Independent Schools Victoria is committed to providing relevant and up to date information to Victorian Independent schools and has prepared a series of guidelines called Across the Board in conjunction with legal advisers.

All reasonable care has been taken in preparing these guidelines, however, they are necessarily generic in nature and whilst Independent Schools Victoria is always willing to provide whatever assistance it can, where applicable members should seek specific legal advice.

1. Purpose

It is the role of the School Board to provide strategic guidance for the School and to effectively oversee and review the School’s management. Governance practices require the School to formalise and disclose the roles and responsibilities of the School Board and its Members.

Good governance requires the School Board to:

  • adapt to the distinctive characteristics of an academic environment and act in a way that exemplifies and reinforces the institution’s core values and ethos
  • oversee all aspects of the School, including its control and accountability systems and approve the expenditure and capital budgets
  • appoint, review and, in some cases, remove the Principal and provide ongoing support and supervision
  • handle grievances concerning the Principal
  • develop and maintain healthy relationships with key stakeholders including effective communication channels
  • ensure a strategic approach to the school’s future by setting major goals, policy frameworks and strategies
  • set the tone and the ethical standards of the school and monitor adherence to them;
  • review plans and budgets established by school management
  • approve all material expenditure outside the budget
  • anticipate problems as much as possible and act to diffuse issues
  • be attentive to the matter of succession
  • establish committees where appropriate
  • review and monitor adherence to systems of risk management, governance and legal compliance
  • monitor organisational performance
  • conduct an annual review of the Board’s own performance (i.e. Board Appraisal)
  • conduct an annual review of the School’s progress and performance in meeting its objectives
  • establish a whistleblower procedure
  • maintain the solvency of the school

It is often said that the Board’s most important task is the selection of the Principal. The Principal is the public face of the School and is crucial in setting the tone, standards and personality of the School. The relationship between the Principal and the Chair of the Board is pivotal to the success of the School.

2. Governance

It is the role of the School Board to provide strategic guidance for the School and to effectively oversee and review the School’s management. Governance practices require the School to formalise and disclose the roles and responsibilities of the School Board and its Members.

 

Good governance requires the School Board to:

  • adapt to the distinctive characteristics of an academic environment and act in a way that exemplifies and reinforces the institution’s core values and ethos
  • oversee all aspects of the School, including its control and accountability systems and approve the expenditure and capital budgets
  • appoint, review and, in some cases, remove the Principal and provide ongoing support and supervision
  • handle grievances concerning the Principal
  • develop and maintain healthy relationships with key stakeholders including effective communication channels
  • ensure a strategic approach to the school’s future by setting major goals, policy frameworks and strategies
  • set the tone and the ethical standards of the school and monitor adherence to them;
  • review plans and budgets established by school management
  • approve all material expenditure outside the budget
  • anticipate problems as much as possible and act to diffuse issues
  • be attentive to the matter of succession
  • establish committees where appropriate
  • review and monitor adherence to systems of risk management, governance and legal compliance
  • monitor organisational performance
  • conduct an annual review of the Board’s own performance (i.e. Board Appraisal)
  • conduct an annual review of the School’s progress and performance in meeting its objectives
  • establish a whistleblower procedure
  • maintain the solvency of the school

It is often said that the Board’s most important task is the selection of the Principal. The Principal is the public face of the School and is crucial in setting the tone, standards and personality of the School. The relationship between the Principal and the Chair of the Board is pivotal to the success of the School.

3. Applying Principles of Good Governance to Schools

Principles of corporate governance must be considered and applied in light of the complex school environment.

Complex Environment

Unlike traditional companies, a school operates on a not-for-profit basis; its stakeholders have long term personal and emotional investments, relationships and friendships; participation in the School may cover many generations of family members; members of the Board participate on a voluntary basis; the School is engaged in the education, development and welfare of children; and teachers are expected to be dedicated and provide a contribution well beyond the normal teaching day.

Schools rely on family philanthropy, legacies and benefactors. It is not a simple matter for disaffected stakeholders to change allegiances. It is not a simple matter for disaffected stakeholders to change allegiances. Changing schools can be a traumatic and expensive exercise.

It is pivotal to good governance that the Board recognises and manages the School’s main stakeholder groups. The management of stakeholders requires skill and tact and relationships must be delicately balanced at all times.

The main stakeholder groups are depicted in the following diagram:

Commercial Directors

The members of a school Board have a wide range of interests, specialities, skills and backgrounds. They are not required to have experience in the corporate Boardroom or be financially or commercially focussed. They may be educators, religious nominees or representatives of parent or affiliate groups.

In contrast to many commercial Boards, the goals of the School extend beyond financial performance. Some experienced company directors have difficulty in adjusting to the non-commercial environment of a school Board. The company director must understand that the School Board is a different environment.

Parents

It is often the case that parents of current students sit on the School Board.  This brings both benefits and difficulties.

Parent Board Members are alive to the issues of the day and can provide important feedback to the Board. They are keen to ensure that the school meets the current and future needs of the students.

By the same token, parent Board Members are usually more accessible to stakeholders than non-parent Board Members and consequently may be subjected to greater pressure or scrutiny. It can be the case that parent Board Members are sought out by parents focussed on securing the best outcome for particular child or their particular issue rather than looking at the interests of the school as a whole.  Parent Board Members often become targets for those with complaints, grievances or causes. This is a common issue for School Boards and requires clear guidelines to assist Board Members on how to deal with such situations.

There is no universal model of good governance for schools. Rather a good governance structure requires a review of the particular school’s unique context and culture.  A governance structure will only be effective if it acknowledges the environment and particular context within which the school operates.

Relevant factors for consideration include:

  • the school’s core values, history and culture
  • the objectives and strategic direction of the school
  • individual personalities
  • interests of key stakeholders:
    • current students and parents
    • former students and parents
    • prospective students and parents
    • affiliates (e.g. religious association)
    • government funders
    • benefactors
    • staff
    • local community
    • other relevant groups.
  • the size of the school
  • availability of suitable Board members and other resources.

In addition, a school’s governance framework must be reviewed and adopted to reflect changing environmental factors.  The framework that constitutes good corporate governance for a school will evolve in light of the changing circumstances of the school and must constantly be tailored to suit those particular circumstances.

Questions and Answers

‘I am new to my School Board.  How do I respond to those parents who insist on coming up to me wanting me to take on their particular concerns?’

It is not uncommon for interested parties, such as parents of current students, to try to lobby Board members. Parents have a strong investment in their children’s education and therefore it is understandable that they may wish to express their concerns or try to advance their interests with someone who they would perceive to be in a position of some authority. These parents may require a degree of tact and understanding.

The school should ensure that a proper forum exists whereby parents and other stakeholders can express their views or concerns without fear of retribution. It is important to ensure that the views of all stakeholders are considered, not just those who are more vocal or pushy.

If you are the recipient of pressure from parents, be sure to politely inform them that a proper method is in place for them to express their views.  Provide reassurance that any opinions or complaints received in the appropriate manner will be dealt with in the appropriate manner.

The best response is to suggest that the parent put their concerns in writing and address them either to the Principal, if the issue involves the operations of the school, or to the Chair, if the matter involves the Principal or a governance issue.

Try to explain that your role as Board Member is separate to your role as a parent. All Board Members have an ongoing obligation to act in the best interests of the School. Although you have been appointed to the Board by a specific interest group, your role on the Board requires you to act strictly in the best interests of the School as a whole, and not for the benefit of the particular interest group. You are prohibited from acting as the mouthpiece of the other parents, and you are not permitted to report back to them on the deliberations or decisions of the Board unless expressly authorised by the Board.

This should encourage stakeholders to follow proper procedures to register concerns.

4. Legal Status of Schools

Notwithstanding that schools operate on a not-for-profit basis and are not engaged in what would normally be considered as commercial activities, they are in fact quite sizeable businesses and they engage in a broad range of commercial activities. Therefore, it is important for schools to adopt best practice corporate governance standards to ensure limited liability, perpetual succession, ownership of property, to be able to contract in their own right and to facilitate operations in accordance with well-established and understood commercial procedures.

