Occasionally, a public entity will be sold, merged, have part of its responsibilities transferred to another public entity or be wound-up.
All of these structural changes will result in some changes to the public entity’s board and governance arrangements.
This can arise for a number of reasons, including a change in government policy or as a consequence of governance non-performance by a public entity’s board.
There is currently no specific government policy on the winding-up or re-scoping of a public entity. A public entity may be wound up or replaced by way of legislation. In that case, compliance with the legislation (including any transitional provisions) will be required.
Advice on appropriate processes and reporting requirements should be sought from departmental contacts, which should also be consulted and advised on a regular basis and at milestones.
Winding up a public entity may be a relatively simple matter for smaller public entities, such as a cemetery trust, or it may be a complex matter.
For example, the establishment of Ambulance Victoria entailed winding up Rural Ambulance Victoria, Metropolitan Ambulance Service and Alexander District Ambulance Service. More complex matters are likely to require comparatively more intense liaison with the portfolio department and specific and detailed legal advice to ensure that legislative requirements were met.
The following general practices, based on the Corporations Act 2001 (Cwlth) Part 5.5, should be considered from the passing of a resolution to wind up, merge or split a public entity:
- The public entity should cease to carry on business except as required for the beneficial disposal or winding up of the public entity (however, the corporate state and corporate powers of the public entity continue until de-registration or dissolution).
- Directors should make a written declaration that, having made an enquiry into the affairs of the public entity, they are of the opinion that any debts of the public entity will be able to be paid in full within a period not exceeding 12 months after dissolution.
- Directors should make a statement of affairs of the public entity showing:
- the property of the public entity and the total amount expected to be realised from that property
- the liabilities, obligations and duties, whether actual, contingent or prospective of the public entity
- the estimated expenses of dissolution.
- Directors should ensure the appropriate disposal and reconciliation of the public entity’s current and non-current assets.
- Appropriate measures should be established to meet current and future liabilities.
- All matters in relation to staff termination and/or transfer should be addressed.
- A final meeting of directors should be convened and an appropriate process for the termination of directors’ appointments should be established and implemented.
- Government databases should be updated and central agencies (the Department of Premier and Cabinet; Department of Treasury and Finance; and the State Services Authority) advised; particularly the Government Appointment to Public Entities Database.
- Departmental officers should ensure the public entity complies with the requirements established to wind it up (this may include some examination of board decisions prior to the final winding up of the public entity to ensure that decisions meet requirements for honesty, integrity, due care and diligence).