Good Governance Guide
Management and oversight
Board papers
Board papers represent the information that the board
receives to allow it to fulfil its duties. The board papers
should be as concise as possible, clarifying the purpose
of each paper but always ensuring that the directors
are properly informed about the matter. Sufficient
information is required to allow the board to undertake
its deliberations.
Senior management needs to consider carefully the
balance between the level of detail required and
providing too much information. The critical question
to ask is what information the board needs to make
a decision.
It is good governance to develop guidelines on how
board papers should be presented, and for those
guidelines to be clearly communicated to all parties
who are preparing board papers. The board and senior
management should set the tone for the organisation
by providing the company secretary with the support to
implement the guidelines.
The guidelines should ensure that board papers:
• are written in plain English, with minimal use of
acronyms and industry jargon (provide a glossary of
acronyms if required)
• share a consistent format and layout include a
summary, background and more detailed content,
in an accessible font and font size, clarify upfront
whether the matter is for information, for discussion
or for decision and where a decision is being sought,
contain a clear recommendation from management
and the exact wording of the proposed resolution
directors are being asked to consider
• if directors are being asked to pass a resolution, the
board paper should clearly articulate the pros and
cons and material risks of each alternative open to the
board
• articulate how any matter on which a decision is being
sought is aligned with the strategic plan
• contain sufficient information to provide for an
informed decision by directors
© Governance Institute of Australia 2015. This material is subject to copyright. The Good Governance Guides indicate, in the view of Governance Institute
of Australia Ltd, one interpretation of good practice. They are not designed to cover or comply with all applicable legislation or case law. We cannot be held
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Management and oversight
• do not include so much information that the critical
elements are obscure
• include a clear reference to any supplementary
information (this could be a link in electronic board
papers)
• are dated and include the author’s name and title,
and the name and title of the authorising executive or
senior manager
• be reviewed and approved by the CEO or his or her
delegate before being circulated to the board.
The amount of supplementary material needs to be
carefully considered and needs to be appropriate to
the board and the company. It is good governance to
ensure that all board papers are distributed to directors
sufficiently in advance of any directors’ meeting to
ensure that there is time for the directors to digest the
contents of the papers and prepare for the meeting.
It is common practice to distribute board papers
approximately one week before the board meeting.
It is also good governance to establish a timetable at
the start of each year for the provision of board papers
to the board, as well as an annual calendar that sets
out the regular items that will need to be considered at
particular meetings (for example, annual accounts, risk
declarations, succession planning etc).
Management and the board should regularly review the
size and content of board packs to ensure that they are
meeting the needs of the directors and enabling them
to be properly informed without supplying too much
information for them to digest.
Tabled documents and presentations to
the board
Regardless of the process that is implemented to
ensure board papers are distributed prior to the
meeting, documents may, from time to time, need to be
tabled. However this practice should be discouraged
and kept to an absolute minimum. It is very important
that directors have the opportunity to read and consider
tabled documents and if necessary the meeting should
be adjourned to allow them to do so.
Good Governance Guide
Tabled documents and presentations raise particular
concerns for directors who are attending meetings
remotely by teleconference or video conference. If these
directors cannot be sent a copy of the tabled document
or presentation electronically then the document
should (if practical) be read aloud to them. If neither is
possible, then the director concerned should be given
the opportunity to abstain from any decision related to
the tabled document or presentation and the minutes
of the meeting should record their abstention and the
reason for it.
It is therefore good governance to ensure that:
• a folder is maintained for each board meeting which
includes an original set of board papers including
copies of all documents tabled and presentations
given at the meeting. Confidential documents
including documents subject to legal professional
privilege as well as some HR and taxation papers
which may be filed separately
• in addition to a hard copy folder, electronic copies of
board papers, tabled documents and presentations
should be obtained and retained whenever possible,
or this could be an alternative to a hard copy folder,
in which case all documents must be maintained
electronically
• when documents are tabled or presentations given,
the name of the author/presenter, that person’s
title and the date is noted on the document or
presentation and the steps that were taken as a result
(see above)
• the minutes refer to the tabled document or
presentation and whether any directors did not have
access to the tabled document or presentation
• the minutes of the meeting note that a paper
circulated at short notice or a tabled document and/or
presentation was not included in the papers circulated
to directors in advance of the meeting in the ordinary
course, to provide a record that directors had only a
limited time to consider its contents.
© Governance Institute of Australia 2015. This material is subject to copyright. The Good Governance Guides indicate, in the view of Governance Institute
of Australia Ltd, one interpretation of good practice. They are not designed to cover or comply with all applicable legislation or case law. We cannot be held
liable or accountable to any person who acts or relies upon the information provided. The guides are not a substitute for professional advice.
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Management and oversight
PowerPoint presentations are bullet points and
shortened versions of complex documents. Consider
carefully the inclusion of a PowerPoint presentation as
a board paper given its capacity for misinterpretation
when read as the record of the information on which a
board based its decision. If a PowerPoint presentation
needs to be included in the board pack, it is important
to ensure that there is no inconsistency between any
board paper and the presentation made on the day on
the same matter.
If there are any documents that are subject to legal
professional privilege these should be dealt with
separately if necessary to ensure that privilege is not
waived through inappropriately wide circulation of the
privileged document. Companies should seek advice
from internal or external legal counsel and develop
policies on the management of privileged documents
to ensure that legal professional privilege is not
