Board members fiduciary obligations

 

The Conservation Council Board has again looked at the policy on Board members Fiduciary Obligations and re-endorsed the existing policy. This is a common and standard but important policy to guide organisations on their governance and Board members in their roles.

Like their for-profit counterparts, board members of a not-for-profit corporation are in a fiduciary relationship with the corporation. This means that they are obliged to act honestly and in good faith in respect of their role within the corporation. The obligation of board members has many components, including a duty to avoid conflicts of interest and a duty to avoid abusing their position to gain personal benefit. Another component of board members’ fiduciary obligation is a duty to maintain the confidentiality of information that they acquire by virtue of their position within the corporation.

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 organisation as a whole. Board Members are not on the Board to represent and promote the interests of particular groups or stakeholders. They are not there to represent the interests of their constituents.

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

In all deliberations as a member of the Board you must have regard to the overriding principle that your duty is to act in the best interests of the organisation, irrespective of any personal or other interests.

Another essential aspect of good governance is that Board Members maintain 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.

Signpost of good qualities

Summary of some common duties

Act with care and diligence
  • This duty requires Board Members to apply reasonable care in the performance of their office Act in good faith
  • Board Members must act bona fide for the benefit of the Organisation as a whole – the interests of the organisation must always be the principal consideration
  • To act in good faith means not to act in bad faith
Act for the proper purpose
  • 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
  • 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
  • A Board Member must also refrain from improperly using his or her position to cause any detriment to the Organisation
  • 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
  • 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 organisation.

Agreed by Conservation Council ACT Region Board October 2016, re-endorsed October 2017

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