1. PURPOSE
The purpose of this policy is to help ensure that directors and staff members of Compassion Australia (“CAU”) -
(a) act in the best interest of CAU by making decisions concerning CAU based on merits, and not affected by personal interests;
(b) take responsibility for identifying, disclosing and managing any conflict of interest;
(c) deal with conflict of interest in a transparent and effective manner.
2. SCOPE
This policy applies to all directors and staff members of CAU.
3. DEFINITIONS
A conflict of interest occurs when a person’s personal interests conflict with their responsibility to act in the best interest of CAU. A conflict of interest may be actual, potential, or perceived and may be financial or non-financial. A related party contract is a type of conflict of interest which involves CAU entering into a contract with an organisation in which a director or staff member has a personal interest. These situations present the risk that a person will make decisions based on, or affected by, a personal interest, rather than what is in the best interests of CAU. Accordingly, personal interests must be identified and managed accordingly.
Personal interests include-
(a) direct interests (for example, if the person directly receives a benefit), and
(b) close relationship interests, being interest of a family member or another person with whom the person has a close personal relationship, and which might reasonably give rise to an apprehension that the person might place the interests of their family members or the other person above the interests of CAU (for example, if a company controlled or owned by a person’s spouse receives a benefit), and
(c) business interests, being interests of a business or organisation that the person may be involved with, have an interest in, or owe a duty to (for example, if a person is a director or a shareholder or another organisation which will receive benefit).
4. POLICY
It is the policy of CAU that conflicts of interest be avoided but, if that is not possible, they are disclosed and managed in the best interest of CAU.
5. IDENTIFYING AND MANAGING CONFLICTS OF INTEREST
5.1 Directors
5.1.1 Identifying conflicts of interest
A director should regularly consider the relationship between their personal interests and their duty to CAU and identify any conflict of interest.
If a director requires advice or guidance about whether a conflict of interest exists, they should discuss the matter with the Chair.
If a director identifies a conflict of interest, they must disclose the nature and extent of that conflict to the Chair immediately, and at the next meeting of the board.
Details about the conflict of interest declared is to be recorded in the minutes of the meeting and in a conflict of interest register maintained by the board.
5.1.2 Managing conflicts of interest
If a director has a material personal interest in a decision proposed to be made by CAU, the board must–
(a) Ensure the proposed decision is considered by the board and is not made under any delegation of authority from the board, unless permitted by clause 5.1.3.
(b) Subject to (c), the director with the material personal interest (the “conflicted director”) is not present when the matter is discussed by the board or vote on the matter, unless permitted by clause 13.1(c) of CAU’s constitution.
(c) A conflicted director with specific information or expertise relevant to the proposed decision is only present when the decision is being considered by the board to provide that information and expertise if requested by the majority of the other directors who do not have a material personal interest. The conflicted director is excluded from the actual decision-making process.
(d) Where the material personal interest relates to a contract or arrangement proposed to be entered into by CAU, the majority of the directors who do not have a material personal interest in the matter resolve that the entry into the proposed contract or arrangement is in the best interests of CAU.
(e) The board records the elements described above, and the board’s approval of the decision, in its minutes and in the conflicts of interest register maintained by the board.
In exceptional circumstances where no effective conflict management strategy could be implemented to enable the director to continue to participate in the decision making of CAU, it may be appropriate for the conflicted director to resign from the board.
5.1.3 Routine business transactions
If –
(a) a director has disclosed under clause 5.1.1 a material personal interest in an entity, and
(b) the board has approved, either generally or specifically, the entry into contracts or agreements with the entity for the provision of goods or services specified in the board approval, and
(c) a contract or agreement is proposed with that entity for the provision of such goods or services, in the ordinary course of undertaking the business of CAU and on commercial terms,
the proposed decision to enter into the contract or agreement may be made in accordance with any delegations of authority approved by the board from time to time.
A decision to enter into a contract or agreement under this clause is to be reported to the next meeting of the board.
5.2 Staff members
5.2.1 Identifying conflicts of interest
Each staff member should regularly consider the relationship between their personal interests and their duty to CAU and identify any conflict of interest.
If a staff member requires advice or guidance about whether a conflict of interest exists, they should discuss the matter with their manager.
If a staff member identifies a conflict of interest, the conflict must be declared to a timely manner. This is to be done by sending a written notice about the conflict to their manager.
5.2.2 Managing conflicts of interest
When a conflict of interest has been declared by a staff member (the “conflicted staff member”), the manager will determine the action to be taken having regard to the nature and circumstances of the conflict. In determining the action to be taken, consideration will be given to –
• whether the conflict needs to be avoided, or whether it can be effectively managed, and
• alternative options to avoid the conflict or effectively manage it, and
• CAU’s objects and resources, and
• the possibility of creating an appearance of improper conduct that might impair confidence in CAU or its reputation.
If the manager considers that the conflict of interest is significant –
(a) they should seek the advice of their Executive Director, or
(b) if the manager is an Executive Director, they should seek the advice of the Chief Executive Officer, or
(c) if the manager is the Chief Executive Officer, they should seek the advice of the Chair of the board or the chair of the Risk Committee of the board.
In the case of a decision proposed to be made on behalf of CAU in which a staff member has a material personal interest, the conflicted staff member is required not to take any part in the decision-making or exercise any role which allows them to influence that decision.
The action to be taken in relation to a conflict will be documented by the manager and advised to the conflicted staff member who will comply with that advice.
The manager will send to the Head of Risk & Compliance copies of the following – - • each written notice about a conflict received from a staff member, and
- • the advice provided about the action to be taken in relation to the conflict.
The Head of Risk & Compliance will maintain a register about the notices and advice received. The register will be available for inspection by the board.
6. DISCLOSURE
6.1 Directors
Where the conflict of a conflicted director arises in relation to the entry by CAU into a related party contract, information about the conflict and the contract may be required to be disclosed in CAU’s financial accounts.
6.2 Staff members
Where the conflicted staff member is key management personnel and the conflict arises inrelation to the entry by CAU into a related party contract, information about the conflict and the contract may be required to be disclosed in CAU’s financial accounts.
7. COMPLIANCE WITH THIS POLICY
7.1 Reminding of requirements of Policy
CAU expects all directors and staff members to uphold a high standard of integrity in the conduct of CAU’s business. In keeping with CAU’s cultural values, directors and staff members should remind one another of the requirements of this policy and notify one another of any actual, potential or perceived conflict of interest that may affect their role. Occasionally, a person may not be aware of the existence of a conflict of interest.
7.2 Disclosure after notification
If after being notified of the existence of conflict of interest, a conflicted director or conflicted staff member fails to disclose that conflict in accordance with this Policy-
(a) the director who knows about the conflict must notify the Chair or the chair of the Risk Committee of the circumstances of conflict;
(b) the staff member who knows about the conflict must notify their Executive Director of the circumstances of conflict.
Breaching this policy may result in-
(a) the standing down of a director or staff member to facilitate investigation,
(b) disciplinary actions (such as dismissal or termination),
(c) in the case of a director, civil actions pursuant to the Corporations Act.