inadvertently waived.
Companies may be required to keep board papers
under deeds of access and indemnity to ensure that
directors continue to have access for a period of time as
specified in their particular deed of access.
It is good governance for companies to have a policy
about whether individual directors may also keep their
copy of board papers (in hard copy or electronically)
which may contain annotations which have been made
by the director.
Late papers
It is good governance to have a policy discouraging late
papers and for there not to be late papers presented
to the board or in any quantity. This practice should be
discouraged, as directors need time to read and digest
the board papers.
Board committees
It is good governance for the principles applying to the
board papers to also apply to the papers for
board committees.
Good Governance Guide
Issues to consider when developing a
policy on delegations of authority
Benefits of delegations of authority
All employees should understand who within their
organisation has authority to make which decisions. An
effective framework of delegated authorities is essential
to the efficient and effective operation and performance
of any substantial organisation.
It is good governance to clarify and document
the delegations of authority that apply within an
organisation. Such documentation assists employees
to understand their authority to make decisions,
including commitments to expenditure, on behalf of
the organisation.
Importantly, a delegations of authority framework is
not a hindrance to effective decision-making, or a
bureaucratic mechanism that slows decision-making.
Rather, it empowers employees by providing clarity as
to who is authorised to make what decisions where
otherwise confusion may operate. As such, if done right,
it enables performance.
The delegations of authority framework needs to
be appropriate to the size and complexity of the
organisation, informed by the risks associated with
decision-making and aligned with the organisation’s
strategic objectives. While it needs to be legally correct, it
should not be driven by a legalistic mindset as delegated
authorities need to be clear, easy to understand and
readily accessible to all employees. Preparation of a
delegation of authority in tabular form is often a good
approach to keep it simple and easy to understand.
Understanding internal and external
delegations of authority
Internal delegations of authority are different from
external delegations. Internal delegations largely deal
with the organisation’s own workings, for example who
can approve annual leave or overseas travel. External
delegations assure people outside the organisation
that the person they are dealing with has the authority
to bind the organisation. External delegations are often
formal legal documents, for example a power of attorney,
© Governance Institute of Australia 2015. This material is subject to copyright. The Good Governance Guides indicate, in the view of Governance Institute
of Australia Ltd, one interpretation of good practice. They are not designed to cover or comply with all applicable legislation or case law. We cannot be held
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Management and oversight
which allows for documents to be signed on behalf of the
organisation, such as a borrowing agreement.
Accountability mechanisms resulting
from a delegation of authority
The corporate instruments that set out the delegations
of authority in a company clarify the accountability
structure in the company.
1. Directors are accountable to members (who appoint
them and have the power to remove them). The
powers delegated to directors are usually set out in
the constitution.
2. The CEO (or managing director) is accountable to the
board. The powers delegated to the CEO are usually
set out in a formal board resolution or an instrument
approved by the board.
3. The executive management team is accountable
to the CEO. The delegations to the executive
management team are usually set out in one or more
policies or instruments approved by the CEO.
4. Employees are accountable to the management team.
The delegations to employees generally are often set
out in organisational policies and procedures.
Role of delegations policy
It is good governance for the delegations policy to
clarify that setting out the delegations of authority
is a fundamental component of a risk management
framework. It is not a stand-alone policy, but central to
the governance framework of an organisation both at and
below board level. It provides a framework for decision-
making and accountability within the organisation.
A delegations policy deals with decisions that are
material to the organisation and cascades authority
to make those decisions throughout the organisation.
Documenting delegations of authority (both internal
and external) provides employees with clarity as to
their decision-making powers to act on behalf of the
organisation and the limits to those powers. In this
regard, a delegation of authority policy is a mandatory
set of rules that has been documented.
Good Governance Guide
A delegations policy also assists in good succession
planning and staff renewal. New incumbents will readily
understand the delegations assigned to the role if they
can refer to an accessible policy.
The delegations policy, in providing the boundaries of
decision-making within the organisation, needs to link
to other organisational policies. For example, it should
link to the capital expenditure policy, which also sets
out decision rights and the process for exercising
those rights.
Accountability
The delegations policy should set out who is
accountable for monitoring, reviewing, revising and
implementing the policy, as well as the accountability
mechanisms in place for those to whom authority has
been delegated to make decisions on behalf of the
organisation.
It is good governance for the audit (or audit and risk
committee) to have oversight of the delegations policy
and to review it regularly. A regular review will assist in
identifying if gaps between the policy, decision rights
and the organisation’s needs have developed as the
organisation evolves.
A regular review also provides for a clear framework
of decision-making within the governance of the
organisation and accountability from the board to
management. It provides for the delegations framework
to be incorporated into the wider risk management
framework of the organisation, over which the audit
committee (or audit and risk committee) has oversight.
Governance Institute’s Good Governance Guide: What a
board committee charter should address sets out how
the board delegates authority to a board committee.
Importantly, the review of the delegations policy by
the board, or the audit committee (or audit and risk
committee) should link to the internal audit function,
which should provide the board with assurance that
the framework set out in the delegations policy is
being followed or not. Consideration needs to be given
to how to facilitate adherence to the policy and the
consequences for individuals of failing to do so.
It is also good governance for the policy to clarify which
member of the management team is accountable to
© Governance Institute of Australia 2015. This material is subject to copyright. The Good Governance Guides indicate, in the view of Governance Institute