Most schools fall into one of the following categories:

Companies Limited by Guarantee

The most common legal structure for schools (and other not-for-profit entities) is a company limited by guarantee incorporated pursuant to the Corporations Act 2001 (‘the Act’).[1] It is a separate legal entity distinct from its members.

A company limited by guarantee has no share capital and there is no sharing of profits. Companies limited by guarantee are able to indemnify their office holders in certain circumstances.

Companies limited by guarantee are required to comply with the reporting and disclosure obligations of public companies. The obligations of Board Members (directors) are reasonably well defined by the Act and Board Members should familiarise themselves with the appropriate sections within the Act.

In the case of companies limited by guarantee that are established on a not-for-profit basis, the constitution is required to include a provision that, in the event of the winding-up of the company, any surplus assets may not be distributed to the members. In the case of such companies, the members of the company do not own the assets but act in a stewardship capacity.

If, on the winding up of a company limited by guarantee, the assets are insufficient to cover the debts, the liability of members is limited to a nominal amount that is stipulated in the School’s constitution (usually $100 or less).

[1] http://www.austlii.edu.au/au/legis/cth/consol_act/toc-C.html

Incorporated Associations

The incorporated association is a more simple and less expensive alternative to registration as a company. It is primarily intended for use by sporting clubs and other similar non-profit organisations and may, possibly, be suitable for small schools or kindergartens.

The complex nature of schools means that operating as an incorporated association can be ineffective as it often is a very informal structure, lacking clear rules and procedures. It is generally considered not to have the sophistication required for most schools.

Incorporated associations are established under State legislation –in Victoria, this is the Associations Incorporation Reform Act 2012 (Vic)[2]. The main benefits of an incorporated association stem largely from its status as a separate legal entity and limited liability for members. These benefits generally come at a lower initial and continuing cost than incorporation as a company. For new schools, it may be appropriate to incorporate as an association during the establishment phase to protect the liability of the proponents before incorporation as a company.

[2] http://www.austlii.edu.au/au/legis/vic/num_act/aira201220o2012422

Unincorporated Associations

An unincorporated association is a group operating without the benefit of an incorporated entity. It is not recommended under any circumstances. Unincorporated associations do not have the protection of limited liability for members or any of the advantages associated with perpetual succession, the ability to contract or the ability to own property. Unincorporated associations must operate through individual members who may become personally liable for the activities of the organisation.

Trusts and Foundations

Trusts and foundations are usually created by a trust deed, which sets out the purposes of the trust and the powers and duties of the trustees, being those charged with the responsibility of administering the trust. Trusts are complex structures predominantly governed by common law and equity.

Trusts are usually associated with individual benefactors.

Trustees are not personally liable provided that they make it clear that they act in the capacity of trustee, within the powers and solely for the purposes specified in the trust deed.

Other

We have not considered in the handbook alternative structures which may, for example, be used by schools established under religious or canon teachings.

Each structure has its pros and cons and there are various legal and legislative requirements which must be adhered to in each case.  Each situation needs to be considered on its merits.

5. Primary Legislation Governing Schools

Corporations Act

Board Members must comply with legislative requirements that arise under the Corporations Act 2001. It is each Board Member’s responsibility to familiarise themselves with the following sections of the Act:

  • act with care and diligence (s180);
  • be informed on matters under discussion (s180);
  • act for the proper purpose (s181);
  • act in good faith and best interests of the corporation(s181);
  • not make improper use of the position on the Board (s182);
  • not make improper use of information obtained by virtue of the Board position (s183);
  • ask searching questions (s189);
  • declare any conflicts of interest (s191);
  • not use the position for personal gain without informed consent (s192); and
  • ensure that the School remains solvent (s588G).

See section 10. Legal Obligations and Potential Liability of Board Members for further detail on what these obligations entail.

Board Members can incur civil or criminal liability for breach of their fiduciary obligations or for breach of any of their legislative obligations under the Corporations Act 2001. However, this is unlikely if good governance processes are in place and observed. Ignorance is not an excuse for a Board Member failing to comply with his or her duties.

Questions and Answers

‘I am on a School Board and I have read the duties imposed by the Corporations Act.  But what do these actually mean for me in practice? What are my responsibilities?’

It is your responsibility to:

  • inform yourself of matters under discussion (ignorance is no excuse);
  • read the Minutes and ensure they represent a true and correct record;
  • ask questions or seek explanations whenever you do not fully appreciate the issues, discussions or resolutions;
  • ask relevant questions of school officers but do not ask questions for the sake of it;
  • understand the material in front of you;
  • be an independent team player, speaking your mind rather than going along with the rest of the Board;
  • respect the confidentiality of Board discussions;
  • seek specialist advice if necessary;
  • do not use any information obtained by virtue of your position on the Board for any purpose other than for what it is intended (i.e. not for any personal or pecuniary benefit or for the benefit of any third party);
  • declare any potential conflicts of interests; and
  • be assured that the School is able to pay its debts as and when they fall due.

Boards must also be aware of the legislation, both State and Commonwealth, which governs the legal basis for operation of Victorian Schools.

6. Other Statutory Obligations

Board Members can also incur personal liability under other legislation such as:

  • Equal Opportunity Act 2001 (Vic)
  • Australian Consumer Law (Schedule 2 of the Competition and Consumer Act 2010 (Cth))
  • Occupational Health and Safety Act 2004 (Vic
  • Environmental Protection Act 1970 (Vic)
  • Income Tax Assessment Act 1936 and 1997 (Cth)
  • Protected Disclosure Act 2012 (Vic)
  • other legislation (including Superannuation Legislation).

Most of this legislation is dealt with by the Principal and management team in the day-to-day operation of the School, but the Board must have a broad overview of the relevant issues as such issues are the Board’s ultimate responsibility.

For example, the Australian Consumer Law prohibits corporations (the school) from engaging in misleading or deceptive conduct, or conduct that is likely to mislead or deceive. It is the responsibility of the School Board, as part of its governance role, to ensure that the School delivers on any promises or inducements it makes to parents or other stakeholders. If a School advertises or promotes that it offers a remedial program, then it must actually deliver such a program. Failure to do so may result in liability for misleading or deceptive conduct. This is an important governance issue for Boards as the temptation arises for schools to promise particular services and outcomes which they may not necessarily deliver on. They may ‘over promise and under deliver’. All advertising and promotional material published by the School must reflect the School’s actual policies and programs. School Boards must also ensure that the School does not make any false or misleading representations in relation to the quality of services offered. Schools receive income, primarily from parents and government and should expect that these and other stakeholders will hold them accountable for the services the schools provide.

The School Board must also oversee compliance with the Occupational Health and Safety Act 2004 (Vic). This Act requires the School actively secure the health, safety and welfare of employees and students and to provide and maintain, as far as is reasonably practicable, an environment that is safe and without risks to health. As part of its governance role, the Board must ensure that the School is in a safe condition and that there are adequate facilities in place (i.e. clean toilets, hygienic playgrounds and eating areas, etc). The conduct of the School must not endanger School employees, students, visitors to the School or the general public. An employer’s obligation under occupational health and safety law to provide a safe workplace for all its employees encompasses a duty to take all reasonable steps to provide a workplace that is free from harassment, discrimination and bullying. Again, the Board is not involved in the day to day issues but needs to ensure that there are appropriate procedures in place.

For planning purposes local government is also important. Most Local Government Authorities now require Schools to produce and maintain a Site Master Plan. As the Board is responsible for the School’s strategic direction, this Master Plan is inextricably linked to the overall Strategic Plan.

Outdoor education poses its own risks. It is imperative, whether the school provides the outdoor education program itself or outsources the responsibility to third party providers, that there is an appropriate risk assessment undertaken.

