Law
Board education key to improving corporate governance in Australia
By Professor Nick James
Key Features
According to the Australian Security and Investments Commission (ASIC), 2213 building companies collapsed in Australia during the 2022-2023 financial year. This was a 72 per cent increase on the previous 12-month period.
These building company collapses have had, and continue to have, a devastating impact on the Australian community. Subcontractors have lost their payments. Employees have lost their jobs. Home buyers have lost their deposits, their new homes, and in many cases their life savings.
Several factors have contributed to these collapses, including the COVID-19 pandemic and the subsequent supply chain disruptions and labour shortages, as well as rising inflation and construction costs, and increased competition in the building industry.
However, many of these collapses were also a consequence of poor governance, including poor financial management and a failure to manage risks by the relevant boards and directors.
The recent building company collapses are just the latest examples of the consequences of poor corporate governance in Australia. The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry in 2019 found widespread evidence of misconduct in the Australian financial services sector.
The collapse of the Queensland company Blue Sky Alternative Investments in 2019 resulted in losses of more than $3 billion for investors. In 2021, the Victorian Royal Commission into the Casino Operator and Licence found Crown Casinos had enabled money laundering and other criminal activity, and its board of directors had been asleep at the wheel.
And in 2022, the New South Wales Independent Liquor and Gaming Authority found Star Casinos had breached several of its gaming license conditions, including failing to adequately prevent money laundering and financial crime, and that these breaches were a consequence of ineffective board oversight.
At the same time, thousands of smaller enterprises went into insolvency as a consequence of poor governance, and while these collapses rarely made the headlines, they still had an impact on everyday Australian workers and families.
There are too many other examples to list, and all have clearly shown there is a need for better corporate governance in Australia.
Rich Text
A key step towards better corporate governance is better education of board members and corporate leaders about their legal and ethical duties.
A well-educated board is better able to understand and manage the risks and to make sound decisions in the best interests of the company and its stakeholders.
Board education can help directors to develop a deeper understanding of their company’s business, its industry, and the regulatory environment in which it operates. Board education can help directors to develop the skills and knowledge they need to be effective directors, including things such as risk management, financial literacy, and corporate governance best practices.
Board education can help to create a more engaged and informed board of directors: a well-educated board is more likely to ask tough questions of management and to hold management accountable for its decisions.
Importantly, board education ensures the directors appreciate the significant personal consequences they may experience if things go wrong.
A well-educated board is better able to understand and manage the risks and to make sound decisions in the best interests of the company and its stakeholders.
— Professor Nick James
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Many company directors fail to take steps to formally educate themselves about their duties and obligations due to the time and cost associated with undertaking a course, and the challenge of balancing education with their other obligations.
Bond University’s new microcredential, the Advanced Credential in Enterprise Governance, is an example of a new type of board education opportunity that acknowledges these challenges.
The course is designed to provide current and aspiring board members with the knowledge and skills they need to fulfill their legal and ethical responsibilities. The microcredential covers a wide range of topics, including the role and responsibilities of boards of directors, the legal framework for corporate governance, risk management and compliance, ethical considerations in corporate decision-making, and boardroom dynamics and communication.
At the same time, the microcredential is designed to be accessible to a wide range of students, regardless of their background, education, or experience.
The microcredential is delivered through a series of self-paced online modules, and can be completed in as little as three months. The modules have been developed by leading experts in corporate governance, and the assessments are designed to be challenging and rewarding.
Upon completion, students receive a digital certificate and are eligible to apply for Recognition of Prior Learning towards the Bond University Master of Laws in Enterprise Governance.
The Advanced Credential in Enterprise Governance is an excellent educational experience for both lawyers and non-lawyers who want to learn more about corporate governance in a way that does not interfere with their other obligations.
The microcredential is designed to help learners develop the knowledge and skills they need to be effective directors and corporate leaders and is intended to contribute to the development of a more robust, informed and ethical culture of corporate governance in Australia.
Discover the Advanced Credential in Enterprise Governance
Master the art of enterprise governance and lead your organisation towards sustainable and ethical success.
References
- This article was originally published in Queensland Law Society Proctor: https://www.qlsproctor.com.au/2023/10/board-education-key-to-improving-corporate-governance-in-australia/
- Australian Security and Investments Commission: https://asic.gov.au/regulatory-resources/find-a-document/statistics/insolvency-statistics/insolvency-statistics-current/
Learn more about the author
Prof Nick James
Executive Dean — Law
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