Controlled Entities

Controlled Entities

SUMMARY

The Controlled Entities Policy establishes the University’s governance framework for Controlled Entities. The Controlled Entities Procedure provides guidance on the governance of all Controlled Entities (CEs) of Macquarie University during their lifecycle, including:

  • circumstances in which a CE may be established;
  • permitted activities of a CE;
  • requirements for operations, governance and reporting during the life of a CE to ensure effective systems of control and accountability, and
  • requirements for disestablishment of a CE.

Note: Delegations of Authority pertaining to the University's Controlled Entities are listed on the Controlled Entities tab on the Delegations of Authority page.

POLICY

1     PURPOSE

The Controlled Entities Policy establishes the University’s governance framework for Controlled Entities.

2     BACKGROUND

This Policy should be read in conjunction with the provisions of the Macquarie University Act 1989 (NSW), Public Finance and Audit Act 1983 (NSW) and the Macquarie University Risk Appetite Statement.

3     SCOPE

This  Policy  applies  to  all  officers  and  directors,  members,  employees,  consultants  and  contractors  of Macquarie University and its Controlled Entities.

4     DEFINITIONS

Commonly defined terms are located in the University Glossary. The following definitions apply for the purpose of this Policy:

Council: means the University Council which is the governing authority of the University, established under Part 3, section 8 of the Macquarie University Act 1989 (NSW).

Controlled Entity (CE): means a person, group of persons or body over which the University has control. Note: See also the definition of “controlled entity” in Section 16A of the Macquarie University Act 1989 (as amended); Sections 39 (1A) and 45A of the Public Finance and Audit Act 1983 and Australian Accounting Standard AASB 127 Consolidated and Separate Financial Statements.  Refer to the Controlled Entities Procedure for examples of evidence of control.

Macquarie University Group or Group: means Macquarie University and its Controlled Entities.

Director: means a member of a Board of a Controlled Entity.

5     POLICY STATEMENT

  1. The University may conduct activities through Controlled Entities.
  2. The Macquarie University Act (Act) requires that Council:
    1. must ensure that a controlled entity does not exercise any function or engage in any activity that the University is not authorized by or under the Macquarie University Act to exercise or engage in, except to the extent that Council is permitted to do so by the Minister.
    2. ensure:

      (1) that the governing bodies of controlled entities:

      1. possess the expertise and experience necessary to provide proper stewardship and control, and
      2. comprise, where possible, at least some members who are not members of the Council, or members of staff, or students of the University, and
      3. adopt and evaluate their own governance principles, and
      4. document, and keep updated, a corporate or business strategy containing achievable and measurable performance targets, and

      (2) that a protocol is established regarding reporting by governing bodies of controlled entities of the Council.

  3. The University will operate its controlled entities in accordance with the Act.
  4. The Council must approve:
    1. the establishment of a Controlled Entity, including details of the Member(s);
    2. the constitution of a Controlled Entity and any material amendments to it;
    3. the deregistration or liquidation of a controlled entity on the recommendation of the board of the Controlled Entity; and
    4. transfer of activities from a Controlled Entity to any another entity (including to the University or another University Controlled Entity) which would trigger an alteration to the constitutional objects of a Controlled Entity.
  5. The Vice-Chancellor will establish procedures and guidelines for the governance and operation of controlled entities to provide for:
    1. proper governance;
    2. minimization of risk to the University;
    3. maximization of returns and benefits to the University;
    4. appropriate reporting to ensure control and oversight by the Council.
  6. The Vice-Chancellor will provide an annual report to Council on compliance by the controlled entities of the University with the requirements of Section 16A of the Macquarie University Act.
  7. The Controlled Entity Member has obligations as defined in the Corporations Act and each CE’s constitution.

6     RELEVANT LEGISLATION

Macquarie University Act 1989 (NSW)

Public Finance and Audit Act 1983 (NSW)

7     KEY RELATED DOCUMENTS

Controlled Entities Procedure

Macquarie University Risk Appetite Statement

8     NOTES

8.1

Contact Officer

University General Counsel

8.2

Implementation Officer

Vice-Chancellor

8.3

Approval Authority / Authorities

Council (Resolution 18/26)

8.4

Date Approved

14 June 2018

8.5

Date of Commencement

14 June 2018

8.6

Date for Review

June 2021

8.7

Documents Superseded by this Policy

Controlled Entities Policy approved 1 October 2010

8.8

Amendment History

30 July 2018 – Minor amendment to incorporate standard policy template features, Purpose and Background sections, and standard ordering of document.