of Australia Ltd, one interpretation of good practice. They are not designed to cover or comply with all applicable legislation or case law. We cannot be held
liable or accountable to any person who acts or relies upon the information provided. The guides are not a substitute for professional advice.
Visit our website at governanceinstitute.com.au to find more Good Governance Guides and information on governance.
Management and oversight
implement the policy and ensure it goes to the board or
the audit committee regularly for review. Responsibility
for this could sit with the CFO, the company secretary or
the head of risk or compliance.
Responsibility for implementation includes staff training,
so that employees understand the policy and the levels
of delegation assigned to them.
Accountability for implementation of the policy also
includes being the nominated person to whom breaches
of the policy are reported and the person who makes
notifications to the board, or the audit committee (or
audit and risk committee).
Access to policy
It is important that the policy be easily accessible by
employees. Organisations should consider posting the
policy to their intranet and making the document easily
searchable. A well drafted policy should not require the
assistance of lawyers to be understood.
Internal decision-making power
It is good governance to delegate authority to make
particular categories of decisions that are material
to the organisation to a role, rather than a person.
Individuals leave organisation and change roles within
the organisation and the policy needs to accommodate
this dynamic environment. In some situations it may
be appropriate to delegate authority to an executive
committee rather then an individual, for example to
a capital management committee. In this case, the
committee should have a charter that clearly sets out
how it functions as a decision-making body, including
such matters as membership and quorum.
It is also good governance for the policy to confirm
that the delegations to a particular role are subject to
review when there is a change of personnel in a role.
For example, a CFO may resign and the newly appointed
CFO may be less experienced. In such circumstances,
the CEO may decide that the new CFO should have
reduced decision-making authority for a period of time.
The policy should allow for adaptation to change.
It is also good governance for the delegations policy
not to seek to implement contract-specific financial
delegations, as these may change over time, or overly
detailed delegations that can make the framework of
delegations difficult to manage. Moreover, exceptions
to specific details can arise, which also make the
Good Governance Guide
framework difficult to manage. For example, regular
payments to the Australian Taxation Office (ATO) can
vary, and carve-outs then need to be implemented to
provide for such payments.
A better governance outcome can be achieved by
implementing delegations for decision-making in
financial categories. For example, financial category
delegations to particular roles for making decisions
could be set:
• up to $5,000
• up to $10,000
• up to $50,000
• up to $500,000
• up to $1 million.
The organisation must find a balance between serving
the complexity of organisational decision-making — by
setting out the categories of decisions that are material
to the organisation — and the necessary simplicity for
employees to understand how the delegations work, the
power of decision-making they have and the limits to
that decision-making power.
It is also good governance for the policy to address
those decisions that are risk factors that are not
captured by a financial limit category. Delegations
of authority and the limits to those delegations may
apply to decisions that sit outside a particular field of
expertise. For example, the policy could address that
the delegations apply to decisions undertaken within
Australia, or within the current market in which the
organisation operates, but that they do not apply to
decisions undertaken in countries outside of Australia or
in new markets, or the policy could address the limits on
the provision of unlimited indemnities in contracts.
Decisions that affect the wider organisation could also
be risk factors that are not captured by a financial limit
category. For example, the policy could specify that a
line manager can approve a confidentiality agreement,
subject to it having been reviewed and approved by
the legal department. Or the policy could specify that a
particular role has the authority to move debt and equity
among subsidiary companies, subject to the decision
being reviewed and approved by the tax department.
It is also extremely common for a policy to draw a
distinction between the authorisation of capital and
operating expenditure, and the limits relating to these
items which may vary.
© Governance Institute of Australia 2015. This material is subject to copyright. The Good Governance Guides indicate, in the view of Governance Institute
of Australia Ltd, one interpretation of good practice. They are not designed to cover or comply with all applicable legislation or case law. We cannot be held
liable or accountable to any person who acts or relies upon the information provided. The guides are not a substitute for professional advice.
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Management and oversight
Clarification of whether a decision is subject to a review
and approval process assists in implementing the
policy. For example, overseas travel expenditure may fit
a particular financial limit category, but the policy may
specify that no such travel is to be undertaken or paid
for without sign-off from the CEO, subject to it being in
the budget. If the proposed travel is not in the budget,
board approval would be required.
Importantly, the policy should clarify that the authority to
make a financial decision is separate from the authority
to sign a legal document binding on the company.
Role of the company secretary
• Check what powers are conferred on the directors by
the management clause in the constitution. Ordinarily,
this will align with the replaceable rule in s 198A of
the Corporations Act, which states ‘that the business
of the company is to be managed by or under the
direction of the directors’.
• Ensure that there is a clear delineation of
responsibility between the board and the CEO.
• Ensure that the board committee charters set out
whether the board retains decision-making powers
but receives and relies on advice and information
provided by the committee.
• Ensure that there is a chart of the organisational
structure in place; powers of attorney; and group
delegations/discretion policies.
• Ensure that the CEO has in turn delegated authority to
the executive management team.
Legal context
Most companies in Australia have clauses in their
constitutions that allow the directors broad ability
to delegate their collective powers, but not their
responsibility, to others. The constitution may
specifically provide for the delegation of powers
to board committees, the conferral of powers on a
managing director; and for broad delegation to any
other person.
Section 190 of the Corporations Act recognises that
directors may delegate their powers, subject to the
requirements of the constitution. Section 198D provides
that a director will be responsible for the actions of
delegates unless the director believed on reasonable
Good Governance Guide Management and oversight

