I’ve been appointed to a Commonwealth Board – how are my duties different?

The key Commonwealth governance legislation, the Public Governance, Performance and Accountability Act 2013 (Cth) (PGPA Act) divides Commonwealth entities between non-corporate Commonwealth entities that have no separate legal identity to the Commonwealth (eg a Department of State) and Corporate Commonwealth Entities (CCEs), that are bodies corporate established under specific legislation such as the National Reconstruction Fund Corporation. It also addresses requirements that apply to Commonwealth Companies that are incorporated under the Corporations Act and controlled by the Commonwealth such as Snowy Hydro Limited (CCs).

This article compares the duties that are owed by Board Members of CCEs and directors of CCs^[1].

What are your duties as a director of a Commonwealth Company?

As CCs are Corporations Act companies, normal Corporations Act directors duties apply. The PGPA Act imposes some additional obligations on directors of wholly-owned CCs such as to keep their responsible Minister informed of certain matters, provide reports and notifications, and to establish an audit committee.  The connection to government and reporting obligations to their responsible Minister means that directors may be called before Parliamentary committees. Directors may also be subject to scrutiny by the National Anti-corruption Commission (NACC).

What are your duties as a Board Member of a Commonwealth Corporate Entity?

The PGPA Act largely mirrors Corporations Act directors duties for Board Members and other “officials” of CCEs. There are however some differences to be aware of:

• First, Board Members are not protected by the Business Judgment Rule (BJR)^[2] when exercising their duty of care and diligence. Similarly, Board Members are not protected by a statutory provision akin to the ‘reasonable reliance on information and/or advice’ provision in the Corporations Act.
• Secondly, CCE Board Members have more extensive reporting obligations. For example, section 19 of the PGPA Act requires that Board Members must inform the responsible Minister and Finance Minister of significant changes to the CCE’s operations.
• Thirdly, unlike in the Corporations Act where civil/criminal penalties flow from a breach of director duties, there are no civil/criminal penalties in the PGPA Act. However, Board Members may have their appointment terminated.^[3]
• Fourthly, as ‘public officials’, CCE Board Members should be mindful that any actions they take may be subject to NACC scrutiny. If the NACC suspects that a Board Member engaged in ‘serious and systematic corrupt conduct’, they may, for example, investigate the issue or alert law enforcement. 
• Fifthly, given the potentially ‘public’ nature of their duties, a tort of misfeasance in public office may be brought against Board Members who intentionally inflict harm if the course of their duties. There is no authoritative test to determine whether someone is a holder of ‘public office’. As such, whether a claim can be brought will depend entirely upon the Board Member’s specific duties. Nevertheless, Board Members should carry out their duties without intentionally inflicting harm.
• Finally, Board Members may be called before Parliamentary committees because of their direct connection with government individuals (for example, their reporting obligations to the responsible Minister).

Table of key duties/obligations

The table below further details the relevant differences.