PROCEDURE

SCOPE

This Procedure applies to all officers and directors, members, employees, consultants and contractors of Macquarie University and its Controlled entities (collectively referred to as the Macquarie University Group or Group).

This Procedure should be read in conjunction with the Controlled Entities Policy.  It provides guidance on the governance of all Controlled Entities (CEs) of Macquarie University during their lifecycle, including:

  • circumstances in which a CE may be established;
  • permitted activities of a CE;
  • requirements for operations, governance and reporting during the life of a CE to ensure effective systems of control and accountability, and
  • requirements for disestablishment of a CE.

The Policy defines key roles and responsibilities in relation to CEs including for the University Council (Council) and Committees of Council, CE Members, CE Boards and management teams, and functional heads of University specialist support functions.

1. Determining control of a Controlled Entity

The University regards itself as being able to control an entity where:

  • the University, directly or indirectly, owns most of the shares in a company;
  • the University is the sole member of a company limited by guarantee;
  • the University has power over more than half of the voting rights in the entity;
  • the University has the power to cast the majority of votes at meetings of the entity’s board;
  • the University has the power to appoint or remove the majority of the entity’s board;
  • the University has the power to govern the financial and operating policies of the entity; or
  • the University has the power to cast, or to control the casting of, a majority of the votes likely to be cast at a general meeting of the entity.

The above list is not exhaustive. An opinion as to whether an entity is within the University’s control may require detailed review of the circumstances.  Where there is doubt, the University General Counsel and University Chief Financial Officer will jointly determine whether the University considers an entity to be within its control.

2. Design Principles for Establishing a Controlled Entity

2.1. Core Principles

2.1.1. Teaching and Research, being core to the mission of the University, are undertaken within the University, under the respective control of the Deputy Vice Chancellor (Academic) and Deputy Vice Chancellor (Research), and the relevant Faculty Executive Dean.

2.1.2. All academic staff are appointed by the University.

2.1.3. All academic awards within the scope of the Australian Qualifications Framework are issued by the University and governed by Academic Senate.

2.2.  It is expected that most activities supporting the academic enterprise will also be conducted within the University.  A Controlled Entity will only be considered as a vehicle to conduct non-teaching and non-research activity when the nature of the activity meets at least one of the following three requirements:

Industrial instruments

Taxation

Regulatory, Legal and Operational

It is more appropriate to employ staff under industrial instruments that are designed to address employment requirements for specific activities, and these conditions of work cannot be accommodated under the University Enterprise Agreement. e.g. nursing staff

Use of overseas CE to receive donations which are tax-deductible for the donor in the country of origin.

Compliance with critical commercial, regulatory, legal or other critical operating imperatives can be more appropriately met if the activity is conducted in a separate entity. e.g. medical accreditation.

2.3.  In addition to meeting at least one of the above three criteria, the anticipated size of a new CE within three years of operation must justify the inherent costs incurred in establishing and managing a separate CE.

3. Approval for a new Controlled Entity

Council approves the establishment of a Controlled Entity, or the acquisition of an interest in a third-party entity that would become a Controlled Entity.  A formal business case must be presented by the Vice- Chancellor to the Council in the approved format (as detailed in the Schedules supporting this Policy), with endorsement from the following University functional leaders: General Counsel, Chief Financial Officer, HR Director, Chief Information Officer, Director Risk and Assurance.

4. Governance within Controlled Entities

The responsibility for the governance of CEs resides with several key roles within the Macquarie University Group.  These are detailed below by activity and included in the CE’s Constitution and Board and Committee Terms of Reference (ToR).

4.1  CE Boards – composition, on-boarding, training and remuneration

Initial composition

The proposed initial Board composition for a new entity will be included in the business case proposal to Council (both numbers and personnel).

Existence within the proposed Board of both general and specialised skillsets as noted below must be evidenced in the recommendation of Board composition.