grounds that the delegate would exercise their powers Standing powers of attorney should be reviewed
in conformity with the duties imposed on directors and regularly and revised as necessary. Documentation
that the delegate was reliable and competent. needs to exist as to:
• whom standing powers of attorney have been
External delegations of authority assigned
• the instrument of the standing power of attorney
Standing power of attorney
• the power delegated.
Standing powers of attorney are put in place for dealing
with external parties. External parties dealing with an
organisation need to know that the person undertaking
agreements with them has the power to do so.

Standing power of attorney can be assigned to either a

particular individual or a role. They are usually crafted
in relatively wide language so as to avoid disputes with
external parties. However, those to whom the power of
attorney has been granted can form the view that their
powers are wider than they are, due to the manner in
which the power of attorney is drafted. Those to whom
a standing power of attorney has been assigned need
to understand that any document between an external
party and the organisation, regardless of whether it
is actioned by an individual with the standing power
of attorney, must go through the usual processes
of internal review and approval before being signed.
The external party needs to have confidence that
the individual signing the document on behalf of the
organisation has a clear line of authority to do so.
The internal checks and balances in place within an
organisation do not need to be included in the standing
power of attorney, but all those to whom a standing
power of attorney has been granted need clarity as
to whether sign-off is needed before entering into an
agreement with an external party.

Those to whom a standing power of attorney has been

granted also need to understand whether they have
been granted the right to make the decision or the right
to sign the document. For those who have the power
to make a decision, consideration also needs to be
given to the checks and balances in place to ensure the
decision is the right one for the organisation and aligned
with its strategic objectives.