7. Funding and Operating Agreement

Prior to 2014, both Australian Government and Victorian Government funding was governed by a Funding Agreement between the relevant level of government and the school. The Funding Agreements covered the conditions under which recurrent funding was provided to the school for a defined period.

From 2014, schools are no longer required to sign a funding agreement with the Australian Government. Instead, Australian Government funding and the associated accountability requirements are outlined in the Australian Education Act 2013 and the associated Australian Education Regulations. As the Act does not specify an end-date, schools that receive Australian Government funding will be bound by all of the relevant conditions until such time as legislation is amended.

A school signs a Funding and Service Agreement with the Victorian Government for Victorian Government funding.

Government funding is contingent upon the school meeting specified accountability requirements. For comprehensive information relating to government funding (State and Federal), compliance and accountability, refer to Independent Schools Victoria’s Compliance Framework.

It is important for the Board to understand the implications of funding legislation, agreements and associated accountability requirements. School rules, regulations and guidelines must be consistent with these requirements. Board Members need to be aware of the school’s rights and obligations with regard to funding arrangements. Government funding represents a significant component of overall school revenue. Understanding and meeting funding agreement criteria are therefore important risk management issues for Board Members.

For further information on government funding arrangements, please contact Independent Schools Victoria.

8. Structure of the School and Delegation of Powers

The following diagram is a visual representation of the organisational structure and delegation of powers throughout a School. At the top, the School’s constitutional structure is made up of its Members, whose liability is limited to a nominal Guarantee under the School’s founding document.
The practical governance and policy-making of the School is delegated to the School Board. The School Board is effectively led by the Chair. The Board may also wish to establish Committees to maximise efficiency and effectiveness. The day-to-day management and operations of the School are delegated from the Board to the Principal.

It is an essential aspect of good governance that clear boundaries exist between the overall governance of the School, which is the responsibility of the Board, and the day-to-day management of the School, which is the responsibility of the Principal and senior management team.

It is pivotal to organisational success and efficiency that the Board does not impose on the duties and authority of the Principal, and vice versa. The success of the School depends largely on the relationships that exist between the School’s key personnel.

9. The Key Roles of the School Board and its Members

It is the role of the School Board to provide strategic guidance for the School and to effectively oversee and review the School’s management. Governance practices require the School to formalise and disclose the roles and responsibilities of the School Board and its Members.

Good governance requires the School Board to:

  • adapt to the distinctive characteristics of an academic environment and act in a way that exemplifies and reinforces the institution’s core values and ethos
  • oversee all aspects of the School, including its control and accountability systems and approve the expenditure and capital budgets
  • appoint, review and, in some cases, remove the Principal and provide ongoing support and supervision
  • handle grievances concerning the Principal
  • develop and maintain healthy relationships with key stakeholders including effective communication channels
  • ensure a strategic approach to the school’s future by setting major goals, policy frameworks and strategies
  • set the tone and the ethical standards of the school and monitor adherence to them
  • review plans and budgets established by school management
  • approve all material expenditure outside the budget
  • anticipate problems as much as possible and act to diffuse issues
  • be attentive to the matter of succession
  • establish committees where appropriate
  • review and monitor adherence to systems of risk management, governance and legal compliance
  • monitor organisational performance
  • conduct an annual review of the Board’s own performance (i.e. Board Appraisal)
  • conduct an annual review of the School’s progress and performance in meeting its objectives
  • establish a whistleblower procedure
  • maintain the solvency of the school.

It is often said that the Board’s most important task is the selection of the Principal.  The Principal is the public face of the School and is crucial in setting the tone, standards and personality of the School.  The relationship between the Principal and the Chair of the Board is pivotal to the success of the School.

10. Legal Obligations and Potential Liability of Board Members

There is a mistaken but commonly held view that members of school Boards do not have the same legal duties as directors of ‘for-profit’ companies. However, school Board Members are obliged to comply with general law and legislative requirements. These legal obligations are not dependent on the size of the School or experience of the Board.

It is a fundamental aspect of good governance that all Board Members understand that their role on the Board is first and foremost to act in the interests of the School as a whole. Board Members are not on the School Board to represent and promote the interests of particular groups or stakeholders.

This overriding obligation on all Board Members to act in the best interests of the School as a whole arises by virtue of what is known as the ‘fiduciary relationship’ between each Board Member and the School. A fiduciary relationship is a general law notion, dictating that Board Members must always act in the best interests of the School and must act honestly, fairly, loyally, in good faith and with integrity.

In all deliberations, a school Board Member must observe the overriding principle that it is his or her duty to act in the best interests of the School, irrespective of any personal or other interests.

Another essential aspect of good governance is confidentiality in respect of all Board matters and discussions. Confidentiality forms the basis of trust and encourages an open and honest forum for discussion. Board Members have a right to freely express their views without fear of being named outside the Board Meeting as taking a particular position.

Questions and Answers

‘What does it  mean to have a fiduciary duty?’

A person or organisation has a fiduciary duty where he or she has assumed the responsibility to act in the best interests of another person or organisation to which the fiduciary duty is owed. A person who occupies a fiduciary position may not use that position to gain a profit or benefit for himself or herself or for the benefit of a third party. The distinguishing obligation of the fiduciary is the obligation of utmost loyalty and to act in good faith. Each Board Member has an obligation to exercise their powers in good faith and in the best interests of the School.

‘I am a former student of the school and I am also an active representative of the Old Collegians Club.  I have recently been appointed to the School Board as the delegate of the Old Collegians.  Whose interests am I on the Board to represent and protect?’

All Board Members have an ongoing obligation to act in the best interests of the School. Although you have been appointed to the Board by a specific interest group, your role on the Board requires you to act strictly in the best interests of the School as a whole, and not for the benefit of the particular interest group. The Old Collegians have selected you to go on the Board as they believe you to have the desired qualities to do so. You are prohibited from acting as the mouthpiece for the Old Collegians, and you are not permitted to report back to the old Collegians on the deliberations or decisions of the Board unless expressly authorised by the Board.

‘I am a parent and I am also a member of the School Board. When I see other parents at the School or in a social setting they often ask me about decisions that were made at the last Board meeting. Am I allowed to discuss this information?’

Not unless you are expressly authorised by the Board to do so. Board meetings are completely confidential and as a Board Member you must always respect the confidentiality of all Board discussions. It is for the Board to determine how, when and what to communicate to stakeholders.

‘What do my duties under the Corporations Act require me to do?’

  • Act with care and diligence (s.180)
    • This duty requires Board Members to apply reasonable care in the performance of their office.
    • The standard of care and diligence is determined both by reference to the School’s circumstances and the specific Member’s position, experience and responsibilities.
  • Be informed on matters under discussion (s.180)
    • As a Board Member, you are under a continuing obligation to keep informed about the activities and affairs of the School.
    • Ignorance is no defence to liability for breach of these provisions – a Board Member must ask questions and seek advice, where necessary, in order to have a complete understanding of all Board issues, discussions and resolutions.
    • Board Members should bring an informed and independent judgment to bear on the various matters that come to the Board for decision.
  • Act in good faith (s.181)
    • Board Members must act bona fide for the benefit of the School as a whole – the interests of the School must always be the principal consideration.
    • To act in good faith means not to act in bad faith.
  • Act for the proper purpose (s.181)
    • As a Board Member, you must only exercise any associated powers for the purpose for which they were conferred.
    • You must not act for an improper purpose.
  • Not make improper use of the position on the Board (s.182)
    • A Board Member must refrain from improperly using his or her position on the Board in order to gain a personal advantage or an advantage for a third party (for example, the Board Member’s child).
    • A Board Member must also refrain from improperly using his or her position to cause any detriment to the School.
    • An individual will make improper use of the position on the Board if he or she uses it to manipulate or intimidate other stakeholders.
  • Not make improper use of information obtained by virtue of the Board position (s.183)
    • A Board Member must also refrain from improperly using any information obtained by virtue of the Board position (e.g. information obtained at Board Meetings, information divulged to the individual in the capacity as Board Member) in order to gain a personal advantage or an advantage for a third party, or to cause any detriment to the School
  • Ask searching questions (s.189)
    • It is the responsibility of Board Members to ask searching questions in order to gain a complete understanding of all Board matters and to obtain clarity on any of the affairs of the School.
    • Ignorance is no excuse to liability so questions need to be appropriate in the circumstances.
  • Declare any conflicts of interest (s.191)
    • A Board Member who has a material personal interest in a matter that relates to the affairs of the School must give the other Board Members notice of the interest.
    • In practice, inevitable conflicts of interest may arise and, in such circumstances, a Board Member must be candid with disclosure in relation to the nature of the interest and its relation to the affairs of the School.
  • Not use the position for personal gain without informed consent (s.192)
    • A Board Member must give notice to the Board of any material personal interest in matters that affect the School.
  • Ensure that the school remains solvent (s.588G)
    • A Board Member has an ongoing duty to ensure that the School does not incur a debt unless there is a reasonable prospect that the School will be able to repay the debt when it falls due.
    • A Board Member is obliged to maintain familiarity with the financial status of the School by a regular review of financial statements.

