Summary of Amendments to the Commonwealth Authorities and Companies Act

Summary of changes to the CAC Act for Senior Managers

The purpose of this summary is to provide an overview of the main changes made by the Commonwealth Authorities and Companies Amendment Act 2008 to the CAC Act that will affect the University, its employees and University Council Members.

For ease of reference the terms, ‘University’, ‘University Council Members’  and ‘University Officer’ are used when outlining the amendments to the CAC Act.  All references to sections are references to the relevant section of the CAC Act.

Changes to the CAC Act

Inclusion of the term ‘Senior Manager’ in the Definition of ‘Officer’

The CAC Act imposes a number of requirements on ‘Officers’ of the University. To clarify what is meant by the term ‘Officer’ of the University and to bring the definition of ‘Officer’ in line with the definition in the Corporations Act, the term ‘Senior Manager’ has been added to the definition of Officer (section 5).

‘Senior Manager’ is defined as a person who:

(i)         makes or participates in decisions that affects the whole, or a substantial part, of the University; or

(ii)        has the capacity to significantly affect the University’s financial standing.

This definition covers Deans and Directors, as well as Heads of Major Budget Units within the University. It will also cover individuals engaged in managing the finances of the University. As a matter of practice, the Legal Office had been of the view that these staff members were already included in the definition of ‘Officers’ prior to these amendments.

Penalty Provisions

The following new or varied penalties have been added to the CAC Act:

• A $220,000 fine and/or 5 years’ imprisonment where a University Council Member dishonestly causes the contravention of the annual reporting rules (section 11). Please note the use of the word ‘dishonest’ requires an element of intent in the University Council Member’s actions.

• A $220,000 fine and/or 5 years’ imprisonment if a University Council Member or University Officer dishonestly causes the University’s financial records not to be properly recorded so as to prevent/hamper the University in preparing its financial statements and having those statements audited (section 20).

• A $220,000 fine and/or 5 years’ imprisonment where a University Council Member or University Officer has breached their duty to: act in good faith; make proper use of the information given to them as a University Council Member or Officer of the University; or use their position for a proper purpose (section 26).

• An $1,100 fine where a University Council Member fails to notify University Council of their material personal interest* in a matter that relates to the affairs of the University. This is a strict liability offence, which means that the University Council Member is liable for a penalty regardless of whether they intended to contravene this section or not (section 27F).

• A $550 fine where a University Council Member is present during consideration of, or votes on, a matter in which they have a material personal interest, unless their presence or voting is approved via a resolution of Council (section 27J).

• A $550 fine on the University where it seeks to insure its University Council Members or University Officers for wilful breach of duty or any contravention of their duties to: act in good faith; make proper use of their position; and make proper use of the information given to them as a University Council Member or Officer of the University. This is also a strict liability offence (section 27N).

• A $220,000 fine and/or 5 years’ imprisonment for a University Council Member who dishonestly causes the financial year of a University subsidiary not to align with the University’s financial year, or dishonestly fails to take all reasonable steps to secure alignment of those financial years, within 12 months of the subsidiary becoming a subsidiary (section 30).

There is also an uncommenced section,¹ which provides for a penalty of imprisonment for 7 years where a person misuses a University credit/purchase card (i.e. uses it for a purpose other than for the University). This offence would be a criminal offence, which means the person must have acted with an intention to misuse the purchase/credit card to be liable for this offence. 

*Material Personal Interest

Broadly speaking, a ‘material personal interest’ means any direct or indirect, monetary or non-monetary, advantage or benefit a University Council Member has that poses a real possibility of conflicting with the performance of his/her duties as a University Council Member. An interest will not be ‘material’ if it is remote or contingent.

Whilst there is no definition for ‘material personal interest’ in the CAC Act, there are some exceptions to the meaning of ‘material personal interest’ listed in the Act. For example, a University Council Member is not required to disclose any of the following types of interest:

(a)       an interest that arises in relation to the University Council Member’s remuneration as a University Council Member;

(b)       an interest that relates to insurance coverage for the University Council Member;

(c)       the University Council Member’s interest in any contract that indemnifies the University Council Member in the course of his/her duties or any indemnity payments made under these contracts or by the University;

(d)       the University Council Member’s interest in a contract which is made on behalf of, or for the benefit of, a University subsidiary to which the University Council Member is a director (section 27F).

Clarification of the Business Judgment Rule

In order to bring the CAC Act in line with the Corporations Act, the ‘business judgment rule’ has been expanded.  The previous position was that a University Council Member only needed to make enquiries regarding the nature of the advice if the circumstances suggested a need for this; the provision now provides that a Council Member will be entitled to rely on the advice of an ANU employee, professional adviser, or expert where the reliance is made in good faith and:

“after making an independent assessment of the information or advice, having regard to the [Council Member’s] knowledge of the authority and the complexity of the structure and the operations of the authority” (section 27D). 

Amendment of the Administrative Arrangements for Subsidiary Audit Reports

The Act now requires the University Council Members (rather than the Auditor-General, which was the case previously) to arrange for the supply of the University’s subsidiary’s audited financial statements to be supplied to the Responsible Minister (section 12).