Major aged care reforms are welcomed by the AICD, with important improvements to director liability proposals. APRA governance standards and virtual AGMs are also in review.
Aged care reforms & responsible person duty
At the time of writing, legislation to introduce major reforms in aged care is before Parliament. The AICD supports a duty on providers and a strengthened, rights-based framework for aged care. We have been focused over recent months on proposals for a new “responsible person duty” for senior managers and directors, holding them personally liable for failings by providers in delivery of care.
As initially proposed, the draft duty was punitive and excessive, with criminal liability, strict liability and reverse onus of proof components. There were strong concerns that this could drive experienced managers and directors out of the sector. Of note, the duty was not a Royal Commission recommendation.
In positive news, the concerns by the AICD and other stakeholders have been heard. Criminal liability has been removed in the Bill and improvements made in the drafting of the new duty. We will be engaging with the parliamentary process as the Bill progresses.
The AICD recognises the importance of improving governance and supporting directors in aged care. Some of our updated and new resources available to members include:
Member webinars on care governance
Statutory review on virtual/hybrid AGMs
An independent review of laws enabling virtual and hybrid AGMs has been welcomed by the AICD. The review panel (Dr Robert Austin AM, Judith Fox MAICD and Helen Bird) examined legislative changes made in 2021 to support virtual and hybrid AGMs and to allow electronic documents.
The AICD supported the laws, arguing that organisations are best placed to determine the appropriate format for meetings. We also called for the current hurdle of special resolutions to hold virtual meetings (where constitutions do not expressly permit them) to be removed or replaced with a general resolution. Some stakeholders argued for more prescriptive requirements for listed entities, such as mandating fully hybrid AGM formats in the law.
The panel has recommended:
“Status quo” for listed companies (including special resolution requirement)
Removing the constitution resolution requirement for all other entities
Retaining electronic documents and signature provisionsRegulator guidance on better meeting practices for companies
Review of AGM formats in five years’ time.
The government is due to respond to the report before the end of the year.
APRA governance standards
The Australian Prudential Regulation Authority (APRA) is expected to open consultations soon on a review of governance and fit and proper standards. APRA’s governance standards are critical for boards of prudentially regulated entities — in banking, insurance, superannuation — and have a normative influence more broadly.
APRA will focus on board performance, including appointment and renewal processes for directors. The AICD will be engaging with advice from our APRA Director Forum. Simplifying and harmonising the large number of governance obligations across APRA standards is a priority.
Fit and proper standards in superannuation are on the regulator’s watch list, with notable recent enforcement. In August, APRA imposed licence conditions on trustees for Cbus and BUSSQ to require an independent expert review of fit and proper compliance in relation to trustees (BUSSQ conditions are suspended pending legal challenge).
In September, APRA launched proceedings in the Federal Court seeking civil penalties and the disqualification of First Super director and co-chair Michael O’Connor, alleging breaches of Superannuation Industry (Supervision) Act 1993 covenants for trustees in relation to a contract between First Super and the Construction Forestry and Maritime Employees Union (CFMEU).
AICD landmark practice statement on director oversight of corporate compliance
A new legal opinion from leading barristers Michael Hodge KC and Sonia Tame provides insights on what is required of directors in overseeing their companies’ regulatory compliance obligations. To give greater clarity to directors, we have issued an AICD Practice Statement with practical guidance, accessible here.
This article first appeared under the headline 'Review & Reform’ in the November 2024 issue of Company Director magazine.
Practice resources — supporting good governance
Examples of the AICD’s contemporary governance practice resources for members:
Directors’ Guide to AI Governance
- AICD’s practical guides on AI governance, developed with the Human Technology Institute at UTS.
AI Fluency for Directors Sprint
- AICD is piloting this with the University of Sydney Business School. Our first pilot cohort sold out in seven days, with a second program now open for February 2025.
A Director’s Guide to Mandatory Climate Reporting
- The AICD’s director guide has been updated to reflect the new laws, a must-read for all directors.
- Members can also access free climate governance e-learning and a short course
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