make a policy about this for everyone to see and use.

9. Minutes of meetings

Make sure you keep minutes of every meeting of the corporation. Minutes should say what type of meeting you had (AGM, general meeting or directors' meeting, what day it was held, who came, and what decisions were made).

10. Hold an annual general meeting (AGM)

Make sure you have an AGM every year (usually before 30 November).

 

The Australian Institute of Company Directors lists ten principles that promote good governance in not-for-profit organisations which can be found here.

Last modified: 
15 Aug, 2018