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    Government Owned Corporations

    Corporate Governance Guidelines for Government Owned Corporations

    Version 2.0

    The State of Queensland (Queensland Treasury)

    The Queensland Government supports and encourages the dissemination and exchange of information. However, copyright protects this document. The State of Queensland has no objection to this material being reproduced and made available online or electronically, provided it is for your personal, non-commercial use or use within your organisation, this material remains unaltered and the State of Queensland is recognised as the owner of the copyright. Release Date: February 2009 Document Reference: 48761

  • Date of Release: February 2009 Doc ID: 48761 Version 2.0

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    Table of Contents

    1. Revision History ........................................................................................................... 3

    2. Introduction .................................................................................................................. 3

    3. Application of Guidelines .............................................................................................. 4

    4. Summary of Reporting Requirements........................................................................... 6

    5. Corporate Governance Principles................................................................................. 7

    Code of Conduct and Conflicts of Interest Best Practice Guide for Government Owned Corporations............................................................................................................... 18

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    1. Revision History

    Version Date Contact Changes

    1.0 30 September 2005 OGOC Initial release

    2.0 December 2008 Policy and Governance

    Revised policy reflect revised ASX Principles and introduce a best practice guide on code of conduct and conflict of interest policies

    2. Introduction These Guidelines summarise the expectations of shareholding Ministers in relation to the corporate governance of all Queensland Government owned corporations (GOCs) established under the Government Owned Corporations Act 1993 (GOC Act). They are intended to provide a framework for GOCs to develop, implement, review and report upon their corporate governance arrangements. The high levels of public accountability which apply to GOCs as a result of their public ownership make the corporate governance of GOCs very important. GOCs must be properly managed on behalf of their ultimate owners, the people of Queensland. The Guidelines have been drafted having regard to the following:

    ASX Corporate Governance Councils Corporate Governance Principles and Recommendations 2nd Edition (ASX Principles);

    Auditor-Generals Report No. 2 2002-2003 Review of Corporate Governance and Risk Management at Government Owned Corporations;

    Auditor-Generals Report No. 10 2002-2003 Review of Managements Assessment of Fraud Control Risks and Associated Plans and Procedures;

    OECD Principles of Corporate Governance; and

    Crime and Misconduct Commission (Qld) and Independent Commission Against Corruption (NSW) Managing Conflicts of Interest in the Public Sector Guidelines and Toolkit.

    The Guidelines take effect from the date of release and apply to the 2008-2009 and subsequent financial years.

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    3. Application of Guidelines There is no single model of corporate governance which is appropriate for all GOCs. As GOCs vary in the size and scope of their business activities and their internal and external environment, it is not possible or desirable to create such a model. The corporate governance arrangements for a GOC may also need to change over time as circumstances change. All GOCs are required to:

    implement comprehensive, high quality corporate governance arrangements which are appropriate for and adapted to their particular circumstances; and

    properly disclose and report upon those arrangements to the shareholding Ministers, employees and the public.

    GOCs should have regard to the Guidelines in designing their corporate governance arrangements, and in monitoring those arrangements for ongoing relevance. The Guidelines also apply, as far as practicable, to GOC subsidiaries. The approach taken by the ASX Principles has been adopted so that the same eight general principles of corporate governance apply. In the same way as the ASX Principles, each principle contains some recommendations and commentary giving guidance regarding implementation of the principle. The recommendations of the Auditor-Generals reports have been included as further recommendations for the relevant principles. The recommendations are intended as a more specific guide as to how the principle may be applied. GOCs should refer to the ASX Principles (and the Auditor-Generals report where relevant) for more detailed commentary upon the principles and recommendations. In general, commentary is only provided where some modification or explanation is required for application to GOCs. In addition, the publication Managing Conflicts of Interest in the Public Sector Guidelines and Toolkit jointly issued by the Crime and Misconduct Commission (Qld) and Independent Commission Against Corruption (NSW) provides useful guidance for the development and implementation of effective conflict of interest management strategies. The recommendations are not intended to be prescriptive. GOCs have the flexibility to implement the relevant principle in the best manner they see fit, as long as this can be justified. In determining the extent to which to apply a principle, GOCs may consider the costs and benefits, taking into account matters such as the nature of their activities and the risks they face, as well as resources available.

    GOCs should first consider what constitutes better practice in their own particular circumstances. To the extent that the recommendations in these Guidelines represent better practice recommendations, GOCs should adopt an if not, why not approach, in the same way as set out in the ASX Principles. That is, if a GOC considers that a recommendation is not appropriate to its circumstances, it has the option of not following the recommendation but will be required to explain why.

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    In designing their corporate governance practices and frameworks, GOCs also must have regard to governance requirements in legislation such as the GOC Act, Financial Administration and Audit Act 1977 (proposed to be replaced by the Financial Accountability Act in 2009) and the Corporations Act 2001 (Cth).

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    4. Summary of Reporting Requirements Reporting and disclosure are the most important elements of these Guidelines. GOCs must disclose and report on their corporate governance arrangements and how they have considered the principles to a sufficient level to give the shareholding Ministers confidence that corporate governance issues are being adequately addressed. GOCs must include a separate section on corporate governance in their annual report which deals with the following:

    A general discussion of all aspects of the GOCs corporate governance arrangements.

    The specific information recommended to be disclosed in the annual report in the Reporting section of the principles set out below.1

    Detailed explanations of any departures from the recommendations in these guidelines. Such explanations should address:

    o how the GOCs approach differs from the relevant recommendation; o the reasons why the GOCs approach has been adopted and how its

    approach accords with the intent or spirit of the relevant principle; and o that the GOC understands the relevant issues and has considered the impact

    of its alternative practices. The detailed explanations of departures from the recommendations must also be included in GOCs statements of corporate intent. GOCs must also keep shareholding Ministers informed in relation to any significant issues relating to corporate governance, including any significant changes to their corporate governance practices, as and when they occur. This disclosure may be made through the regular quarterly reporting process, although for more important or urgent issues (e.g. suspected or actual breaches of securities trading policies) specific reporting would be appropriate at the relevant time. GOCs have the flexibility to adopt the corporate governance practices and arrangements which they consider to be the most appropriate for their particular circumstances, but must report in detail upon why the practices have been adopted and demonstrate how those practices give effect to the principles. It is each GOCs responsibility to ensure that it provides sufficient information to enable the shareholding Ministers to assess whether its corporate governance practices and structures meet the underlying concerns of the principles and are generally adequate and appropriate.

    1 Where information is already disclosed in other parts of the annual report, that information may be

    incorporated in the corporate governance section by cross reference.

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    5. Corporate Governance Principles Principle 1 Foundations of management and oversight Recommendations

    The board should have a formal statement or board ch