From 1 March 2024, new requirements will apply to Victorian public entity boards.

The Victorian Public Sector Commission (VPSC) has issued the Code of Conduct for Directors of Victorian Public Entities 2024 (“the Directors’ Code”), to enhance governance standards in Victoria's public entity boards. The Directors’ Code replaces its 2016 predecessor, aiming to address contemporary challenges, modernise language and align with evolving governance standards. Demonstrating the VPSC’s commitment to improving transparency, accountability, and effectiveness of public sector boards, the Directors Code highlights an evolution in governance standards, expectations, and the regulatory environment governing directors of Victorian Public Entities from 2016 to 2024.

This blog explores the key provisions of the Directors’ Code.

Key changes

The most notable changes relate to lobbying and conflict of interest management.

1. Lobbying

The single most significant addition is the introduction of requirements relating to current and past lobbying activities of directors.

Additional requirements in relation to conflict of interest apply if a director is or has been engaged in lobbying activities in Victoria or elsewhere that may relate to the public entity.

Lobbying activity is defined in the Victorian Government Professional Lobbyist Code of Conduct.

Current lobbying activities

The Directors’ Code introduces stringent restrictions on lobbying activities by board members. Directors are prohibited from engaging in any lobbying activity that may relate to the functions of the public entity they oversee. This measure aims to mitigate conflicts of interest and uphold impartiality in decision-making processes. The prohibition on lobbying was introduced in response to a recommendation from the Independent Broad-based Anti-corruption Commission’s Operation Clara report.

At every board meeting, directors are required to confirm that they are not engaged in lobbying relating to functions of the public entity.

Past lobbying activities

Directors who have previously been involved in prior lobbying activities relevant to their public entity's functions must declare such activities to the board promptly. This includes lobbying activities at any time in the past whether before or after the director’s appointment to the public entity. Any previous lobbying activity relevant to a board meeting agenda item must also be disclosed at the board meeting.

2. Conflict of Interest

Some specific requirements have been introduced about disclosing, recording and managing directors’ conflicts of interest (COI). For example, the 2024 Code provides:

• Conflicts of interest (including duty) in relation to an agenda item must be declared even if the matter has previously been disclosed.
• The board must make a decision about how the conflict should be managed and record this in the meeting minutes.

These conflict of interest changes apply to all conflicts of interest and are not specific to conflicts of interest about lobbying activities.

Other changes

Some other changes include:

• introducing requirements about leadership and stewardship (e.g. setting strategic direction, oversight of risk and compliance activities, oversight of reputation and intellectual capital, maintaining a direct and effective relationship with the Minister)
• removing from the Directors’ Code some details about management of conflicts of interest (expected to be covered in the board’s COI policy if based on the VPSC model COI policy)
• changes to structure and language.

What hasn’t changed?

Both the 2016 and 2024 Codes address:

• upholding public sector values
• managing conflicts of interest in the public interest
• performance of individual directors and of the board collectively
• gifts
• acting in good faith in the best interests of the public entity
• notifying the board if standing for election (State, Federal or local government)
• financial responsibility
• some other statutory office holders as well as directors
• acting with honesty and integrity
• acting in the best interests of the public entity even if nominated by industry groups, other government agencies or stakeholders.

In her forward to the Directors’ Code, Victorian Public Sector Commissioner Brigid Monagle states:

It is vital that directors act – and be seen to act – in good faith in the best interests of the public entity that they govern on behalf of all Victorians.

This includes acting with integrity, honesty, fairness, due skill, care and diligence, and in an impartial and apolitical manner.

The 2024 Code is well structured and an easy read, just over 3,000 words! Whether you are interested in the new content or a refresher on pre-existing requirements, an end-to-end read is warranted. We commend it to every director and board advisor.

Resources

• Code of Conduct for Directors of Victorian Public Entities
• Special Reports: Operation Clara (IBAC)
• VPSC Model Conflict of Interest Policy

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A participant in the UN Global Compact, CourtHeath seeks to raise awareness about the Sustainable Development Goals and the principles of the Global Compact with business and government organisations in Victoria.

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