Acting for You, October 2019

Whistleblowing — ASIC Guidance 

Governance Institute has lodged a submission to the Australian Securities and Investments Commission (ASIC) in response to its consultation paper on its draft regulatory guide on whistleblower policies.

As part of the new whistleblower provisions in the Corporations Act 2001, public entities, large proprietary entities and proprietary entities that are trustees of registrable superannuation entities are required to have a whistleblower policy and make it available to their officers and employees by 1 January 2020. The purpose of ASIC’s draft guide is to help entities establish and implement a compliant whistleblower policy.

Our policy committees carefully considered the draft guide and concluded that there were issues with it concerning its length (the draft guide is 50 pages long), level of prescription and complexity. The draft guide contains a mixture of mandatory requirements (must) and guidance (should). The good practice suggestions provided by ASIC throughout the draft guide exceed, in many cases, what is actually required by law. We argued that it would be challenging for non-lawyers to understand the difference between what ASIC considers to be best practice or ‘gold’ standard and what is mandatory in order to comply with the Corporations Act. 

We made various recommendations in our submission as to how ASIC could improve the draft guide. We recommended that ASIC: 

  • simplifies the guide to make it more concise and less complex for users
  • clarifies in the guide what is a legal requirement and what is suggested best practice
  • includes commentary in the guide on how smaller organisations can develop a fit-for-purpose whistleblower policy that is appropriate for their size, complexity and number of employees.

One of the issues raised by ASIC in its consultation paper was whether it should use its powers to exempt public companies that are not-for-profits (NFP) or charities from the requirement to have a whistleblower policy in accordance with the Corporations Act. ASIC asked if these companies limited by guarantee should be exempted on the grounds that it would be overly burdensome for them to comply.

Governance Institute does not support exempting public companies that are NFPs or charities from the requirement to have a whistleblower policy

Governance Institute does not support exempting public companies that are NFPs or charities from the requirement to have a whistleblower policy in accordance with the Corporations Act. Whistleblower processes that encourage staff to speak up about wrongdoing concerns and integrity challenges, and which protect them from detriment, are vital to the integrity and good governance of all organisations, as well as to society as a whole. We consider that ‘carving out’ certain companies from the whistleblower provisions is at odds with the policy objective of the reforms, which is to improve transparency and integrity.

However, we pointed out to ASIC in our submission the practical difficulties we consider companies will experience in complying with the 1 January 2020 deadline, which are magnified for companies limited by guarantee that are charities and NFPs. We argued that the NFP and charitable sector will need assistance in order to comply with this important legal obligation. 

We recommended that ASIC:

  • develops separate guidance for charities and NFPs that is shorter, simpler and more relevant to that sector
  • cooperates with the Australian Charities and Not-for-profits Commission (ACNC) to develop a ‘basic’ model or template whistleblower policy that can be adopted by charities and NFPs
  • grants companies that are NFPs or charities an extension to the deadline by which they need to have adopted a compliant whistleblower policy
  • plays an educative rather than a punitive role and assists NFPs and charities in complying with the requirement to have a whistleblower policy, rather than penalising those organisations that do not comply.

We understand that ASIC plans to issue its final regulatory guide in late October or early November of this year and we will keep our members updated on this important issue.

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Good Governance Guide — onflicts of interest in the public sector 

Governance Institute has updated its Good Governance Guide on conflicts of interest in the public sector. The Good Governance Guide was updated by our Public Sector Governance Committee and takes into account important guidance recently issued by the New South Wales Independent Commission Against Corruption: Managing Conflicts of Interest in the NSW Public Sector.

The guide highlights the important distinction that there is nothing necessarily wrong in having a conflict of interest; the crucial aspect is that the conflict is declared and managed to protect the public interest. 

The updated guide covers: 

  • what a conflict of interest is
  • acting in the public interest
  • risk management
  • examples of types of conflicts of interest
  • how to manage conflicts of interest
  • the importance of an ethical culture.

A comprehensive list of resources from both Governance Institute and the integrity agencies of each of the states and the Commonwealth is included at the end of the guide.

There is nothing necessarily wrong in having a conflict of interest; the crucial aspect is that the conflict is declared and managed to protect the public interest.

The Good Governance Guide can be found on the Governance Institute Resource Centre and is free for members. It is also free to the public as part of our public sector starter pack. The guide is a useful addition to induction packs for boards of public sector entities. It is also a good starting point for the board’s discussion of conflicts of interest.

Documents donated by members undergo a refresh

Over the past 12 months, our policy committees have been reviewing the documents our members have donated to the Useful Practitioner Document Service. Governance Institute’s Useful Practitioner Documents service is for members only. It provides members with examples of documents that may be of assistance to them. They are located under the Useful Practitioner Documents tab in the Resources section of the Institute’s website. There over 75 documents in the service, ranging from share application forms to committee charters and registers of interest. The documents are anonymised before being included in the service and no warranties are provided for their appropriateness. They do, however, provide a useful starting point for governance professionals tasked with drafting a document from scratch. 

We are always looking for additional documents to be added to the service and in particular would value a donation of risk management documents. Members can donate their document by sending it by email to the Policy team. Members donating documents warrant that the documents they are donating do not infringe copyright, or have been cleared for release by the copyright owner.

I look forward to receiving what you have to send me.

Submissions

Consultation paper 321 Whistleblower policies — 18/9/19

Adoption of IEC 31010:2019 Risk management Risk Assessment Techniques Withdrawal of SA/SNZ HB 89:2013 Risk management: Guidelines on risk assessment techniques  10/9/19

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