Policy for the Establishment and operation of Incorporated Entities

The University recognises the important contribution incorporated entities can make to achieving its overall mission, and the close relationship of incorporated entities to research. This policy is designed to:

1. provide a mechanism for the establishment and management of incorporated entities within the University;

2. encourage staff to make their expertise or services available to the community through the use of incorporated entities owned in whole or in part by the University;

3. provide for proper risk management of all commercial activities undertaken by the University;

4. limit the University’s liability in respect of incorporated entities;

5. ensure accountability of University incorporated entities; and

6. ensure the University meets its legal obligations with respect to incorporated entities.

"incorporated entity" means a legal entity registered under law as an association or company. It may include some staff and student clubs and societies.

"association" means a society, club, institute or entity formed and registered under the Associations Incorporation Act 1987 (WA). An association cannot be established for the purposes of trading or securing profit, though it can trade and make a profit provided this is ancillary to its principal purpose.

"company" means an entity formed and registered under the national Corporations Law for economic purposes and trading as a business for profit. A company can be limited (i.e. if it becomes insolvent, the shareholders’ contribution to the company’s debts are limited) by shares or guarantee or both, or be an unlimited company, or a no liability company.

"University company" means an entity incorporated under this policy and approved by the Senate.

"Private company" means an entity incorporated by a staff member for remuneration or other consideration in her or his private capacity or partnership, association, trust, or any similar entity.

"University entity" means a University company or association.

"University association" means an association organised under this policy and approved by the Senate.

"staff" means all full time and part time academic and general staff who are permanent or with a contract of one year or more, plus visiting fellows and research fellows.

"Divisional Head" means the Executive Dean of an academic Division and the Pro Vice Chancellor or Deputy Vice Chancellor in charge of an administrative Division.

1. No incorporated entity or association, having any of the attributes listed in this Clause, shall be organised by the University, or by or on behalf of any staff, without the approval of the Senate, following recommendation from the Vice Chancellor.

This Clause shall apply to any incorporated entity or any association having any of the following attributes:

a.	the University is intended to own a shareholding interest, partnership interest, or other legal or beneficial interest of any kind, in such a entity or association; or
b.	the University’s name, logo, or any other intellectual property rights, are intended to be used by such incorporated entity or association; or
c.	the University is intended to guarantee or indemnify any person or entity for the liabilities or default of such incorporated entity or association, or  such incorporated entity or association intends to represent in any way its association with the University.

2. Only upon receipt of the approvals provided in this policy in respect of an incorporated entity or association of the type described in Clause 1, shall such incorporated entity or association become a University company or University association, as the case may be.

3. The Office of the University Company Secretary shall be responsible for executing the incorporation or organisation of all University entities and shall be responsible for the entity’s administration.

4. University entities may compete on a professional basis with services offered by commercial or other agencies. The University expects that the private sector will not be unfairly undercut by subsidised charges.

5. Where the Senate resolves to approve incorporation or other form of registration of a University entity, the University Secretary will advise the Divisional Head in writing of the decision of Senate as soon as possible. This advice is to include requirements as set out under sections 13-17 of this policy.

6. The University name and logo can be used by a University entity in its advertising material only after Senate approval of its incorporation, and then only in accordance with any conditions or limitations set out in such approval. Any such use requires the explicit approval of the Vice Chancellor, and must be in accordance with the University style guide.

7. University staff are expressly forbidden to incorporate a University entity until:

• the procedures set in this policy have been complied with; and

• the Senate has approved incorporation of the proposed entity.

8. Staff are reminded that incorporation or organisation of Private companies and associations are subject to the terms of the University’s policy on Private Consultancies, and staff proposing any such incorporation or organisation are referred to such policy.

9. Staff acting contrary to this policy are liable to be dealt with in accordance with the University’s disciplinary procedures.

10. In the case of cooperative arrangements with external agencies, the Senate may approve incorporation which does not conform to this policy in all respects.

11. Where the terms of this policy statement are inconsistent with Enterprise Bargaining Agreements or other industrial instruments with University staff, then those agreements apply.

12. Breaches of this policy may constitute not solely breaches of University policy, but also of State and Federal laws.

13.     Any proposal to incorporate a University entity is to take account of:

1. the resource implications;

2. the taxation implications;

3. the requirements for proper governance of the entity as per the University’s policy on Governance of University Entities;

4. the importance and appropriateness of the incorporation or organisation to the mission of the University;

5. whether incorporation of any University entity will be of benefit to further development, commercial application, or mutual arrangements between the University and industry;

6. whether incorporation of any University entity will attract support for further research and/or provide royalty income (to the University, the Division or to staff members);

7. risk management of commercial activities;

8. any need to protect the University's or the entity’s intellectual property or other interests, where there is a possibility of others incorporating a entity which may diminish work completed or underway within the University.

14. Any proposal to incorporate a University entity shall be submitted in writing to the Vice Chancellor through the Deputy Vice Chancellor by the Divisional Head. Prior to a Divisional Head submitting such a proposal, he or she shall consult the Head(s) of any School(s) affected and the Divisional Board. The application shall:

1. follow the requirements for registration under the relevant Act;

2. include a business plan;

3. include the names of people proposed for appointment as office bearers or directors (bearing in mind the requirements of s. 19(c) below);

4. disclose any potential conflict of interest of the proposer or the proposed office bearers or directors;

5. control of risk and limitation of the liability of the University; and

6. be accompanied by a completed ‘Checklist for the Establishment of Incorporated Entities’ – refer appendix A.

15.     All costs associated with incorporation or organisation of a entity rest with the Division or Office concerned.

16.     Any negotiations with the Vice Chancellor shall be conducted by the Division Head or the Division Head’s nominee in
          writing. 