Although extremely rare and unlikely if good governance processes are in place and acted upon, Board Members of a school can incur liability for breach of their fiduciary obligations or for breach of any of their legislative obligations under the Corporations Act.

Board Members can also incur personal liability under other legislation such as the Income Tax Assessment Act, Environmental Protection Act, Occupational Health and Safety Act, and the Australian Consumer Law (Schedule 2 of the Competition and Consumer Act). Victorian and Commonwealth legislation can be accessed via the Austlii Website.

Whilst it is clear that Board Members can be held personally liable for their conduct or for the financial failure of the school, this is an extremely rare event and will usually be accompanied by a fairly significant degree of negligence.

The School may elect to take out directors’ and officers’ insurance to provide some protection for Board Members. Policies cover nominated Board Members and officers against liability for ‘wrongful acts’ committed in the course of their office. ‘Wrongful acts’ generally encompass breaches of duty, neglect, misstatement, omission or other acts of the insured, or liability arising from the performance of their office.

However, the School is prohibited from insuring its directors and officers against a liability arising out of conduct involving a wilful breach of duty or a contravention of their duties under the Corporations Act. Many Directors’ and Officers’ Insurance Policies contain additional exclusions for claims alleging dishonesty or fraud, insolvent trading, and claims arising from breaches of environmental health. It is important to understand the extent of the School’s Directors and Officers Insurance Policy and to ensure that it is maintained.

Directors and officers are entitled to take out personal insurance cover at their own expense to cover additional liabilities above and beyond the School’s Directors and Officers Insurance Policy.

School Boards as a body may also face potential liability in the following areas:

  • negligence claims (including vicarious liability for the negligence of employees)
  • claims for unlawful, unjust or unfair dismissal of employees
  • discrimination claims
  • breach of contract
  • land use obligations
  • defamation
  • criminal charges
  • privacy claims
  • taxation claims.

‘I do not have the same corporate experience as some of the other Board Members and I regularly leave Board Meetings feeling very confused and not truly understanding the decisions that were made. What should I do?’

As a Board Member it is your duty to be informed about all matters discussed at meetings and to ask searching questions if you have a lack of understanding. It is no defence to claim ignorance.

  • It is the responsibility of the Board, and more specifically the Chair, to ensure that all Board Members feel comfortable asking questions and seeking explanations. If you are reluctant to speak up you should address this issue with the Chair.
  • Board Members can be held personally liable for their conduct or for the financial failure of the School but this is extremely rare and will usually be accompanied by a fairly significant degree of negligence.

‘As a Board Member, can I be held personally liable?’

Board Members may incur liability for breach of their legislative obligations under the Corporations Act or for breach of their fiduciary duty owed to the school or for breaches of specific legislation.   Although it is imperative to consider these matters before accepting a role on the Board, an individual who is sufficiently committed to the role and acts with integrity, diligence, honesty and accountability should not incur any liability.

‘How can I avoid personal liability?’

There are a number of ways Broad Members can avoid personal liability. These include:

  • complying with your obligations;
  • ensuring the school remains solvent. Management should provide a regular solvency report to the Board;
  • ensuring that there are appropriate compliance programs in place to minimise risk;
  • remaining vigilant; and
  • maintaining Director’s Insurance.

‘I am on the School Board and the School has taken out Directors and Officers Insurance.  Does this mean that I am insured against all liability?’

No. The School’s insurance policy can specifically exclude certain liabilities and will most likely not cover you for a range of potential liability arising out of conduct involving a wilful breach of duty in relation to the School,. This includes, but is not limited to liability arising from:

  • a contravention of the duty not to improperly use your position in order to gain a personal advantage;
  • causing detriment to the School; and
  • a contravention of the duty not to use information obtained by virtue of your position improperly.

It is highly recommended that you read over the School’s Director and Officer Insurance Policy carefully in order to understand the extent of the cover and exclusions.

It also imperative that you understand the length of time you will be covered by the policy after you leave the Board.

Guiding principles for Board Members include:

  • acting in the best interests of the School at all times
  • acting with integrity, honesty, diligence and accountability
  • disclosing all potential conflicts of interest to the Board
  • maintaining confidentiality of all Board discussions and decisions
  • reviewing the School’s Directors’ and Officers’ Insurance Policy and understand any potential liability that is not covered under this policy
  • speaking up at Board meetings if you do not understand or are unclear about any Board matters, discussions or resolutions
  • not using any information obtained by virtue of your position on the Board in any manner other than that which it was intended
  • not simply going along with the rest of the Board if you disagree with their views or decision-making
  • not allowing the School to incur a debt without there being a reasonable prospect that it will be able to pay the debt as and when it falls due
  • not getting involved in the day-to-day management of the School.
11. Conflicts of Interest

The fiduciary obligations imposed on Board Members encompass a duty to avoid situations where, without the prior consent of the Board, a material personal interest of a Board Member conflicts or may conflict with their duty to the School. Conflicts of interest are prohibited per se and any considerations of fairness are irrelevant. The only means by which a conflict of interest will be permissible is with the prior informed consent of the Board.

The declaration of conflicts of interest should be a standing preliminary item on the agenda for school Board meetings so that Board Members may declare any actual or potential conflict of interest before further items on the agenda are discussed.

Board Members must:

  • declare any conflicts of interest;
  • not use their membership of the Board for direct or indirect personal gain without informed consent by the Board; and
  • not use their membership of the Board to gain an advantage for themselves or someone else.If a Board Member has a material personal interest in a matter that relates to the affairs of the School he or she must:
  • disclose the interest to the other Board Members as soon as practicable after becoming aware of the interest in the matter, giving details as to the nature and extent of the interest and the relation of that interest to the affairs of the School
  • ensure that details of the disclosure are recorded in the Minutes of the Board meeting
  • be absent from the Board meeting while the matter is being considered and refrain from voting (unless a Board resolution is passed to the contrary).

A Board Member may give standing notice of the nature and extent of a possible conflicting interest. Standing notice means that the Board Member will not be obliged to bring his or her interest to the attention of the Board every time a potentially conflicting matter arises. A standing notice will expire if a new Board Member is appointed and is not given the notice.

Common examples of material personal interests in a matter that relates to the affairs of the School include:

  • where the School employs a company/service provider of which a Board Member is involved or has a pecuniary interest or a family connection;
  • where the School is voting on a policy relating to a matter in which a Board Member has a material personal interest; and
  • where a decision reached by the Board will result, directly or indirectly, in a financial or other specific benefit for a particular Board Member.Board Members should always err on the side of caution if unsure as to whether they have a material personal interest in a matter that relates to the affairs of the School. By disclosing the nature and extent of the Board Member’s interest, the Board Member can obtain the Board’s informed consent and avoid any potential conflict of interest issues.

