Commonwealth Companies (Annual Reporting) Orders 2011 (Cth)
Commonwealth Companies
(Annual Reporting) Orders 2011
I, Penelope Ying Yen Wong, Minister for Finance and Deregulation, make these Orders under section 48 of the Commonwealth Authorities and Companies Act 1997.
PENELOPE YING YEN WONG
.......................................................
Dated 22-9-11
Reader’s Guide
These Orders require the directors of a wholly-owned Commonwealth company to provide additional information in the company’s annual report to that required by the Corporations Act 2001. The Commonwealth Authorities and Companies Act 1997 (CAC Act) allows the Finance Minister to require a wholly-owned Commonwealth company to include such additional information (paragraph 36(1)(c)).
These Orders require reporting on matters such as:
Governance of the company;
Key events affecting the wholly-owned Commonwealth company during the reporting period;
Ministerial directions and Australian Government policies;
Judicial decisions and reviews by outside bodies; and
Disclosure requirements for a wholly-owned Commonwealth company that is a Government Business Enterprise (GBE).
A wholly-owned Commonwealth company can integrate the additional information into the standard directors’ report required under section 298 of the Corporations Act 2001.
These Orders form Finance Minister’s Orders for the purposes of section 48 of the CAC Act, and are a legislative instrument which is disallowable under the Legislative Instruments Act 2003.
Contents
1 Name of Orders
Preliminary
2 Commencement
3 Application of Orders
4 Purpose
5 Approval by directors
6 Exemptions
Requirements
7 Parliamentary standards of presentation ............................................................. 2
8 Plain English and clear design .............................................................................. 2
9 Responsible Minister
10 Ministerial directions and other statutory requirements
11 Information about directors..................................................................................3
12 Outline of organisational structure and statement on governance
13 Related entity transactions ................................................................................... 4
14 Key activities and changes affecting the company
15 Judicial decisions and reviews by outside bodies
16 Obtaining information from subsidiaries
17 Disclosure requirements for GBEs ........................................................................ 6
18 Index of annual report requirements
19 Definitions
1 Name of Orders
These Orders are the Commonwealth Companies (Annual Reporting) Orders 2011.
Preliminary
2 Commencement
These Orders commence on the day after they are registered on the Federal Register of Legislative Instruments.
3 Application of Orders
3.1 Subject to subclause 3.2, these Orders apply to wholly-owned Commonwealth companies in relation to each financial year ending on or after 30 June 2012. The first report under these Orders will encompass the 2011-2012 financial year.
3.2 Clause 13 (related entity transactions) applies to annual reports for each financial year ending on or after 30 June 2013.
Note: The Orders, apart from clause 13, will relate to the financial year 2011-2012, and to the annual reports due on 15 October 2012 and onwards. More time is provided for the application of clause 13 (related entity transactions) which is to apply for the financial year 2012-2013, and to the annual reports that fall due on 15 October 2013 and onwards.
4 Purpose
These Orders prescribe additional information that must be included in a wholly‑owned Commonwealth company’s annual report.
The CAC Act requires the directors of a Commonwealth company to submit an annual report each year. The report is required to be prepared in accordance with subsection 36(1) and given to the company’s responsible Minister within a specified timeframe prescribed in subsection 36(1A) of the CAC Act for tabling in Parliament.
5 Approval by directors
An annual report must be approved by a resolution of the directors of a wholly-owned Commonwealth company. The annual report must be signed by a director and include details of how and when approval was given.
6 Exemptions
The Finance Minister may grant an exemption to the directors of a wholly‑owned Commonwealth company from any requirement of these Orders. An exemption must be in writing and may be subject to conditions
Details of an exemption must be included in the annual report.
Requirements
7 Parliamentary standards of presentation
The annual report of a wholly-owned Commonwealth company is tabled in Parliament by the responsible Minister in accordance with subsection 36(4) of the CAC Act. Once tabled in Parliament, the annual report becomes part of the Parliamentary Papers series and as such, the report must comply with the presentation and printing standards for documents presented to the Parliament.
Note: Further information on Parliamentary requirements for tabled documents is available through the link: Plain English and clear design
The annual report must be constructed having regard to the interests of the Parliament and other users. Information included in the report must be relevant, reliable, concise, understandable and balanced. For example, to the extent practicable:
a. use clear design, including through headings and adequate spacing;
b. define acronyms and technical terms (such as through a glossary);
c. use tables, graphs, diagrams and charts; and
d. include any additional matters that may be appropriate.
9 Responsible Minister
The annual report must specify the name of the current responsible Minister and the names of any other responsible Ministers during the financial year.
10 Ministerial directions and other statutory requirements
Directions and Government policies
Wholly-owned Commonwealth companies can be made, through a variety of processes, to comply with additional requirements that may not appear to be in the best interests of the company. To assist readers to understand why companies may have acted in such a way, the annual report must provide details of:
a. directions issued to the company by the responsible Minister, or other Minister under the company’s constitution, or under legislation; and
b. general policies of the Australian Government that were notified to the Commonwealth company before 1 July 2008 under section 43 of the CAC Act (as in force before 1 July 2008) and which continue to apply to the Commonwealth company; and
c. General Policy Orders that apply to the Commonwealth company under section 43 of the CAC Act.
This will assist readers to understand why companies acted in a particular way.
Where a direction, general policy or General Policy Order has not been fully complied with, the annual report must include an explanation of the non‑compliance.