© Governance Institute of Australia 2015. This material is subject to copyright. The Good Governance Guides indicate, in the view of Governance Institute
of Australia Ltd, one interpretation of good practice. They are not designed to cover or comply with all applicable legislation or case law. We cannot be held
liable or accountable to any person who acts or relies upon the information provided. The guides are not a substitute for professional advice.
Visit our website at governanceinstitute.com.au to find more Good Governance Guides and information on governance.
Good Governance Guide
Issues to consider when developing a
policy or process for managing related
party transactions
It is good governance for all entities to have in
place a policy or process for managing related party
transactions to reduce corporate risk and protect
members’ interests. An effective policy or process which
complies with the Corporations Act and ASX Listing
Rules will ensure that financial benefits are not given to
related parties without approval by the board, and where
required, the shareholders.
A related party policy or process reduces the entity’s
risk that the entity’s transactions may be influenced by
the interests of the parties related to the transaction.
This occurs where the parties are in a position to
influence the decision of whether a benefit is provided
to them and the terms of the provision of that benefit.
The management of related party transactions cannot
be separated from the process for managing conflicts of
interest. Directors have basic obligations under ss 182
and 183 of the Corporations Act not to improperly use
their position, or information available to them in their
position as a director to gain an advantage for themselves
or someone else or to cause detriment to the entity.
Those basic duties prevail even where the requirements
of the related party transaction laws have been met. The
provision of a benefit to a related party to a transaction
may be to the detriment of the interests of other members
of the entity involved in the transaction. The process
requiring directors to declare any material personal
interests assists the board to determine if any transaction
being entered into is a related party transaction. (See
Governance Institute’s Good Governance Guide: Issues to
consider when developing a policy on disclosure of and
voting on matters involving a director’s material personal
interests for more detailed guidance.)
To ensure that related party transactions are managed
for the benefit of the entity and not that of an individual
director, it is good governance for entities to document
the management of related party transactions within:
• a separate policy, or
• a policy for managing matters involving directors’
material personal interests, or
© Governance Institute of Australia 2014. This material is subject to copyright. The Good Governance Guides indicate, in the view of Governance Institute
of Australia Ltd, one interpretation of good practice. They are not designed to cover or comply with all applicable legislation or case law. We cannot be held
liable or accountable to any person who acts or relies upon the information provided. The guides are not a substitute for professional advice.
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Board structure
• the process may be captured in the entity’s board charter
Entities should consider which approach is appropriate
for their circumstances.
Legal and regulatory context
Who is a related party?
Any policy or process for managing related party
transactions should define related party.
Related parties are defined in the Corporations Act
and include:
• directors of the company
• directors of any entity that controls the company
• spouses of a director of the company, or a director of
any entity that controls the company
• parents and children of a director of the company, or
a director of any entity that controls the company
• an entity that controls the company
• an entity controlled by any of the above (unless the
entity is also controlled by the company)
• an entity that was one of the above in the past six
months
• an entity that believes or has reasonable grounds to
believe that is likely to become one of the above at
any time in the future, and
• an entity acting in concert with any of the above
related parties on the understanding that the related
party will receive a financial benefit if the company
gives the entity a financial benefit.
A reference to an entity includes a body corporate, a
partnership, an unincorporated body, an individual, and
a trustee or trustees of a trust.
As the term can refer to a diverse range of people and
entities, related parties are usually best identified by the
entity. An entity should consider documenting examples
of the people and companies which would be considered
related parties for the purposes of their organisation, or
consider identifying known related parties.
Good Governance Guide
Financial benefit
A related party transaction is one in which a related party
accrues a financial benefit as a result of the transaction.
In determining whether a financial benefit is being
provided, the Corporations Act requires that entities
give a broad interpretation to the financial benefit being
given, giving preference to the economic and commercial
substance over the legal form, and disregarding any
consideration that may be provided for the benefit, even
if the consideration is considered adequate.
Entities should also be aware that circumstances in
which the provision of a financial benefit may occur can
be quite broad and include:
• providing a financial benefit indirectly, for example
through one or more interposed entities
• giving a benefit by making an informal agreement, oral
agreement or an agreement that has no binding force,
and
• situations in which no money is paid, for example,
where a financial advantage is provided.
An entity should consider documenting examples of
financial benefits and the circumstances in which a
financial benefit might be conferred in the context of
the entity.
Exceptions
Under the Corporations Act, for a public company to
provide a financial benefit to a related party, either:
• the company’s members must approve the
transaction, or
• the giving of the financial benefit must fall within an
exception.
The Corporations Act provides that member approval is
not required for:
• transactions which would be reasonable at arm’s
length terms and which are less favourable to the
related party
• benefits that are reasonable remuneration for directors,
officers and employees including expenses incurred
• the payment of certain indemnities, exemptions,
insurance premiums and payment for legal costs
for officers
© Governance Institute of Australia 2014. This material is subject to copyright. The Good Governance Guides indicate, in the view of Governance Institute
of Australia Ltd, one interpretation of good practice. They are not designed to cover or comply with all applicable legislation or case law. We cannot be held
liable or accountable to any person who acts or relies upon the information provided. The guides are not a substitute for professional advice.
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Board structure
• a small amount given to a related party
• the giving of benefit to or by a closely-held subsidiary
• the giving of benefits to members that do not
discriminate unfairly against other members, or
• a financial benefit given under an order of the court.
An entity should consider documenting examples of
exceptions and also where exceptions do not apply for
the purposes of their organisation.
Purpose of policy or process
The policy or process should clarify that its purpose is to:
• educate directors and employees so that they can
recognise related party transactions if they arise
• provide direction as to whom a director or employee
can consult should they be uncertain if a transaction
is a related party transaction
• establish a clear process for obtaining approval that a
potential related party transaction is exempt from the
requirements for member approval
• ensure that any related party transactions that require
shareholder approval are put before shareholders, and
• ensure the entity meets its legal and regulatory
obligations.
It is also important that entities ensure that directors,
offices and relevant employees are trained to recognise
related party transactions, and understand the actions
they should take if they become aware that a related
party transaction might be taking place.
Process for managing related party
transactions
The policy or process should detail the internal
authorisation and approval processes concerning
related party transactions.
Directors are required to provide information on their
material personal interests. It is good governance for a
company secretary to maintain and periodically update
a register of directors’ material personal interests.
The register may also include related party transactions
— see Governance Institute’s Best practice register
of interests and related party transactions for more
detailed guidance.
Good Governance Guide
It is good governance for potential related party
transactions or any questions as to the validity of
application of an exemption to be referred to the board
in the first instance.
A full briefing to the board would include:
• details of the proposed transaction, including the
parties and the nature of their relationship
• whether an exception to the requirement to obtain
shareholder approval is applicable
• why the exception applies to the proposed transaction
(where relevant)
• any other information appropriate or necessary in the
circumstances.
Management should provide to the board internal or
external advice on the application of the exemptions,
where relevant. The board may seek external advice
in situations where the board does not accept the
recommendations of management.
Where the board resolves that a proposed transaction
is subject to an exemption and does not require
shareholder approval, it should ensure that a resolution
to that effect is minuted.
If the board resolves that a proposed transaction does
require member approval, it should set in place the
procedures for seeking such approval.
Voting
As with conflicts of interest, directors will be prohibited
from participating in voting procedures associated with
related party transactions where they are the related party.
Where the board determines that an exemption applies
and resolves to proceed with the transaction, and the
transaction relates only to one director, the board, in
the absence of that director, may vote and approve the
transaction. In a similar manner to conflicts of interest,
the director may continue to be present and vote if the
other directors who do not have such an interest pass a
resolution identifying the director; the nature and extent
of the director’s interest and its relation to the affairs
of the company; and states that the directors without a
© Governance Institute of Australia 2014. This material is subject to copyright. The Good Governance Guides indicate, in the view of Governance Institute
of Australia Ltd, one interpretation of good practice. They are not designed to cover or comply with all applicable legislation or case law. We cannot be held
liable or accountable to any person who acts or relies upon the information provided. The guides are not a substitute for professional advice.
Visit our website at governanceinstitute.com.au to find more Good Governance Guides and information on governance.
Board structure
material personal interest are satisfied that the interest
should not disqualify the director with the interest from
being present at the meeting or voting on the matter.
In relation to a director who has been excluded from the
meeting, the policy or process should detail whether the
director will be kept informed of the transaction, even if
only in general terms.
Member approval
Where a proposed transaction with a related party is
not subject to an exemption, member approval will be
required. Where member approval is sought, entities
should keep in mind:
• the requirements of s 218 of the Corporations Act
regarding the materials which the company must
lodge with ASIC before being put to members, and
• ASIC Regulatory Guide 76 which outlines the
circumstances in which entities must seek member
approval, and also requires entities to provide
ASIC with a copy of any notice of meeting where
a resolution will be put to shareholders for their
approval. ASIC may need to review the notice of
meeting prior to its issue to members. The ASIC
Regulatory Guide also contains a useful checklist on
how to deal with related party transactions
ASX Listing Rules
Listed companies must also be aware of the ASX
Listing Rules on transactions with persons of influence.
Companies may, under the provisions of Chapter 10
of the ASX Listing Rules be required to meet various
requirements when seeking approval for transactions
with persons of influence.
Companies should note that the interpretation of a
related party may involve the ASX exercising discretion.
Other issues to consider
The policy or process should also:
• provide a cross-reference to other related policies,
such as the policy on the disclosure of and voting
on matters involving a director’s material personal
interests, the directors’ code of conduct and the
securities trading policy
Good Governance Guide Board structure

• describe the consequences of a breach of the law in

relation to a related party transaction
• provide for appropriate reviews of the policy to ensure
that the policy remains relevant to the entity and its
operations
• clarify which information is required for the purposes
of financial reporting.