Questions and Answers

I am a Member of the School Board in a provincial city and the School wants to hire my construction company to carry out renovations in the main building. Are there any conflict of interest issues that arise?’

It is imperative that in this situation you disclose all relevant information relating to your interest and any potential financial or other benefits that you will receive if your construction company carries out the job. The Board, without you present, should then discuss the conflict of interests and resolve as to whether or not to allow your company to carry out the renovations. Relevant factors might include stakeholders’ perceptions and whether an open tender for the business is to be/was called.

In risky ventures where there is a real potential for dispute, it is preferable to deal with an arms length supplier as the potential for ill will can have a major impact on the school community

12. Charter for the School Board

Boards should adopt a formal Board charter that outlines its functions and responsibilities. In establishing a charter, it is important for the Board to set out the key values, principles and ethos of the School as they form the basis for policies and strategy development.

The Charter should include the following information:

  • the Board structure (including number, term, appointment and vacation of Board Member positions)
  • the role of the Chair and Board Members
  • the role of the Principal
  • the conduct of Board meetings (frequency, place, attendance, quorum and cycle
  • format of agendas for Board meetings, Board papers and minutes)
  • the number of committees and their structure and terms of reference
  • the strategy and goal setting processes (including budgets)
  • key performance indicators
  • performance management mechanisms for the Board (including the Chair) and the Principal
  • delegations of authority to the Chair, Board Members, principal or senior management team
  • an outline of the relationship with the broader community and key stakeholders;
  • compliance
  • risk management strategies covering all areas of operation, including occupational health and safety, privacy, physical risk, security and insurance.

These matters are indicative only.  Each School should develop a Charter to specifically meet its own needs.

13. Constitution of the Board and Selection of Board Members

The most effective size for a school Board will depend largely on the circumstances of the school. A medium to large sized school that has access to a range of resources might have 10-12 Board Members. In contrast, a smaller school with limited resources may be governed effectively by a Board with significantly fewer members.

It is important to bear in mind that large school Boards provide diversity of skills and views. However, a large number of individuals sitting on the Board may hamper effective decision-making. Such considerations, along with the particular circumstances of the School, should be weighed up when determining the size of the Board.

Generally, school Board Members are not paid for their contribution to the School. However, the demands made on Board Members in the context of schools can be more gruelling than those imposed on paid directors of corporations. Therefore, it is imperative that individuals selected to serve on a school Board demonstrate a high level of commitment to the School and its goals and values.

Because commitment to the School is so important, it is quite common to see current and former parents, donors, former students, and other representatives from stakeholder groups on the School Board.

The School Board can have a skills matrix that sets out the mix of skills and diversity that the Board currently has or is looking to achieve in its membership. This does not have to name individual Board Members or disclose any commercially sensitive information. The skills matrix may help identify the absence or presence of Board Members with the following characteristics:

  • strong oral and written communication skills
  • the ability to display initiative and confidence
  • the ability to establish and develop quality relationships
  • strong analytical and problem-solving skills
  • the ability to think strategically and critically
  • basic financial analytical abilities
  • the ability to relate to a wide range of people
  • the ability to gain respect and act as a mentor to management
  • the ability to understand and relate to stakeholders
  • potential for long term valuable contribution and involvement
  • the ability to fill an identified skill need on the Board.

In addition, there will be specific school requirements, based on religious or other policy, which should be incorporated into these criteria.

School Boards carry all the ethical and practical demands of corporate Boards and that is why those with corporate experience are increasingly in demand. However, there are additional complexities involved in serving on a school Board such as educational, personal and spiritual dimensions that may come into play.

“All the issues you have running a company Board you have with a School Board, but then overwhelming that is the children”

Margaret Jackson
Former Chair of Methodist Ladies’ College

Questions and Answers

“Is it good governance to have parents of current students on the School Board?”

Parents of current students can be excellent Board Members as they have a strong vested interest in the school.  In addition, allowing representation of this stakeholder group on the Board provides peace of mind to other parents, thereby possibly reducing interference in governance issues. Parent representation on the Board also allows parents to contribute to the school in a tangible way.  Finally, the school can benefit as it provides an additional perspective on the Board.

On the flip side, allowing parents to sit on the Board may have its disadvantages.  Fiduciary duties dictate that Board Members must always act in the best interests of the school, however parents may have difficulties in the separation and understanding of responsibilities.  The temptation arises for parents to make decisions that promote the best interests of their child, rather than those of the school.

Nevertheless, parents can be very beneficial on the Board due to their commitment and their additional perspective.  Therefore, when appointing parents of current students to the Board, it is important to clearly explain their legal responsibilities and to encourage them to distinguish their Board role from their parental role.

“How can we attract new and valuable Members onto our School Board?”

Before searching for new Board Members it is important to evaluate the current Board Members in order to know what expertise and skills are represented on the Board and what expertise and skills are missing.  Once these issues have been resolved, you can search for the right Board Member that will be the most value-adding to your existing team.  A lot of quality people will be prepared to sit on your School Board but you must always ensure that they are made aware of what their commitments to the School will entail.

Skills Matrix

Board Members drive the School’s strategic direction by providing broad and varied perspectives.  Each Member has a unique skill set that has been developed and sharpened by past experiences.  The Board benefits immensely from collaboration of its Members, and many Boards find it useful to include a range of particular skills when structuring Board Membership.

The range of skills and attributes that should be sought for representation on a School Board includes:

  • corporate experience
  • risk management experience
  • financial and accounting experience
  • leadership experience
  • interpersonal skills
  • educational experience
  • legal experience
  • religious affiliation (if relevant).

In addition, consideration should be given to the gender balance on a School Board and a variety of age groups should be represented.

A skills matrix can be found at Appendix 2, which can then be used as a basis for determining requirements when vacancies occur.

Selection Process

The process for selection should be documented to ensure it is clear and transparent.  It is important that there be a balance of skills and inputs on the Board, and that this mix – and the personality profile of existing Board Members – be considered when appointing new members.  A team approach is very important with all Board Members working cooperatively.  A sample Board Member Agreement for appointment of a new Board Member can be downloaded below.

14. Orientation and Ongoing Education for Board Members

Material provided to new Board Members should include:

  • a letter of welcome from the Chair
  • a written agreement setting out the terms of appointment
  • the School’s founding document
  • the Board Charter
  • a copy of the school’s mission and values statement
  • a plan of the organisation’s structure
  • a physical plan of the school
  • a background history of the school
  • a statement of the Board Member’s roles, rights and responsibilities (usually from the Charter)
  • a statement of expectations of Board Members (including commitment envisaged);
  • relevant policies
  • the School’s latest Annual Report
  • board Minutes and papers from recent Meetings
  • legal and governance obligations (dependent upon the School’s legal structure, funding agreement and other School policy)
  • a Deed of Access, Indemnity and Insurance
  • a Directors’ and Officers’ Liability Insurance Policy (where relevant)
  • a Director’s Confidentiality Agreement

New Board Members must be given adequate time to learn the fundamentals of Board operations. On an ongoing basis, new Board Members should be provided with updates and forthcoming major initiatives and their implications, and should also be apprised of appropriate relationships between Board Members and the Principal, staff and students.

It is the responsibility of new Board Member to:

  • undertake a due diligence of the school’s Charter documents
  • undertake a due diligence of the school’s financial position
  • understand the legal structure of the school
  • obtain copies of all documentation relevant to Board Members undertaking the particular role
  • undertake a sufficient due diligence to know what they are getting into before taking on the role.
15. Retention of Board Members

Board Members usually are volunteers. This provides a special challenge to ensure that valued Board Members are properly supported and, therefore, retained. It is appropriate that the Chair maintains continuing consultation (on both a formal and informal basis) and provides ongoing support to Board Members.

One issue for consideration is whether or not to implement constitutionally enshrined tenure limits.  A fixed three-year term with a maximum of three terms is generally appropriate.

