Controlled and Non-Controlled Entities Policy

Policy Corporate Governance Controlled and Non-Controlled Entities Policy

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Intent

To provide a framework within which JCU will acquire and manage ownership or other significant interests in an Entity in keeping with its powers under section 61 of the James Cook University Act 1997.

This policy has been drafted to be compatible with the Voluntary Code of Best Practice for the Governance of Australian Universities to which JCU seeks to adhere.

Scope

The establishment, acquisition and disposal of interests by JCU in controlled and non-controlled entities including companies, trusts, joint ventures and partnerships.

Definitions

Acquisition means the acquisition by any means, with or without consideration, and includes the formation or taking part in an Entity. “Acquire” has a like meaning.

Board means the board, governing body or ultimate management committee of an Entity.

Company Limited by

Guarantee means a company limited by guarantee under the Corporations Act

Controlled Entity means an Entity that is subject to the control of another entity in terms of section 50AA of the Corporations Act. In essence, an entity has the capacity to control a second entity if the first entity has the capacity to determine the outcome of decisions about the second entity’s decisions and policy making.

Controlled Interest means an interest which has, or will have, the consequence that the Entity is a Controlled Entity of JCU. The term includes the increase by JCU of a Controlled Interest.

Corporations Act means the Corporations Act 2001

Council means the Council of JCU.

Disposal means the disposal by any means, with or without consideration, and includes sale, transfer and surrender. “Dispose” has a like meaning.

Director means a person who is a director or member of a Board or a trustee.

Entity means a partnership or joint venture (whether incorporated or unincorporated), a trust, company or like body corporate.

Executive Director means the Executive Director, Finance and Resource Planning.

Foundation Document means a constitution, trust deed, partnership agreement or joint venture agreement.

Interest in an Entity means any interest in an Entity, whether a Controlled Interest or a Non-Controlled Interest, and includes-

  1. the acquisition of a share in a company;

  2. the acquisition of a unit in a trust;

  3. participation in a joint venture; and

  4. becoming a partner in a partnership.

The term excludes any investment in the ordinary course by JCU in publicly listed companies or trusts.

JCU Act means the James Cook University Act 1997.

Non-Controlled Interest means an interest which is, or will not be, a Controlled Interest.

Vice-Chancellor means the Vice-Chancellor of JCU.

Policy and Procedures

1 Reasons for Acquiring an Interest in an Entity

1.1 Reasons for which JCU may Acquire an Interest in an Entity (whether a Controlled or Non-Controlled Interest) include -

  1. to provide a more appropriate governance framework for the management of specialised functions of JCU;

  2. to separate the management of non-core functions of JCU from core functions;

  3. to provide for a level of independence in the decision making or operation of a function of JCU;

  4. to enable JCU to establish a more flexible operational environment for the purpose of the management of specific functions of JCU;

  5. to act as a holding entity or trustee for specific activities of JCU; and

  6. to assist JCU in its objectives as contemplated by section 61 of the JCU Act.

2 Acquisitions of an Interest in an Entity

2.1 Subject to clause 8.1, Acquisitions of an Interest in an Entity (whether a Controlled Interest or a Non-Controlled Interest) require the prior approval of Council.

2.2 For the avoidance of doubt, any increase in the size of an Interest in an Entity also requires approval of Council.

2.3 All applications to Council for approval under this policy should where ever possible include the following information-

  1. the reason for the Acquisition;

  2. the background circumstances and the proposed JCU interest;

  3. the business case for the Acquisition;

  4. any relevant due diligence process carried out or to be carried out;

  5. risk assessment, including workplace health and safety, which has been or will be carried out;

  6. the benefit to JCU of the Acquisition;

  7. key documents;

  8. relevant financial information including the most recent financial statements and or budgets;

  9. relevant commercial considerations;

  10. an overview of the structure of the Entity and its Board;

  11. an overview of the existing and /or proposed membership of the Entity and its Board;

  12. consideration of academic, student related, human resources or quality assurance issues;

  13. matters relating to intellectual property;

  14. matters relating to JCU corporate identifiers and their use, if any;

  15. the Entity name;

  16. dispute resolution procedures;

  17. other governance related matters.