References
• Good Governance Guide: Issues to consider when
developing a policy on disclosure of and voting on
matters involving a director’s material personal
interests
• Corporations Act 2001, Chapter 2E
• Corporations Regulations 2001, REG 2E.1.01
• ASX Listing Rules, Chapter 10
• ASIC Regulatory Guide 76: Related party transactions

© Governance Institute of Australia 2014. This material is subject to copyright. The Good Governance Guides indicate, in the view of Governance Institute
of Australia Ltd, one interpretation of good practice. They are not designed to cover or comply with all applicable legislation or case law. We cannot be held
liable or accountable to any person who acts or relies upon the information provided. The guides are not a substitute for professional advice.
Visit our website at governanceinstitute.com.au to find more Good Governance Guides and information on governance.
Good Governance Guide

Management and oversight

Issues to consider when recording and
circulating minutes of directors’ meetings
Management and oversight

Under s 251A of the Corporations Act, a company
must keep minute books in which it records, within one
month, the proceedings and resolutions of directors’
meetings (including meetings of a committee of
directors). The company must also ensure that the
minutes of a directors’ meeting are signed by the chair
of the meeting (or the chair of the next meeting) within
a reasonable time. If minutes are recorded and signed
in this way, they are evidence of the proceedings and
resolutions passed, unless the contrary is proved.
Recording minutes of directors’ meetings
Importantly, minutes are a record of the meeting, not
a report.
The purposes of minutes is to accurately record the
meeting. The way in which they are prepared may also
assist to establish that directors turned their minds
sufficiently to the matters under consideration in the
discharge of their duties, which are individual duties.
However, board minutes record the resolutions of the
board as a whole.
The minutes should not record the votes of individual
directors. Each director, however, retains the right
to have their dissent or abstention recorded in the
minutes, should they wish to include such disclosure in
the minutes. This may assist a director in relying on the
business judgment rule or other matters that give rise to
a defence to explain and or justify at law why they either
dissented or abstained on voting.
Abstaining will not necessarily be sufficient in a
particular case for a director to discharge their duties.
A ‘happy medium’ between pure minutes of
resolution and minutes of narration is appropriate for
contemporary corporate practice: see Good Governance
Guide: Board minutes: what to record, the business
judgment rule.
Entering the minutes in the minute book
It is also important to number the pages of the minutes
for easy reference. A decision needs to be taken as
to whether the pages will be continually consecutive,
which can be useful from an audit perspective, as
it ensures there are no duplicated page numbers,
or whether they will be numbered consecutively per
meeting. It is also good practice for the chair to sign, or
initial, each page of the minutes, as well as signing the
final page of the minutes (s 251A). Agenda items may
also be numbered to assist in cross-referencing board
papers; discussion during the board meeting itself and
also to reduce the risk of minutes being altered. What is
important is that the company can provide comfort that
the version of the minutes entered into the minute book
is the correct record that has been signed by the chair
without alteration to or deletion of the pages (s 1306(3)).
Given the requirements under s 251A, it is good
governance to develop and implement a process to
facilitate the entering of the minutes into the minute
book within one month of the meeting, in order to
comply with legislative requirements and ensure that
a recording of the directors’ meeting is made while
memory of the meeting is fresh.
In most companies, the minutes of the previous board
meeting are formally approved at the subsequent board
meeting. However, in many companies, the board does
not meet each month, but may meet less frequently or
at other periods. These companies need to ensure that
they have a process in place to satisfy the demands of
the legislation when the next scheduled meeting is not
within one month of the board meeting.
Circulating draft minutes of directors’
meetings
The chair should agree with the board members, CEO and
company secretary upon a procedure for circulating the
draft minutes. Companies need to decide the approach
most suitable to the requirements of the organisation.