Tips for achieving a good retention rate of Board Members, include

  • recruiting people who not only fulfil a skill requirement needed on the Board but who also share the same vision and values as other Board Members
  • recruiting people who are a culture match with the School
  • recruiting people who are completely committed to the School and who understand the availability requirements for a Board Member
  • providing clarity in relation to roles and responsibilities
  • ensuring that each Board Member feels included and valuable to the team
  • ensuring that Board processes and decision-making are open, transparent and fair
  • operate the Board professionally
  • ensure that the Chair has the leadership skills required to effectively chair the Board
  • making an effort to develop and maintain relationships.
16. Succession Planning

Stability of Board membership assists the School in taking a longer-term perspective on strategic issues. It is the role of the Board to effectively manage its own succession risk. Special attention needs to be paid to succession planning for key positions such as Chair, Deputy Chair, Heads of Committees and the Principal.

The Board (either directly or through a nominations committee) should identify suitable candidates for election to the Board. It needs to consider where gaps will appear in the future with respect to a balance of skills.

If the Board has a nomination committee it should disclose the charter and members of the committee. If the Board does not have a nomination committee, the Board should disclose that it does not have a nomination committee as well as the processes it uses to address Board succession issues.

Effective succession planning involves:

  • clearly defined roles for the Chair and Board Members
  • an effective performance management structure that:
  • occurs periodically and evaluates performance of the Board, committees and of individual directors
  • enables identification of Board Members who are potential successors to the Chair
  • enables recognition of the gaps between the Board Members’ current sets of competencies and the competencies required to credibly step up to the position of chair
  • the creation of a development plan for Board Members in order to prepare an appropriate succession structure within the Board.

The following diagram is useful for ascertaining the gap between existing Board Members’ competencies and the skills required for the Chair position:

The skills matrix established to choose Board Members can also assist in succession planning to ensure that an appropriate level of expertise is maintained.

17. The Key Roles of the Chair

As chairman, the most important thing is to give every member of your boards or councils the opportunity to express their views and have them considered, without allowing the discussion to become rambling and unproductive.  You must keep the focus on a coherent discussion, and you may need to construct an outcome everyone can live with.’

Michael Robinson
Former Chair of Scotch College

 

The Chair is responsible for leadership of the Board and for the efficient organisation and conduct of the Board. The Chair should facilitate the effective contribution of all Board Members and promote constructive and respectful relations between Board Members and between the Board and management.

It is the responsibility of the Chair to:

  • effectively lead the Board and chair all Board meetings
  • recruit the right people to the Board, ensuring they have the right mix of skills, knowledge and experience
‘ensure that new Board Members match the culture of the Board but not to the point of hindering diversity
  • ensure that new Board Members gain from an effective induction program
  • manage the Board in the discharge of its duties
  • manage the frequency and agenda of Board meetings
  • act as a facilitator of relationships within the Board
  • be the prime conduit between the Board and the Principal
  • publicly support the Principal.

In addition to the skills required of all Board Members, the Chair should possess:

  • meeting management skills
  • time management skills
  • leadership skills
  • the ability to manage and construct agendas
  • the ability to bring the Board and management together to work effectively as a team
  • the ability to ensure stakeholders are adequately informed.

It is vital that the Chair of the Board gives an appropriate commitment to the job and allocates sufficient time to doing the job well. The Chair should be conscious of not being overburdened with other duties that are likely to hinder effective performance of the Chair’s role. The Chair has an ongoing duty to ensure that he or she is adequately informed about the activities of the School and its financial situation.

A list of sample behavioural questions that may be useful for the selection process of the Chair can be found at Appendix 1.

18. Legal Obligations of the Chair

There is conjecture in legal circles as to whether the Chair possesses responsibilities and legal obligations above and beyond those owed by other Board Members.

Interpretation of recent case law is divided.  Some commentators take the view that the Chair has enhanced legal duties and obligations that arise by virtue of appointment to the position of Chair, and that these additional duties and obligations will vary depending on the specific expertise, qualifications and experience of the particular Chair.  An alternative view is that the Chair is the “first among equals” and has no greater legal obligations than any other members of the Board.

Section 180(1) of the Corporations Act dictates that a Board Member must exercise their powers and discharge their duties with the degree of care and diligence that a reasonable person would exercise if they had the same responsibilities within the organisation as the particular individual.  The Court in ASIC v Rich accepted the argument that an individual can have special responsibilities by virtue of his position within the company and by virtue of any high qualifications, experience and expertise possessed by the individual relative to other Board Members.  There were however special circumstances pertaining in that case and bodies such as the Australian Institute of Company Directors have come out strongly against there being any enhanced responsibilities.

‘Largely the ‘additional’ duties of chairmen are a matter of common sense and should not give rise to serious concerns by those who are committed to doing a professional job as chairman.  Greater risks will lie for those who are not prepared to give appropriate commitment to the job and allocate sufficient time to doing it well.’

Australian Institute of Company Directors – Law Committee

19. The Key Roles of the Principal

The Principal is responsible for the management and day-to-day operations and business of the school. The authority to exercise managerial powers is delegated from the Board, which retains responsibility for the overall governance of the School. The Principal oversees the educational programs and developments in the school (and in the broader educational community) and must keep Board Members abreast of these issues. It is critical that the Principal and the Board have confidence in one another.

Good governance involves the School Board and the Principal having an open and honest relationship where there is an effective flow of communication between the parties. As it is the Chair’s role to act as the Board’s primary channel of communication with the Principal, trust, honesty and respect between the Principal and the Chair are essential aspects of good governance. The Principal should attend all Board Meetings except those at which the Principal’s performance is to be discussed. The Principal may or may not be a member of the Board.

Although the Principal usually occupies a unique position in a managerial sense, in order to achieve good governance practices the Principal needs to have managerial roles, responsibility and accountability similar to those of the Chief Executive Officer of a commercial undertaking. It is important that the roles, responsibilities, delegations and authority of the Principal are clearly defined and understood.

These should include:

  • management powers
  • appointing school staff
  • managing expenditure within budget
  • implementing the Board’s Strategic Plan by effectively managing the School’s resources;
  • remuneration (level determined by individual School)
  • key performance indicators
  • performance management
  • delegations
  • authority and responsibility levels
  • dealing with relationship issues.

The above should be clear and unambiguous.  Each Board Member and the Principal need to understand these issues. At the time of appointment the Principal should be given a formal job description and a letter of appointment outlining the duties, rights and responsibilities attached to the role.

Good governance requires the school to have clear guidelines determining the boundaries between the governance role of the Board and the day-to-day management of the school, which is the Principal’s role. The following processes are useful in achieving appropriate separation of roles:

  • formalise and disclose the delegation of authority to the Principal
  • formalise and disclose the authority reserved to the Board
  • define the role of Principal in a job description
  • ensure that key performance indicators are in place to measure the Principal’s performance.

Questions and Answers

‘Should the Principal be a member of the School Board?’

This will really depend on the particular circumstances of the School. A larger school with access to a range of resources may prefer for the Principal not to sit on the Board. However, a smaller school with more limited resources may not have this luxury and it may be more practical to have the Principal as a Board Member. Either way, it is important to always maintain clear separation between school governance and management.

‘The Principal runs the School and the Board.  Is this good governance?’

No.  It is a vital aspect of good governance that the management and governance of the school be separated. If the Principal runs the Board then there is no desirable forum to discuss the Principal’s performance. Board Members will tend to feel intimidated and this will hinder honesty, transparency and accountability. The overall functioning of the Board will suffer.

‘Where do you draw the line between what is governance and what is management?’

The line between governance and management essentially denotes a separation between policy and administration. The Board deals with policy issues and the Principal runs the school on a day-to-day basis. The authority reserved to the Board and the management powers delegated to the Principal should be clearly documented so that all parties are clear as to their responsibilities. Where the lines are blurred it is essential that there be communication between the Chair and the Principal.