Other legislation
Other legislation can require reporting on additional matters in the annual report as well. For example, subsection 516A(4) of the Environmental Protection and Biodiversity Conservation Act 1999 requires a Commonwealth company to report on environmental matters.
Note: Environment Protection and Biodiversity Conservation Act 1999 (EPBC Act), section 516A. Information on ecologically sustainable development (including the EPBC Act and a suggested approach to meeting the statutory reporting requirements) can be found on the website of the Department of Sustainability, Environment, Water, Population and Communities at: align="left">11 Information about directors
The annual report must include information on the directors of the wholly-owned Commonwealth company. This information includes directors’ names, qualifications, experience, attendance of board meetings, and whether the director is an executive or non-executive director.
12 Outline of organisational structure and statement on governance
Organisational structure
The annual report must include an outline of the organisational structure of the company (including subsidiaries) and the location of major activities and facilities.
Statement on governance
The annual report can assist a Commonwealth company to demonstrate that its governance is sound.
Consequently, the annual report must information on the main corporate governance practices that the Commonwealth company used during the financial year. For example, details should be provided on:
a. board committees of the company and their main responsibilities; and
b. education and performance review processes for directors; and
c. ethics and risk management policies; and
d. any legislation that specifically applies to the company, by name.
13 Related entity transactions
The annual report must disclose the decision making process undertaken by the board of the wholly-owned Commonwealth company when:
a. it approves the wholly-owned Commonwealth company to pay for a good or service from another entity, or provide a grant to another entity; and
b. a director of the wholly-owned Commonwealth company is also a director of the other entity that provides the good or service or receives the grant; and
c. the value of the transaction, or if there is more than one transaction, the aggregate value of those transactions, exceeds $10,000 (GST inclusive).
If decision-making processes relate to multiple transactions to a single entity, with an aggregate value of more than $10,000 (GST inclusive), then a single report can be provided that explains the number of transactions and the aggregate of expenditure.
The aim is to improve transparency around potential conflicts of interests in the operations of Commonwealth companies.[1]
[1] This requirement arose out of Recommendation 2 of the Senate Standing Committee on Finance and Public Administration’s report: Annual Reports (No. 2 of 2009) issued in September 2009. Consistent with clause 3, this applies to 2012-2013 and to annual reports due on 15 October 2013 and onwards.
14 Key activities and changes affecting the company
Highlighting key activities and changes that have affected the company can assist the reader to understand the company’s performance over the financial year. Consequently, the annual report must detail any key activities and changes that affected the operations or structure of the company during the financial year. This may include:
a. significant events under section 40 of the CAC Act; and
b. amendments to the constitution of the company and to any relevant legislation; and
c. changes to the membership structure of the company; and
d. amendments to legislation that specifically applies to the company, by name (if applicable).
15 Judicial decisions and reviews by outside bodies
As entities of the Australian Government, wholly-owned Commonwealth companies are expected to have greater accountability and ethics than private sector companies. Part of demonstrating these qualities involve reporting on judicial decisions and reports by third parties. As such, the annual report must include details of:
a. judicial decisions and decisions of administrative tribunals that have had, or may have significant impact on the operations of company; and
b. reports on the operations of the company by the Auditor-General, a Parliamentary committee, the Commonwealth Ombudsman, the Office of the Australian Information Commissioner, or the Australian Securities and Investment Commission.
16 Obtaining information from subsidiaries
Where the directors are unable to obtain information from a subsidiary that is required to be included in the annual report before the annual report is submitted under section 36 of the CAC Act, the directors must prepare the annual report explaining what information is missing and how this affects the annual report.
17 Disclosure requirements for GBEs
Changes in financial conditions and community service obligations
The annual report of a GBE must include:
a. an assessment of:
i. significant changes in overall financial structure and condition over the financial year; and
ii. any events or risks that could cause reported financial information not to be indicative of future operations or financial condition; and
b. details of any community service obligations the GBE has, including:
i. an outline of actions the GBE has taken to achieve those obligations; and
ii. an assessment of the cost of fulfilling those obligations.
Note: Details on dividends are already required by section 300 of the Corporations Act 2001.
Information that is commercially prejudicial
However, information required by this clause 17 can be excluded if the directors believe, on reasonable grounds, that the information is commercially sensitive and would likely result in unreasonable commercial prejudice to the GBE. The annual report must state whether such information has been excluded.
18 Index of annual report requirements
To assist readers to locate the information required by the Corporations Act, CAC Act (including these Orders) or other applicable legislation, the annual report must provide an index, identifying where relevant information can be found in the annual report.[2]
[2] This requirement arose out of Recommendation 1 of the Senate Standing Committee on Finance and Public Administration’s report: Annual Reports (No.1 of 2009) issued in March 2009.
19 Definitions
In these Orders:
annual report means the reports and government information the directors of a wholly-owned Commonwealth company are required to give their responsible Minister after the end of the financial year in accordance with section 36 of the CAC Act.
due on 15 October includes any later date resulting from an extension granted by a Minister under section 34C of the Acts Interpretation Act 1901.
CAC Act means the Commonwealth Authorities and Companies Act 1997.
Finance Minister means the Minister responsible for the Finance portfolio.
financial year means the period of a year being reported upon (typically commencing on 1 July and ending on 30 June).
Responsible Minister means the Minister with portfolio responsibility for the Commonwealth authority.
Unless the contrary intention appears, an expression that is used in these Orders and in the CAC Act generally, or in a particular provision of the CAC Act mentioned in the relevant part of these Orders, has the same meaning in these Orders as in the CAC Act.
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