3 Disposal of an Interest in an Entity

3.1 All Disposals of an Interest in an Entity, (whether a Controlled Interest or a Non-Controlled Interest) require the prior approval of Council.

3.2 The Vice-Chancellor may refer any proposed Disposal to Finance Committee or Council for comment.

3.3 The Vice-Chancellor shall report to Council on all Disposals or proposed Disposals in accordance with this policy including the reasons and background circumstances for the Disposal or proposed Disposal.

3.4 This clause takes effect subject to clause 8.1.

4 Negotiations for Acquisitions and Disposal of an Interest

4.1 Each of the Vice-Chancellor and the Executive Director may authorise JCU officers to negotiate with third parties in relation to a proposed Acquisition or Disposal on the basis that-

  1. such officers keep the Vice-Chancellor or the Executive Director (as the case may be) informed; and

  2. the requirements of this Policy are complied with.

5 Constitution and Trust Deeds for Entities

5.1 The terms of Foundation Documents for Controlled Entities must be approved by Council.

5.2 The terms of Foundation Documents for Non-Controlled Entities must be approved by the Executive Director;

5.3 Amendments to Foundation Documents for Controlled Entities must be approved by Council.

5.4 Amendments to Foundation Documents for Non-Controlled Entities must be approved by the Executive Director.

6 Boards

6.1 Unless a Foundation Document otherwise provides, all Board members who are representatives of JCU must hold a certificate of approval from the Vice-Chancellor which may be withdrawn at any time at the discretion of the Vice-Chancellor.

7 Oversight of JCU Controlled and Non-Controlled Entities

7.1 Council is responsible to ensure that-

  1. the Board of Controlled Entities possess the skills, knowledge and experience necessary to provide proper stewardship and control of the Entities;

  2. the Board of Controlled Entities contains members who are not members of Council, JCU officers or a student of JCU;

  3. each Controlled Entity reports on and updates JCU annually on its long term objectives including an annual business plan containing achievable and measureable performance targets and milestones;

  4. each Entity adopts and regularly evaluates a written statement of its own governance principles;

  5. each Entity has a clear corporate and business strategy – which may be contained in a business plan.

7.2 Council is responsible to-

  1. assess risks in all Entities;

  2. where ever possible ensure that it obtains an auditor’s report for JCU’s interests in Non-Controlled Entities (refer also clause 9).

7.3 Subject to clauses 7.1 and 7.2, oversight of JCU Controlled Entities and JCU Non-Controlled Entities rests with the Executive Director acting through the Commercial Services Office.

7.4 The Director, Commercial Services is responsible for maintaining a register of JCU’s interests in all Entities.

8. Companies limited by Guarantee

8.1 The Vice- Chancellor may approve JCU becoming a member of a Company Limited by Guarantee where-

a) the company will be a Non-Controlled Entity; and

b) there is no financial commitment on the part of JCU to fund the operations or capital of the company (other than any agreement to pay for services provided by the company to JCU).

8.2 In cases where the Vice-Chancellor has approved JCU becoming a member of a Company limited by Guarantee the Vice Chancellor may approve JCU ceasing to be a member of such company.

9 Audit

9.1 All Controlled Entities must be audited by Queensland Audit Office or by other arrangements approved by Queensland Audit Office.

Related documents, legislation or JCU Statutes

James Cook University Act 1997

Statutory Bodies Financial Arrangements Act

Approval Details

Policy sponsor:

Vice Chancellor

Approval authority:

Council

Version no:

15-1

Date for next review:

02/01/2018

Modification History

Version no.

Approval date

Implementation date

Details

15-1

24/08/2015

24/08/2015

Policy sponsor and approval authority amended in accordance with the approved Policy and Delegations Framework

Author: Quality, Standards and Policy Office

13-2

27/03/2013

28/03/2013

‘Interim’ removed from title and amendments to 2.3 (e) and to Clause 3 (3.1) approved by Council 28/02/2013

13-1

02/01/2013

03/01/2013

New policy approved by the Vice-Chancellor as an Interim Policy