20. Relationship Management

It is important that Board Members and the Principal are clear on what constitutes appropriate relationships within the School context.

This will include understanding appropriate relationships between:

  • the Chair and the Principal
  • Board Members, the Principal, staff and students
  • the Chair and Board Members.

The above should be specified and signed off by the Board in the Charter so that there is no lack of clarity.

21. Performance Management

Schools Boards differ from the traditional corporate model as Members are acting on a voluntary basis. This introduces complexities into the area of performance management. Performance management for voluntary Boards must be sensitively handled so that it is constructive, rather than destructive. It is vital that all potential Board Members are completely committed to an appraisal program before being appointed to the Board.

A Board appraisal program needs to start with a list of specific goals and targets relevant to each Board Member. Some will be general for all Board Members and others will specifically relate to the expertise that the individual brings to the Board.  These goals and targets provide a framework against which the individual may be assessed.

Practical guide for conducting board appraisals

  • Implement a set of specific goals and targets for each Board Member.
  • The Chair conducts an annual consultation with each individual Board Member about their view on each other Board Member.
  • The Chair combines the gathered information with his or her own perspective.
  • The Chair participates in a one to one performance review with each Board Member.

This is an effective appraisal process as it has the advantages of confidentiality and the most potential for frank and open discussion.  Another common method of performance management involves conducting a ‘whole of Board’ review using questionnaire, interview or a contribution, asking each Board Member for feedback. This may be complemented by a sub-group reviewing Board activity.

Guidance as to performance management criteria can be found at Appendix 3.

22. Compliance and Risk Management

Principles of good governance require the Board to establish a comprehensive system of risk management, risk oversight, compliance, and internal control. A Risk Management Policy essentially formalises and communicates the school’s approach to the management of risk. This policy should set the risk tolerance for the school, approve the risk management framework, and monitor its effectiveness. The Risk Management Policy should also identify the specific roles and responsibilities of the Board, individual Board Members, the Chair, the Principal, and other management staff in order to clarify and formalise accountabilities.

It is important to be aware that risk itself is not so much the problem it is the way in which it is managed that is important.  Without any risks we are unlikely to make progress in any type of business or organisational venture.  Boards must have a keen understanding of risk and this involves understanding the School’s business, its operational activities, the expectations of the community and stakeholders, and the implications of all decisions.

Major areas of risk include:

  • meeting statutory and regulatory obligations
  • meeting State and Australian contractual obligations for funding
  • operational and strategic risks
  • service quality risks
  • risks related to physical buildings and equipment, IT systems and business systems
  • human resource risk (including occupational health and safety, professionalism and ethics, breaches of copyright, and poor management of human capital)
  • financial reporting risk and financial loss
  • loss of credibility and reputation with stakeholders
  • risk from disaster (e.g. fire, storm or other threat)
  • specific duties of care owed to students and staff
  • outdoor education.

Independent Schools Victoria facilitates an extensive risk management program in partnership with Willis Australia. For detailed risk management advice and support, Schools can contact Independent Schools Victoria .

It is the Board’s responsibility to identify major areas of risk and to provide policies and procedures on how they are to be managed. The Board should review material risk incidents and ensure that appropriate actions are taken. In addition, risk management should be a standing agenda item at Board Meetings.

On a regular basis, a report should come from the Principal to the Board, signing off that appropriate steps have been taken to comply with risk management policies. This report should include all material risk incidents, the actions that were taken and the outcome or ramifications. Any critical incidents should be reported to the Chair as soon as circumstances permit. The Board can then make appropriate amendments to the plan on an ongoing basis. Principals must therefore be prepared to voice their opinions and estimate risk and factors that might influence the degree of risk. Cooperation and good governance relies on a relationship of trust and respect between the Board and the Principal.

23. Board Meetings

Convening Board Meetings

Board Members make decisions collectively and exercise their powers at a duly convened Board Meeting.  Board Meetings should be held frequently enough to allow the Board to attend to its business and to work effectively as a team.

The Principal should also attend all Board Meetings excluding only those where the performance of the Principal and the management team is to be discussed.  Unless the Charter or school Constitution dictates otherwise, a Board Meeting may be called by a Board Member giving reasonable notice individually to every other Member. A valid Board Meeting may be convened without giving notice in any of the following scenarios:

  • regular fixed Meetings are prescribed by the Charter or agreed to by Board Members
  • all Board Members are present and agreed to meet to act in the capacity of the Board
  • all Board Members have previously agreed to meet at a particular time and place.

If a Meeting is deliberately convened for a time and place with the intention of making it impossible or difficult for a particular Board Member to attend, the notice may be considered unfair and unreasonable and the Meeting will be invalidated.

Agenda and Meeting Papers

Board Members should have the opportunity to place items on the agenda and to thoroughly review and consider all upcoming agenda items before the Meeting.  This should be achieved by circulating a draft agenda before the agenda is finalised and inviting Board Members to include items on the agenda.

The agenda should always cover key areas of policy such as:

  • monitoring of operations
  • risk management
  • major issues.

There should always be sufficient information placed before Board Members for them to be able to consider agenda items before the Meeting and to enable them to make informed decisions on resolutions to be put to the Board Meeting.

The agenda should also include the item ‘Other Business’ or provide ample opportunities for Board Members to raise issues at meetings.

The Running of Meetings

Each Board Meeting must be chaired by the Chair.

The Chair should:

  • encourage contributions from all Board Members
  • ensure openness and encourage diversity of views and opinions
  • ensure that there is an opportunity for Board Members to ask questions on both scheduled items and non-agenda items
  • ensure that appropriate follow up lists are created with reports back to the Board on actions taken.

The Minutes of the proceedings at each Meeting must be recorded and signed by the Chair.

24. Establishing Committees on the Board

Depending on the size of the School, the Board may wish to establish committees to maximise efficiency and effectiveness.

The most common committees are:

  • finance and audit committee
  • nomination and succession committee
  • asset management / property committee
  • fundraising committee
  • remuneration committee
  • risk management committee
  • executive committee.

The roles, responsibilities and reporting requirements for each Committee should be outlined in individual Committee Charters, the structure of which can be based on the Sample Board Charter.

Although it is acknowledged that people who are acting in a voluntary capacity will want to minimise rather than expand the number of committees, larger Schools may wish to appoint an Executive Committee and further split the functions of the abovementioned Committees.

Where an Executive Committee is appointed, it will usually comprise the Chair, a Deputy Chair (if there is one), the Principal and the Finance Committee Chair.  It is usually charged with the responsibility for the day to day overseeing of the Board’s strategy and policies.

25. Whistle Blowers

Schools have twofold issues in dealing with whistle blowing – the first in relation to staff who are often fearful of placing their careers in jeopardy and the second involving parents and students who are fearful of the child being victimised.

Evidence has shown that the two professions where complaints of discrimination and harassment are prevalent are health and education.  Consequently, whistle blowing is an important issue for schools to consider.

Boards should remember that:

“In all the known celebrated corporate collapses, loyal and committed employees tried to alert management to their suspicions and concerns without success.”

As children are placed in the care of Schools for a large part of the day, the Board, Principal and staff have a very significant duty of care. It is important to put in place policies which will permit legitimate complaints to be raised, with those raising these issues being properly protected. Boards must also be fully aware of the mandatory reporting provisions relating to child abuse.

To assist with achieving the objective of good governance, Boards should consider establishing a procedure to afford protection to whistleblowers, to the extent possible under the existing law. Such a procedure would provide students, parents and others with confidentiality and anonymity, to the extent possible, and endeavour to ensure that they are not victimised or subjected to detrimental action.

Therefore, Boards should give consideration to:

  • establishing a whistleblower protection procedure
  • ensuring that the procedure is implemented at the highest level
  • informing the school’s community about the procedure
  • providing appropriate education and training about the procedure to those involved in managing or investigating disclosures.
26. Additional Resources

Schools requiring further assistance may contact Independent Schools Victoria in the first instance. We will in turn refer you to our consultants where appropriate.