Ongoing monitoring of composition

CE Board composition will be subject to annual assessment as prescribed in the CE Terms of Reference.

Each CE Board will assess the appropriateness of their Board composition annually and report it to the Council’s Nomination and Remuneration Committee (NRC), via the Vice-Chancellor.

The annual review will include such matters as:

  • the composition, diversity, tenure and succession planning for each CE Board;
  • developing senior leaders within the Macquarie University Group for Board positions;
  • a skills matrix of Directors, to ensure the Board has the collective governance experience and commercial acumen necessary for the CE and its activities; and
  • the mix of internal and external Directors. External Directors will only be appointed where it is necessary to adhere to regulatory requirements, or to bring relevant industry or other technical expertise to the Board.

Appointment of Directors

Where Directors are to be appointed to a CE, the appointment should be made in accordance with the CE’s constitution.

Initial Directors will be included in the business case for the new controlled entity.

Procedural steps for appointment of subsequent directors:

  1. CE Board will submit a recommendation to NRC for consideration, via the Vice-Chancellor.
  2. NRC to consider the submission, and if it agrees, recommend the appointment to the Council for approval.  If NRC disagrees with the recommendations, further options for appointment will be discussed with the Vice-Chancellor.
  3. Council will consider the NRC recommendation and approve.  If Council disagrees, further options for appointment will be discussed with NRC and the Vice-Chancellor.
  4. Additionally, if, under the CE’s constitution, Member approval for the appointment is also required, and Council will submit their recommendation to the Member for co-approval.

Resignations and removal or Directors

A Director may voluntarily resign, or the Council, the Vice-Chancellor or the CE Chair may recommend the removal of a CE Director.  The CE must then follow the requirements of the CE’s constitution in relation to the removal of a Director.

On-boarding and training for Board members

The Company Secretariat will oversee a formal on-boarding program for each new Board member of a CE, including:

  • provision of key strategic and operational information about the CE
  • details of Directors & Officers insurance and Deeds of Indemnity provided by the University.
  • completion of externally provided entry-level Directorship course covering an introduction to governance, finance, strategy and risk from a Board perspective.
  • Completion of Health and Safety Officer, Privacy, and Whistle-blower training.

Remuneration

Board members who also have paid employment within the University Group will not be eligible for additional remuneration for their role on a CE Board.

External Board members will generally not be paid. Exceptions will be recommended by the Vice-Chancellor to NRC, for discussion and recommendation to, and ultimate approval by, Council.

4.2.  CE Constitution and Members  

4.2.1 The initial CE Constitution must be developed under the direction of University General Counsel, in the approved format (as detailed in the Schedules supporting this Policy).

4.2.2. The CE’s Constitution, and any subsequent material amendments, must be approved by Council.   Member approval may also be required (depending on the individual CE’s constitution).

4.2.3. Further, a CE’s Constitution can only be amended in accordance with the requirements of the Constitution.

4.2.4. Where the University is the sole shareholder or the sole voting member of a CE, the Vice-Chancellor may appoint University representatives to attend and vote at CE member meetings.

4.3.  CE Board Terms of Reference (ToR)

4.3.1. Each CE Board will have a ToR, in the approved format (as detailed in the Schedules supporting this Policy), which clearly defines the roles, responsibilities and authorities of the Board (both individually and collectively) and CE management in setting the direction, management and control of the organisation.

4.3.2. Board ToR will be approved by Council at the same time as the entity establishment is approved.

4.3.3. CE Boards will formally review their ToR annually. Any material recommended amendments must be approved by Council.   Minor amendments that do not change the scope, intent or application off the ToR may be approved by the Vice-Chancellor.

4.3.4. In the event of any inconsistency between a CE constitution and the CE Board ToR, the Constitution will prevail.

4.4.  CE Board meetings

4.4.1. Council requires each CE Board to balance their time monitoring both compliance and performance, with both an internal and external focus[1].

4.4.2. The Board of each CE will develop an annual rotational Board Agenda, in the approved format (as detailed in the Schedules supporting this Policy) ensuring each element of Board accountability is covered as set out in the CE’s constitution and Board ToR as amended from time to time.

4.4.3.  The Vice-Chancellor or their nominated representative has ex-officio rights to receive papers and attend CE Board meetings as an observer.

