1. A USTR ALIA B ELGIUM C HINA F RANCE G ERMANY H ONG K ONG SAR I NDONESIA (A SSOCIATED O FFICE ) I TALY J APAN P APUA N EW G UINEA S AUDI A RABIA S INGAPORE S PAIN S WEDEN U NITED A RAB E MIRATES U NITED K INGDOM U NITED S TATES OF A MERICA Director's Duties 24 July 2015 A Legal and Lego Perspective

2. 2 Personal Civil Liability Fine up to $200,000 A compensation award An injunction stopping the breach of duty Disqualification from managing companies for up to 10 years

3. 3 Personal Criminal Liability Fine up to $340,000 Imprisoned for up to five years

4. Care and diligence Duty to prevent insolvent trading Good faith / best interests/prop er purpose Use of position Use of information Duty to avoid conflict of interest / conflict of duty Duty to exercise powers and discharge duties with degree of care and diligence (s180) This extends to the preparation of the company's financial statements Ensure company is able to pay all debts as and when due and payable. (Personal liability of directors) Duty to exercise powers and discharge duties in good faith in best interests of corporation and for proper purpose (s181) (Also criminal offence) Must not improperly use position to gain advantage for themselves or someone else or cause detriment to corporation (s182) (Also criminal offence) Must not improperly use information to gain advantage for themselves or someone else or cause detriment to corporation (s183) (Also criminal offence) Duty to avoid positions of conflict of interest or conflict of duties Supplemented by s191 – requirement to disclose "material personal interests" 4 Directors' duties – statutory/general law Other duties include duty of confidentiality

5. 5 Duty of care and diligence

6. 6 Duty to prevent insolvent trading

7. Essential role of directors – financial statements Directors must read, understand and focus upon the contents of financial statements before approving them in order to ensure (as far as reasonably possible) that the information included in them is accurate. This duty cannot be delegated. Everyone must be Batman

8. Centro case (2011) Financial statements failed to disclose that US$2.1 billion of debt was due in the next 12 months Directors signed off on accounts but did not know they were wrong ASIC sued 8 directors Court found: –Directors should have been aware of the liabilities –Directors should have asked questions Ignorance is no excuse

9. 9 Good faith and proper purpose Directors must act in good faith in the best interests of the company and for a proper purpose

10. Loyalty: Misuse of information or position Directors/officers/employees must not misuse information or position to advantage themselves or someone else or to harm company Directors/officers must not divert corporate opportunities to themselves or other entities in which they are interested Misuse of corporate information may also contravene prohibition on insider trading No joy riding in the company car! …or helicopter

11. Loyalty: Conflicts of interest Directors must avoid situations where there is a conflict between company's interests and: -their personal interests; or -their duty to another person/company The Smithers Memorial Trust will switch to using nuclear power it's…. excellent

12. Common Mistakes on NFP Boards 1.Conflicts aren't managed 2.Deferring to CEO / Chair 3.Relying on experts exclusively 4.Not understanding finances 5.Treating property as own 6.Disengaged directors 7.Not focusing on mission 8.Micro vs strategic focus 9.Not seeking professional advice 10.Assuming your questions are silly

13. Everything is NOT awesome if… ' Because we've always done it this way Jane makes all the decisions about insurance Numbers? yuck! Whatever you say My cousin would make a great CEO – no need to recruit The company forklift made moving house a breeze

14. 14 Honest & respectful Culture –Disagreement is good! Systems and Policies –Don’t wing it – get advice! Training for your board –Early and often Diversity on the board –Of skills –Of ages –Of genders –Of professions –Of closeness to the issue Vaccinate your board

15. Actively Manage Risk

16. Do you keep all board information confidential (eg. documents in a safe place; not sharing information)? Do you read the agenda and papers supplied before the meeting? Do you go to meetings prepared to make a decision? Do you know if you need more information before you can make a decision? Do you turn up to every meeting on time? How to tell if you are doing a good job?

17. Do you read the minutes after each meeting to make sure they are accurate and reflect the things aid and decisions made? If the minutes are not correct, do you discuss that with the Secretary and board at the next meeting to have them amended? Do you do some of the talking and also listen carefully to the views of others during meetings? Do you understand the key information about what the organisation does and how it is run? Do you ask the management questions about the work they are doing and the information they are giving you? Do you understand the answers? Are you happy with the answers? Do you have a clear idea about how you want the organisation to grow in the next 2, 5 and 10 years? Are you happy that everyone is doing everything they can to make the company successful? Do you promote the organisation? How to tell if you are doing a good job?

18. 18 And above all… have fun!

19. A USTR ALIA B ELGIUM C HINA F RANCE G ERMANY H ONG K ONG SAR I NDONESIA (A SSOCIATED O FFICE ) I TALY J APAN P APUA N EW G UINEA S AUDI A RABIA S INGAPORE S PAIN S WEDEN U NITED A RAB E MIRATES U NITED K INGDOM U NITED S TATES OF A MERICA This presentation material is intended to provide a summary of the subject matter covered for training purposes only. It does not purport to be comprehensive or to render legal advice. No reader should act on the basis of any matter contained in this presentation without first obtaining specific professional advice. 235784570