Useful Resources

  • Ascham School Limited Report to the Council of Governors on Governance and Constitutional Arrangements May 2006
  • ASX Corporate Governance & Principles (3rd Edition) 2014
  • Australian Institute of Company Directors Chairman of the Board (2nd Edition).
27. Appendix 1 – Selection Process

Selecting a Chair or Board Member can be a difficult process and the following behavioural questions are designed to assist Boards in their selection process by providing guidance as to the skills and qualifications that will be beneficial to the Board.  However, the example questions are necessarily generic in nature and therefore each Board should develop a list of questions that are particularly relevant to the circumstances and nature of the school in question.

Example behavioural interview questions for potential Chair:

  1. Please give an example of a situation where your contribution to a board brought about a significant improvement in an organisation.
  2. Please give an example of where your leadership caused the resolution of a particularly difficult issue facing a board.
  3. Please give an example of where your leadership of a board caused it to change its approach to issues, improving its flexibility and responsiveness.
  4. Please give an example of a situation in which you needed to deal with a range of potentially conflicting issues of interest to different stakeholders. How did you gain a satisfactory outcome?
  5. Please describe a situation in which you acted as chair, director or board member and needed to guide a principal or other senior management staff member. How did you ensure that your level of contribution was appropriate?
  6. Please give an example of a situation in which you had to make a difficult decision about the release of information. How did you decide what was appropriate for release and what should be withheld?
  7. Please describe your most significant successes in attracting new board members. How did you go about locating and attracting them?
  8. How have you managed the performance of directors or board members in the past? Have you ever needed to discipline someone in this role?
  9. Managing a board relies on very effective time management. How have you managed the agendas of your boards to ensure that all the necessary material was dealt with?

Example behavioural interview questions for potential Board Members:

  1. Please give an example of a time when you have come on to a board and needed to quickly get up to speed with the issues? How did you achieve this?
  2. Where have you made a contribution to a board that demonstrably improved the organisation?
  3. Where, as a board member, did you make your most significant contribution to strategy?
  4. Risk management is a key issue in effective board membership. Where have you made a contribution to this issue?
  5. Being a board member requires a contribution to the organisation’s management without falling into the trap of interfering. How have you walked this tightrope in the past?
  6. Being an effective board member requires a person who is a good team player, yet able to take an independent stand and be “hard to convince” when necessary. How have you done this in the past?
  7. As a board member you will need to form an accurate opinion and judgment of the performance of the Principal. Where and how have you performed a similar function in the past?
28. Appendix 2 - Board Skills Matrix

The following matrix of skills should be used by the Board to assess the skill requirements met by current Board Members. This will enable the Board to form a view as to the effectiveness of the Board. It should also be used to ensure that future appointments fill skill gaps in the matrix.

29. Appendix 3 – Performance Management

Set out below are some of the Key Performance Indicators for the Board, individual Board Members, the Chair and the Principal. It is important to stress that these questions are necessarily generic and therefore individual Schools should develop their own specific key performance indicators and questionnaires that are structured in accordance with their particular nature and values.

The Board

Strategy Planning

  1. Did the Board conduct a strategy planning meeting during the past year?
  2. Were the goals set out clearly?
  3. Have the goals set been achieved?
  4. If not, analyse why they were not achieved
  5. Was a suitable and effective action plan developed to implement the strategy?
  6. Who was charged with overseeing implementation of the action plan?
  7. Was the implementation plan monitored at regular intervals during the year?
  8. Is the skills matrix largely filled or unfilled?
  9. Is there a plan in place to ensure the skills matrix is filled over time?
  10. If so, what is the time frame?  Is that satisfactory?

Board Information and Processes

  1. How often did the Board meet?
  2. What was the overall attendance level of Board Members?
  3. Did Members receive agendas and Board papers in good time to enable them to consider matters to be discussed at the Board meeting?
  4. Were proper Minutes of the Board meetings kept?
  5. Did they accurately reflect discussion?
  6. Were they circulated within a short time of the meeting?
  7. Were meetings effective?
  8. Were decisions, when made, clear and unambiguous?
  9. Overall, how well did the Board fulfil the Board’s Governance Charter?

Effective Communication and Teamwork

  1. Does the Board function well as a team?
  2. Does the Board as a whole have a good relationship with the Principal?
  3. Does senior management effectively communicate and function well as a team?
  4. How well does the Board get its message across to its constituents?
  5. Does the parent community know of the Board’s work?
  6. Is there room for improvement?

Committees

  1. How often did each of these committees meet?
  2. Did they fulfil their Charter in the conduct of the meetings?
  3. Were proper Minutes kept and circulated?
  4. Did they submit reports and recommendations?
  5. If so, were they clear and concise?
  6. Were they largely accepted or rejected by the Board?

Individual Board Members

  1. What is the Board Member’s understanding of the School’s business?
  2. What is the level of engagement by the Board Member?
  3. How constructive is the input by the Board Member?
  4. Does the Board Member bring expertise to bear on Board’s decision-making?
  5. How good is the Board Member’s strategic thinking capability?
  6. Is the Board Member’s attendance at Board’s meetings acceptable?
  7. Does the Board Member’s network outside the School operate for the benefit of the School?
  8. Are the Board Member’s skills in the following areas at an acceptable level?
  • Communication
  • Relationship / People Skills
  • Ability to speak in public
  • Writing
  • Analytical / critical thinking
  • Strategic vision / long term vision
  • Reasoning
  • Listening
  • Mentoring
  • Responsibility / Accountability
  • Financial / Economic knowledge
  • Creativity
  • Lateral thought processes
  • Empathy
  • Integrity.

Chair

Leadership

  1. Is the Chair well informed?
  2. Does the Chair act as a sounding board for other Board Members so they have confidence in the Chair?
  3. Does the Chair solicit Board Members’ comments? Do they actively seek out the Chair providing their ideas, feedback and views?
  4. Does the Chair ensure that new Board Members are supported and mentored?
  5. Does the Chair when necessary, counsel Board Members?
  6. What is the School community’s perception of the Chair?

Meetings

  1. Are meeting agendas well-constructed?
  2. Are meetings well-conducted by the Chair?
  3. Is the Chair ‘on top’ of all issues?
  4. Does the Chair do all the talking?
  5. Does the Chair encourage discussion at meetings?
  6. Do Board Members leave meetings feeling that the meeting has been worthwhile?
  7. When decisions are made, does the Chair ensure that the resolution is clear and understood by everyone?
  8. How does the Chair perform at meetings of staff/parents/students?
  9. Is the Chair a member of all or any of the sub-committees?
  10. If not, does the Chair attend meetings of those sub-committees?

Relationship with the Principal

  1. Would you describe the relationship between the Chair and the Principal as:
    • Open
    • Honest
    • Consultative
    • Communicative
    • Trusting.
  2. Does the Chair act as a sounding board for the Principal?
  3. Is there regular performance feedback between the Chair and Principal?
  4. Does the Chair seek regular briefings from the Principal?
  5. Does the Chair defend the Principal from unfair or unreasonable criticism?
  6. Does the Chair deal with valid criticism of the Principal promptly and fairly?

Principal

Relationship with the Chair

  1. Does the Principal have a good relationship with the Chair?
  2. Does the Principal brief the Chair regularly on managed and administrative matters?
  3. Does the Principal assist in preparation of Board meeting agendas?
  4. Does the Principal ensure that the Chair has sufficient information to ensure Board meetings are chaired effectively?

School Management

  1. How effective is the Principal in managing the School’s business?
  2. Does the Principal present adequate and timely information to the Board?
  3. Are Board Members able to form an accurate view of the School’s performance based upon information supplied by the Principal?
  4. Does the Principal encourage/discourage Board Members from visiting School premises?
  5. Does the Principal have a good relationship with senior management?
  6. Does the Principal meet the criteria set out in the Board Governance Charter?
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