© Governance Institute of Australia 2015. This material is subject to copyright. The Good Governance Guides indicate, in the view of Governance Institute
of Australia Ltd, one interpretation of good practice. They are not designed to cover or comply with all applicable legislation or case law. We cannot be held
liable or accountable to any person who acts or relies upon the information provided. The guides are not a substitute for professional advice.
Visit our website at governanceinstitute.com.au to find more Good Governance Guides and information on governance.
Good Governance Guide
It is good governance for the draft minutes to be
circulated within a reasonable time of the meeting, as
this will assist in meeting the one-month deadline for
entering the minutes in the minute book.
At a minimum the draft minutes should be reviewed by
the chair. Prior to the draft minutes being submitted to
the chair for review, when relevant, advice of technical
experts within management (such as in-house general
counsel, CFO, chief risk officer, appointed actuary [as
appropriate]) may be sought to ensure that the draft
minutes appropriately capture relevant technical points
and issues discussed at the meeting. The CEO may also
review the minutes prior to them being submitted to the
chair. If there are different views as to how the minutes
record a particular matter, the company secretary
should take these views to the chair for decision.
Once in receipt of the draft minutes, the chair should
review them and note any amendments that may be
required and communicate them to the company
secretary within the time period agreed in the
procedure. At this point the minutes become ‘chair-
approved’ minutes.
The process for circulating the draft minutes of
the directors’ meeting may include the following
approaches:
• The draft minutes are circulated to all directors
by email.
• An email is sent to directors to inform them that the
draft minutes are available on the board portal for
review and comment.
• The chair-approved minutes are circulated to all
directors, and if approved by them they are entered
in the minute book. If any changes of significance are
suggested by one or more directors, a teleconference
of directors may be convened to discuss the changes
or, subject to chair approval of the suggested
changes, the revised minutes are circulated to
all directors.
• The draft minutes go to the chair for review, but not
to all directors, and the chair-approved minutes
are included in the board pack for finalisation and
approval at the next meeting of directors. The chair-
approved minutes are entered in the minute book
within one month.
© Governance Institute of Australia 2015. This material is subject to copyright. The Good Governance Guides indicate, in the view of Governance Institute
of Australia Ltd, one interpretation of good practice. They are not designed to cover or comply with all applicable legislation or case law. We cannot be held
liable or accountable to any person who acts or relies upon the information provided. The guides are not a substitute for professional advice.
Visit our website at governanceinstitute.com.au to find more Good Governance Guides and information on governance.
Management and oversight
The minutes are generally formally approved at the next
board meeting and any amendments to the minutes that
have been entered into the minute book are resolved by
resolution and this is noted in the minutes of the next
board meeting. Once the minutes have been approved
by the board, the final form in the minute book can be
signed by the chair.
• If the next meeting is not within one month of the
board meeting, the minutes as approved by the chair
should be entered in the minute book.
• The minutes should always be approved at the next
meeting if they have not previously been formally
approved by the board.
• If the minutes are amended at the next board
meeting, this should be reflected in the minutes of
that meeting.
• Minutes may be stored electronically but must be
capable of being reproduced in written form
(s 1306(2)).
• The original minutes with the amendments noted
should be retained to demonstrate compliance with
s 251A and to avoid any suggestion of destruction
of company records in contravention of ss 1306 or
1307 of the Corporations Act. The chair may strike
through and initial minor amendments (such as names
or dates) or the amendments may be recorded by
resolution of the board.
When agreeing upon the procedure for circulating the
minutes, consideration needs to be given to the fact
that each draft of the minutes and comments on those
minutes may be discoverable.
If there is a concern about legal professional privilege
in relation to documents or discussions in a board
meeting, legal advice should be sought in advance of
the meeting and also in advance of preparation of the
minutes. The way the minutes are drafted is likely to be
decisive of whether privilege is maintained in any legal
advice that has been given to the board or not. It is
unlikely the minutes themselves will be privileged.
It is a good governance to manage the security of
electronic minutes in a document management system
and through the implementation of user controls. It
is also good governance to formulate a policy as to
whether electronic minutes can be:
Good Governance Guide Management and oversight

• read only, or While board committee members are likely to express

a preference for a particular approach, it is good
• read and printed, or
governance for the protocol for the circulation and
• edited. approval of board committee minutes to align with the
protocol for the circulation and approval of the minutes
Where meetings of directors may be held frequently (for of directors’ meetings.
example, where a company is in a takeover or defence
situation), particular care should be taken to follow the
protocol in relation to the recording and circulation of
minutes and entering them in the minute book to deal
with issues such as reliance on the business judgment
rule or directors’ and officers’ indemnity insurance.

Board committee minutes

Board committee meetings are also subject to s 251A
and as such a company is required to record the
minutes of board committee meetings within one month
of a meeting. This may create timing issues if board
committee meetings are not held every month or are
held just prior to a board meeting. There are different
approaches to how board committees can conform to
the legislative requirements as follows:
• The board committee meets, the minutes are
prepared and draft minutes are circulated to all
committee members for review. If the committee does
not meet again before the board meeting, the draft
minutes are included in the board pack with a memo
noting that the chair of the committee is authorised to
sign those minutes.

• The committee meets, the minutes are prepared and

draft minutes are circulated to all committee members
for review. At the next board meeting, the chair of the
board committee speaks to the draft minutes, but they
are not approved. The draft minutes are presented to
the next board committee meeting for approval. The
board committee may amend the draft minutes at its
next meeting prior to approving them.

• The board committee meets just prior to the board

meeting and the company secretary prepares a report
of the meeting to present to the board. The board
committee chair speaks to the report at the board
meeting. The draft minutes are presented to the next
board committee meeting for approval. The board
committee may amend the draft minutes at its next
meeting prior to approving them.

