11.3 Duties and responsibilities

Part 12 of the GOC Act deals with the duties and liabilities of directors and other officers. Division 1 of this Part is devoted to statutory GOCs and Division 2 deals with company GOCs.

Directors and other officers of statutory GOCs specifically have a duty:

• to act honestly in the exercise of their powers and discharge of functions;
• to disclose direct or indirect interests in a matter being considered, or about to be considered, by the Board;
• to exercise a degree of care and diligence; and
• not to make improper use of information or position to gain, directly or indirectly, an advantage for himself or herself or to the detriment of the GOC.

The GOC Act also prohibits a statutory GOC from making loans to directors. Directors also have a positive duty to prevent insolvent trading and not to make false or misleading statements concerning the affairs of the GOC.

For company GOCs, the duties and liabilities of directors and officers are governed by the Corporations Act 2001 (external link).

The GOC Act recognises that statutory and company GOCs may also have community service obligations and may be subject to directions, notifications or approvals from the shareholding Ministers, creating a different standard of care and diligence for directors of statutory and company GOCs.

All GOCs should note that any projects proposed to be undertaken outside the State of Queensland require shareholding Ministers' approval prior to negotiations being entered into and again prior to any commercially binding contracts being entered into.

In 1999, the Government approved a Code of Practice for GOCs' Financial Arrangements which deals with the following issues:

• Corporate treasury services can be provided by the Queensland Treasury Corporation (QTC). There is no requirement for GOCs to use these QTC services, nor is there a requirement to source funds only from QTC.
• Each corporation is to demonstrate that it possesses suitable expertise and has implemented appropriate management and accountability systems. GOCs are required to submit Board-approved financial management policies to shareholding Ministers for review. Until the Board-approved policies are reviewed and implemented, existing Government policies remain in force.
• A comprehensive stand-alone credit rating is to be undertaken at least once every three years by an independent credit rating agency.
• An annual credit review, involving a high level analysis of each GOC's ability to sustain existing and planned levels of debt, will be undertaken to ensure that adequate and effective debt monitoring is taking place.
• The State Borrowing Program is the vehicle by which the State coordinates and manages debt funding arrangements. Under the program, GOCs are required to ensure that any borrowings (and other debt funding arrangements) are accounted for within its administering department's borrowing limit. The limit for each GOC will be assessed by the Shareholding Minister in the context of the Statement of Corporate Intent, having regard to the annual credit review.
• Quotations for funding may be obtained from lenders other than QTC provided QTC is also invited to submit an offer in the tendering process. Decisions to seek funding from a source other than the lowest-cost lender must be approved by the Board and the shareholding Ministers advised, prior to the entering into of the financial arrangement.
• All GOC borrowings and financial arrangements in the nature of debt obligations, irrespective of whether the funds are sourced from QTC or an external financier, attract a Competitive Neutrality Fee. This fee reflects the beneficial borrowing margin accruing to a GOC by virtue of its Government ownership and will ensure no advantage exists over private sector competitors in this regard.

The GOC Act provides that the State does not guarantee any obligation incurred by a GOC, unless the liability is expressly undertaken on behalf of the State. This is to be reflected in all loan documents prepared by GOCs.

Last reviewed: 17 July, 2009

Last updated: 22 July, 2009

^ to top