On 28 February 2014, the Australian Institute of Company Directors provided a submission to the NSW Review of the Legislative Framework that provides for the Governance and Accountability of State Owned Corporations.
The Review will examine the State Owned Corporations Act 1989 (NSW) and eight enabling Acts that establish State Owned Corporations. The Review aims to make recommendations to the government for legislative change to improve the commercial performance of state owned corporations and streamline and strengthen the state owned corporation accountability and governance framework.
In response to the Issues Paper released by the Steering Committee undertaking the Review, the key themes to which Company Directors comments relate are as follows:
- Directors benefit from simplicity, consistency and ready access in relation to the governance requirements and duties imposed on directors. State Owned Corporations similarly benefit where their directors are able to clearly identify and understand their duties. For this reason we recommend that the Corporations Act duties regime apply to State Owned Corporations.
- Where there is no State Owned Corporation-specific factor which mandates against this, State Owned Corporations should generally operate under the same type of governance framework as private sector corporations, to best position the State Owned Corporation to achieve the same commercial benefits for the state as are pursued by a private sector corporation.
- Applying Corporations Act duties to State Owned Corporations will ensure that State Owned Corporations obtain the benefit of commercial good practice principles that govern the way directors duties have evolved under the Corporations Act, and that those duties will automatically be updated over time without the need to amend the State Owned Corporations Act.
- It is generally beneficial to have a level playing field between State Owned Corporations and private sector companies, to help ensure that State Owned Corporations are run as commercial enterprises.
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