Corporate Governance in Commonwealth Authorities and Companies

In addition, Board sub-committees should be appointed as appropriate. These subcommittees
enable the Board to address certain key areas in more detail than may be
possible in full Board meetings. The number and scope of Board sub-committees should
reflect the specific needs of the organisation. Membership of committees should be
assessed periodically and rotated to ensure the injection of new ideas and perspectives.
These sub-committees may require a minimum number, or be composed entirely of,
independent directors.
Frequently used committees include:
◗ audit committees (which are mandated under the CAC Act) – responsible for
oversight of the audit function, including liaison with internal and external auditors,
and reporting to the full Board on the adequacy of the organisations audit procedures;
◗ remuneration committees – responsible for reviewing remuneration of the CEO,
Board Chair and any other director(s);
◗ nomination committees – responsible for considering the size and composition of the
Board, criteria for Board membership and proposing candidates for Board
membership; and
◗ corporate governance committee – responsible for reviewing the functions of the
Board itself, the adequacy of Board guidelines and the organisation’s corporate
governance principles.
Generally, the governance role of Boards in the public sector is not, however, as clear cut
as that in the private sector. In the private sector, the Board is still primarily responsible to
shareholders for the creation of wealth and dividends. The interests of other stakeholders
are relevant as a derivative of this primary responsibility.
On the other hand, the Board of a CAC body needs to manage the particular interests of
all stakeholders. It needs to balance the competing objectives of increasing shareholder
value with meeting the broader government policy objectives and goals, such as delivering
effective and ethical services at reasonable cost. In turn this should be done in accordance
with expected standards of delivery, for example, equity and fair play considerations,
within the framework of clear public sector values and ethics. The Board’s role is made
even more complex when private shareholders are also introduced.
In many situations it will be difficult for a CAC Board to comply with all the competing
requirements. The challenge for the Board will be to identify the most appropriate balance
and solutions for the organisation in particular cases.
Due to increased expectations which have been imposed on directors, by the CAC Act and
other public sector reforms, a planned induction program will help familiarise newly
appointed directors quickly with the operating environment and business of the
organisation. It will also assist them understand the public sector environment, its
obligations and its interrelationships. Ongoing director education will also ensure that
directors remain abreast of relevant reforms which could impact on their obligations.
CORPORATE GOVERNANCE IN COMMONWEALTH AUTHORITIES AND COMPANIES
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A Corporate Governance Framework