17.     Prior to recommending the incorporation to the Senate, the Vice Chancellor will:

1. satisfy her or himself that it is in the University's best interest to proceed with the incorporation;

2. satisfy her or himself that the laws, Statutes, policy and procedures relating to the establishment of incorporated entities or associations have been complied with; and

3. appoint office bearers and/or directors of the incorporated entity or association. These appointments shall:

1. have the skills, knowledge and experience necessary to provide proper stewardship and control of the entity;

2. include one member designated as the Vice Chancellor’s representative, who shall be responsible for keeping the Vice Chancellor fully informed of the entity’s activities and of any potential risk to the University from those activities;

3. include the Chief Financial Officer (or nominee) of the University;

4. include at least one member who is a University appointee but who is not a staff member of the University.  Where possible, this appointee will not be a member of the Senate or an officer or student of the University;

5. include University appointees at least equal to the ratio of University to non-University equity in the incorporated entity;

6. include a Company Secretary provided by the University Secretariat;

7. be preceded by obtaining from the proposed appointees a declaration of any direct or indirect pecuniary interest in or conflict with the anticipated activities of the incorporated entity; and

8. specify any terms and conditions upon which approval would be given.

4. satisfy her or himself that there are limitations in the charter of the University entity against borrowing or guaranteeing indebtedness without shareholder approval, in any University entity that is controlled directly or indirectly by the University.

18. The Vice Chancellor will ensure that office bearers or directors are conversant with responsibilities of office bearers or directors under the relevant legislation.

19. At the first meeting, the Board (or equivalent) shall adopt and evaluate regularly a written statement of its governance principles (in accordance with the policy on Governance of University Entities)

20. The Board (or equivalent) must document a clear corporate and business strategy that reports and updates annually the entity’s long term objectives and includes an annual business plan containing achievable and measurable performance targets and milestones;

21. After first recovering all costs incurred by incorporation, the University shall deal with income from the incorporated entity with regard to the contribution made by University, Division, School or Office. Although that distribution shall be a matter for negotiation in each case, the University acknowledges that the starting point for negotiation shall be:

1. 15% royalty will be apportioned to the University;

2. recoupment by the University of financial and secretarial services provided;

3. ongoing costs of the incorporated entity will rest with the incorporated entity;

4. profit will be apportioned pro rata on the basis of initial equity.

The Vice Chancellor will approve the distribution.

22.      The following activities of a University entity shall require shareholder approval before the entity commits to such activities:

a. the incurring of any debt;

b. the provision of any guarantee;

c. the incurring of any contingent liability.

Shareholder approval shall only be given after careful consideration of a business case (in writing) including a risk assessment of the proposed activity.

23. A University entity approved by Senate shall keep accounting records that correctly record and explain the financial transactions and financial position of the entity, and that enable true and fair financial statements to be prepared and to be conveniently and properly audited as may be required by the Office of Internal Audit or the law. If required by law or the Office of Internal Audit, all financial statements are to be prepared in accordance with Australian Accounting Standards and the Urgent Issues Group (UIG) Consensus Views as modified by any relevant legislation or instructions issued pursuant to any legislation.

24. The Office of Financial Services of the University shall be responsible for keeping the accounting records of the entity and preparing the financial statements.

25.  An incorporated entity shall prepare an annual business plan, operate on approved budgets, and report to its shareholders on its activities at least quarterly. The business plan, budgets and reports on activities will be presented its shareholders (or equivalent) for approval.

26. The audited financial statements of the incorporated entity shall be presented to its shareholders (or equivalent) for review within three months of the financial year-end of the entity.

27. Staff involved with University entities shall make themselves familiar with related policy documents and legislation, including:

• Private and Consultative Work (Senate resolution 100/96, 7 October 1996).

• Murdoch University Statute No. 18, in particular, the sections on Intellectual Property and Copyright.

• For University companies, the Corporations Law 2001 (Cth), in particular those provisions that refer to the requirement to keep proper records, insolvent trading and the responsibilities of Officers and Directors.

• Murdoch University Code of Ethics (Senate resolution 91/96, 7 October 1996), in particular the sections on conflict of interest and on use of the University name.

• Academic and General staff condition of appointment contracts.

• Guidelines for the Establishment and Management of Centres within the University (Senate resolution 19/98, 22 June 1998).

• Trade Practices Act 1974 (Cth), in particular those provisions of the Act that refer to the recovery of all direct and indirect costs associated with the entity.

28. Any vacancy among the Directors of a University entity shall be filled by the Vice Chancellor in accordance with the procedures set out in s.17(c) and 18.

29. Every three years, or at the instigation of the Vice Chancellor, Senate shall investigate the University’s continued involvement in the University entity. The Vice Chancellor, in consultation with the chair of the committee of management of the University entity, will determine criteria for the review.

30. The Vice Chancellor shall appoint a review committee, and approve criteria and terms of reference for the review.

31. The review committee shall advise the Vice Chancellor. The Vice Chancellor will recommend to Senate that the incorporated entity continue without change, continue with recommended changes, be wound up or cease trading.

32. Where a University entity has been established jointly with other universities or an outside entity, and as part of that agreement has a review process, the University will not appoint its own review committee. Senate will be provided with a summary of the report of any such review, along with any comments of the committee of management of the entity, and shall determine whether the incorporated entity should continue without change; continue with recommended changes; be wound up or cease trading.

33. Staff acting contrary to this policy are liable to be dealt with in accordance with the University’s disciplinary procedures.

 

Approved	22 February 1999	by	Senate	Resolution No S/17/1999
Amended	7 October 2002	by	Senate	Resolution No S/83/2002
Amended	6 October 2003	by	VC	Noted by Senate
Amended	5 July 2004	by	Senate	Resolution No S/74/2004