4.5.  Committees of Boards

4.5.1.  CE Boards may choose to delegate certain roles and responsibilities to CE Board Committees.  In such circumstances:

a. CE Board Committees will formally report to their CE Board and will be chaired by a CE Director.

b. It is expected that CE Committee structures will mirror the accountabilities of University Committees of Council.  The roles and responsibilities of two or more University Committees of Council may be included in one CE Board Committee if the size of the CE does not warrant multiple Board Committees.

c. The CE Board will develop CE Board Committee ToR in the approved format (as detailed in the Schedules), and endorse the proposed membership of CE Board Committees, for initial approval and annual review by the NRC, via the Vice-Chancellor.

d. CE Board ToR must give the following roles ex-officio membership to CE Board Committees:

CE Board Committee

Ex-officio membership

Audit and Risk Committee (or equivalent)

University Chief Financial Officer or their nominated representative

University  Director Risk and Assurance or their nominated representative

University Chief Information Officer or their nominated representative

University General Counsel or their nominated representative

Finance and Facilities Committee (or equivalent)

University Chief Financial Officer or their nominated representative

University Property Director or their nominated representative

Nomination and Remuneration Committee

University HR Director or their nominated representative

    4.6.  CE Board Authority delegated to management

    4.6.1.  Each CE Board will delegate authority to CE management through a formal written Delegation of Authority Policy and Register (DoA), in the approved format (as detailed in the Schedules supporting this Policy), which will be developed under advice from Governance Services.  The CE DoA will be formally reviewed by the Board annually and must be consistent with the principles of the Macquarie University DoA.

    4.7.  CE Management attestations to CE Boards

    4.7.1.  CE management will provide an annual attestation to their Board, covering critical operating controls and adherence to Group and/or local Policies, in the approved format (as detailed in the Schedules supporting this Policy) as part of the preparation of the CE financial statements.

    5. Oversight of Controlled Entities by University

    5.1. Macquarie University - Executive Group oversight

    5.1.1. The Chief Executive Officer (or equivalent) of a CE will have a reporting line to a member of the University Executive Group.

    5.2. Council Reporting

    5.2.2. Each CE will provide an annual report to Council in the approved format (as detailed in the Schedules supporting this Policy).

    5.3. Reporting to Committees of Council

    5.3.1. CEs will provide information requested by University Executive Group members and functional specialist leaders, to fulfil Macquarie University Group reporting to Council Committees.

    5.3.2. An annual attestation covering key operating controls and adherence to Policies, in the approved format (as detailed in the Schedules supporting this Policy) will be provided by CE Boards to the University’s Audit and Risk Committee as part of submission of year-end accounts.

    5.3.3. At the request of the Chair of any of the Committees of Council, the Chair and/or CEO of a CE will attend and present on areas of interest to that Committee of Council.

    5.4. University specialist support functions

    5.4.1. To ensure consistent quality and transparency of specialist functional expertise across the Group, all specialist support functions required by CEs will be provided by the University.

    5.4.2. Roles performing specialist services will:

    5.4.2.1. report to and be supervised by the relevant University functional leaders, including performance management and approval of remuneration and;

    5.4.2.2. have a dotted reporting line to the CE management team that they support.

    5.4.3. Specific rights and responsibilities of the functional specialist areas are included in the Section 7.

    5.5. Operational Policies

    5.5.1. All Policies and Procedures across the Group will meet the quality thresholds prescribed by the University Policy Framework Policy and will be published on Policy Central.

    5.5.2.  By default, CEs will comply with University Policies.  As a principle, University policies will be written to accommodate the needs of both the University and CEs, to minimise the need for local Policies.  The existence of local Policies is only permitted in the following circumstances.

Challenge for CE in adopting University Policy

Authority to issue local CE Policy

University Policy does not exist, due to specialised nature of topic, e.g. certain Hospital Medical Policies

Policy may be approved by local CE Board

University Policy is deemed inappropriate by the CE Board and the relevant University functional leader and cannot feasibly be changed.

Local Policy must be developed in consultation with Governance Services and must follow policy development advice on Policy Central.

Local Policy will require co-approval by CE Board and relevant University functional lead.