© Governance Institute of Australia 2015. This material is subject to copyright. The Good Governance Guides indicate, in the view of Governance Institute
of Australia Ltd, one interpretation of good practice. They are not designed to cover or comply with all applicable legislation or case law. We cannot be held
liable or accountable to any person who acts or relies upon the information provided. The guides are not a substitute for professional advice.
Visit our website at governanceinstitute.com.au to find more Good Governance Guides and information on governance.
Good Governance Guide
Board minutes: what to record, the
business judgment rule
The Corporations Act (ss 180 to 184) legislates the
general duties of directors (and other officers) in relation
to care and diligence, good faith, use of position, use of
information and recklessness or intentional dishonesty.
The statutory business judgment rule (s 180 (2))
provides that directors and officers who make business
judgments are taken to meet their statutory duty of care
and diligence, if they:
• make the judgment in good faith for a proper purpose
• do not have a material personal interest in the subject
matter of the judgment
• inform themselves about the subject matter of the
judgment to the extent that they reasonably believe to
be appropriate
• rationally believe that the judgment is in the best
interests of the corporation.
It is considered good governance to have robust
processes and procedures in place to:
• ensure, to the extent possible, that business
judgments of directors and officers are made with full
knowledge and understanding, and
• the minutes of directors’ meetings adequately record
the process followed in coming to that business
decision, whether it be to take or not to take
certain action.
The business judgment rule is in place to protect
directors. Director’s minutes must record the passing
of a resolution as the collective will of that body. It is
good practice for the company secretary to clarify for
directors the importance of the minutes and how the
business judgment rule operates in directors being able
to rely on it.
This Guide sets out the issues to consider when
developing the processes and procedures in drafting
minutes in relation to the business judgment rule.
© Governance Institute of Australia 2015. This material is subject to copyright. The Good Governance Guides indicate, in the view of Governance Institute
of Australia Ltd, one interpretation of good practice. They are not designed to cover or comply with all applicable legislation or case law. We cannot be held
liable or accountable to any person who acts or relies upon the information provided. The guides are not a substitute for professional advice.
Visit our website at governanceinstitute.com.au to find more Good Governance Guides and information on governance.
Board structure
Board structure
It is common practice for extraneous material such as
discussion, lost amendments, unseconded motions
and procedural motions not to be included in the
minutes. For the benefit of the business judgment rule
to be available, among other things, the minutes need
to reflect that the directors have acted in good faith,
for a proper purpose and in the absence of a material
personal interest, and came to a rational decision
which was reasonable for each of them to reach, in
light of their own skills and experience and in light of
circumstances known to the company at the time. The
minutes are the record of who was at the meeting, the
matters under discussion, the decisions made and the
material that was relied on to make decisions (see Good
Governance Guide: Board papers for further detail of the
material relied on by the board).
A ‘happy medium’ between pure minutes of
resolution and minutes of narration is appropriate for
contemporary corporate practice. Too much information
can be as unhelpful as too little information. The
information included in the minutes should be guided by
the need for clarity.
Boards will ultimately make the decision as to their
preferred mode of recording minutes and the extent
to which additional information regarding board
discussions is contained within them.
Set out below are the types of information that a
company secretary may wish to consider for inclusion
in the minutes to assist in demonstrating that directors
have satisfied, and can rely upon, s 180(2). The types of
information that may be included in the minutes depend
on the circumstances and decision.
The minutes should rely on the board papers and not
seek to repeat or paraphrase them. This principle will
assist in ensuring the minutes are appropriately concise.
Good Governance Guide
Advice
• Noting any advice received from management in
addition to that in the board paper.
• A record of any independent advice which is received
on any aspects of the board’s discussion. Note: If
there is a concern about legal professional privilege in
relation to legal advice given to the board, legal advice
should be sought in advance of the meeting and also
in advance of preparation of the minutes. The way the
minutes are drafted is likely to be decisive of whether
privilege is maintained in any legal advice that has
been given to the board or not. It is unlikely the
minutes themselves will be privileged.
• Any request for additional information or advice,
before a decision is made (only applicable if a decision
is deferred).
Other information and issues
• Significant issues raised by the directors and how
they were resolved.
• Significant aspects that were taken into consideration
in relation to a matter.
• The alternatives considered, if any, and the reason
why they were rejected.
• The impacts of a proposal.
• The reports included in the board papers or tabled
at the meeting — see also Good Governance Guide:
Board papers.
• Other documents tabled at or presentations made
to the meeting, including whether any directors did
not have access to the tabled document, and a note
that a paper was circulated at short notice or a tabled
document and/or presentation that was not included
in the papers circulated to directors in advance of the
meeting in the ordinary course. See Good Governance
Guide: Board papers for further detail.
© Governance Institute of Australia 2015. This material is subject to copyright. The Good Governance Guides indicate, in the view of Governance Institute
of Australia Ltd, one interpretation of good practice. They are not designed to cover or comply with all applicable legislation or case law. We cannot be held
liable or accountable to any person who acts or relies upon the information provided. The guides are not a substitute for professional advice.
Visit our website at governanceinstitute.com.au to find more Good Governance Guides and information on governance.
Board structure
Formal matters and decision
• A declaration of any interests of a director or officer
and whether it is a material personal interest and
how the issue has been addressed — see also Good
Governance Guide: Issues to consider when developing
a policy on disclosure of and voting on matters
involving a director’s material personal interests.
• Any member of management and/or external adviser
present at the meeting and the agenda items for
which they were present.
• A resolution that describes the decision of the board,
including any conditions of any approval and a clear
statement as to how the board will be satisfied that
conditions have been met.
• A record of any director’s dissent or abstention from a
resolution (if so requested).
• A record of any delegation of authority the board
makes (see s 198D and s 190 Corporations Act).
• The actions decided — it is good governance that
actions record what is to be done, by whom and
by when. A separate action list is compiled and
maintained that tracks the status and completion
of actions — see also Best practice action items list.
• A reference to any paper or discussion on any carried-
forward items, matters arising or outstanding issues.
When delegating authority or placing reliance on advice
received by others, directors should consider the
common law and statutory requirements and the limits
on the extent to which a director may delegate authority
or may rely upon the information obtained from an
adviser (ss 189 and 190 of the Corporations Act).
Board committees
It is good governance to ensure that the principles
applying to the minutes of board meetings also apply to
the minutes of meetings of board committees.