5.5.3. CE Boards have responsibility for ensuring adherence to University policies within their CE.  An attestation regarding adherence to University Policies and the existence of any local Policies will be included in the annual attestation to Audit and Risk Committee.

6. Closure or major change of objectives for a CE

Tax, legal and constitutional implications must be completed with oversight from University General Counsel before any proposed material changes to CE operations are enacted.

6.1. Deregistration or liquidation of a CE

6.1.1. Council approval is required to deregister or liquidate a CE.  Member approval may also be required (depending on the individual CE’s constitution).

6.1.2. Where it is deemed appropriate by a CE Board to deregister or liquidate a CE, the approved Deregistration Checklist, (as detailed in the Schedules supporting this Policy), must be completed and provided with the request for approval.

6.2. Transfer of CE’s activities to another entity within the Macquarie University Group

6.2.1. Where it is proposed to integrate all or a material part of a CE’s activities with those in another area within the Macquarie University Group, a project team will be convened by the Board to manage and report on the integration in line with the approved procedure (as detailed in the Schedules supporting this Policy).  Such a team will include operational leaders from the current CE; from the impacted CE or University area that the activity is transitioning to, and from relevant functional specialist areas.

6.2.2.  Transfers of activities within the University Group will be approved as follows:

Scenario

Approver

Transfer requires alteration to the constitutional objects of an impacted CE

Council on recommendation from Vice-Chancellor

Transfer does not require alteration to the constitutional objects of an impacted CE.

Note, that if the transfer involves transfer of employment between CEs and/or the University, an impact assessment from the University HRD will be provided to the Vice-Chancellor.

Vice-Chancellor

7. Rights and responsibilities for functional specialist support areas in relation to Controlled Entities.

Activity

Function Lead and other functional specifics

Company Secretariat Services

A Company Secretariat function, as appointed by the Vice Chancellor, will provide services across the Group.  Supplementary Company Secretariat services may be sought in local jurisdictions where a CE is registered outside Australia.

Services will include:

  • Maintenance of a Group-wide register of CE    Members, Directors and Committees
  • Support to CE Boards in the creation and    review of Board and Committee ToR, Board agendas, Board and Committee    minutes, lodgments with ASIC.
  • Maintain best practice templates for CE    Board Agenda, ToR and Committee templates.
  • Ensure CE Board and Committee Terms of    References are compatible with University equivalents.
  • Ensure CE reporting to Council and Audit    & Risk Committee as stipulated in this Policy is included in relevant    annual agendas.

Legal Services

All lawyers across the Group report directly to University General Counsel or their nominee.

All potential or real legal action against a CE must be promptly referred to University General Counsel by the CE CEO, who will co-ordinate provision of internal and external advice as required.

Controlled Entities must not engage external legal advisors without prior approval of University General Counsel.

All potential ICAC matters across the Group will be referred to University General Counsel.

Finance

All CE Finance staff will report to the University Chief Financial Officer (CFO) or their nominee.

The annual accounts of each CE will be reported in the consolidated accounts of the University as required in accordance with the relevant accounting standards.

The General Ledger system used by CEs must be approved by the University CFO. The University General Ledger will generally be used by all CEs, unless a critical operational requirement of a CE cannot be met by the University General Ledger.

CEs may not incur external borrowings or issue bank guarantees.

Procurement

All CE Procurement staff will report to the University Strategic Procurement Director or their nominee.

IT

All CE IT staff will report to the University Chief Information Officer (CIO) or their nominee.

The systems and IT environment used by CEs must be approved by the University CIO.

Common IT systems, environments and suppliers will be used across the Group unless a critical need of the CE cannot be met.

HR

All CE HR staff will report to the University Human Resources Director (HRD) or their nominee.

The HR and payroll system used by CEs must be approved by the University HRD.

All CE employee deeds of release and terminations of employment will be approved by the University HRD or their nominated delegate.

All industrial instruments in use by CEs will be negotiated by the University HRD or their nominated delegate.

The University HRD will approve all CE remuneration frameworks, pay increments and loadings.

Any bonuses payable to CE employees require approval of the CE Board, University HRD and Vice-Chancellor.

Property & Facilities

All CE Property and Facilities staff will report to the University Property Director or their nominee.

The University Property Director will oversee the following activities across the Macquarie University Group:

  • commercial and retail leasing
  • space utilisation and planning
  • building regulatory and safety compliance
  • utilities, security, landscaping and    cleaning
  • repairs and maintenance
  • capital works, including    building, fixtures and fittings, leasehold improvements

Risk

All CE Risk staff report to the University Risk & Assurance Director or their nominee.

All CE activities must adhere in substance to the University Risk Appetite statement.

CE risk management maturity, as well as monitoring of specific CE risks, will be reported to CE Boards and the University ARC.

Health & Safety

All CE Health & Safety staff will report to the University Risk & Assurance Director or their nominee.

Advancement and Engagement

All CE Advancement, Corporate Engagement, Marketing and Events staff will report to the relevant Head of Office or their nominee as listed below:

  • Advancement – Executive Director Advancement
  • Corporate Engagement – Executive Director Corporate Engagement
  • Marketing – Chief Marketing Officer
  • Strategic Events – Director of Events and Domestic Protocol

Insurance

All insurance needs, including Directors & Officers insurance, will be overseen by the University Risk & Assurance Director, who will ensure insurance cover is consistent with the University risk appetite and profile.

Governance Services

All development of CE Policy and Delegations of Authority will be completed under advice from the Head of Governance Services and will follow policy development requirements as detailed on Policy Central[1].

University and local CE Policies will be made available on Policy Central.

Governance Services will advise each CE Board and relevant functional lead when local CE Policies are due for review.

External audit

All CEs will be audited by the auditors of the University (currently the NSW Audit Office).

Internal audit

Internal auditors for all CEs will be appointed by the University Audit & Risk Committee.

The annual internal audit program for each CE will be approved by the University Audit & Risk Committee, after consultation with the Chairs of local CE Audit & Risk Committees.

The internal auditor will issue findings and progress status reports regarding local CE internal audits to:

  • local CE Boards and Audit & Risk Committees; and
  • the University Audit & Risk Committee.

8. Template Toolkit

The following list of templates will be made available on Policy Central to support this Procedure.

Document topic

Document owner

Formation documents

 

Business case to establish a CE

University Chief Financial Officer

CE Constitution

University General Counsel

Terms of Reference

  • CE Board
  • CE Audit and Risk Committee
  • CE Finance and Facilities Committee
  • CE Remuneration and Nominations Committee

University Company Secretariat

CE Delegation of Authority Policy and Register

University Head of Governance Services

Deed of Indemnity from University to CE Board Directors

University General Counsel

Ongoing documents

 

CE Annual report to Council

University Company Secretariat

CE annual attestations to University Audit and Risk Committee

Chair Audit and Risk Committee, under advice from University Chief Financial Officer and University Director Risk & Assurance

CE Board and Committee annual calendar and agendas

University Company Secretariat

CE Board induction pack checklist

University Company Secretariat

CE Board and Committee skills matrix

University Company Secretariat

Ongoing documents

 

Checklist for transfer of activities to another entity within the Macquarie University Group or in preparation for a CE to cease operational trading.

University Financial Control & Treasury Director

Winding up documents

 

CE deregistration or liquidation checklist

University Company Secretariat

DEFINITIONS

Words and phrases used in these procedures and not otherwise defined in this document have the meanings they have in the Controlled Entities Policy.

Nomination and Remuneration Committee (NRC) – a committee of Council.  Refer NRC Terms of Reference

University specialist support function – specialist support offices, including but not limited to those listed in Section 7 of this Procedure.

KEY RELATED DOCUMENTS

Controlled Entities Policy (see tab above)

Macquarie University Act 1989 (NSW)
Public Finance and Audit Act 1983 (NSW)

Macquarie University Risk Appetite Statement

NOTES

8.1

Contact Officer

University Company Secretary

8.2

Implementation Officer

University Company Secretary

8.3

Approval Authority / Authorities

Vice-Chancellor

8.4

Date Approved

14 June 2018

8.5

Date of Commencement

14 June 2018

8.6

Date for Review

June 2021

8.7

Documents Superseded by this Policy

Incorporating some content from superseded Controlled Entities Policy dated 1 October 2010

8.8

Amendment History

n/a

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