Board member's code of conduct

Many Boards have a written code of conduct. It sets out the legislative and common law requirements of a Board member as well as the ethics and specific behaviors that the organization expects of him/her.

A board is often evaluated based on the quality of its decisions. Many of these requirements help answer the question: What makes a decision good?

A Board's code of code of conduct might include the following areas:

1. Due process
   To be valid, board decisions must follow due process. This means that they must:
1. meet any legal procedural requirements specified in the Act.
2. follow the organization’s constitution.
3. follow the board’s processes, many of which will be written or assumed in both the Act or the constitution. For example:
1. Decisions should be made at a board meeting to which all board members have been invited.
2. There should be a quorum (i.e. enough people present to make a decision).
3. The board should have sought sufficient, accurate information as the basis for its decision.
4. All board members should have had opportunity to express an opinion.
5. Board members should have cast a passing vote.
6. The decision should be accurately represented in the written minute.

Being a board member means committing to high standards.
2. Due care and diligence
1. Due care and diligence means that you must apply your skills and abilities to your work as Board member and to give satisfactory attention to detail. Simply put, this is the opposite of negligence. The principle of reasonable effort applies.
2. Look for the best solution. When facing different alternatives, examine them with the attitude: Let’s look at these two ideas and find the best solution that we can decide on together. If you understand the mix of gifts and skills in the team, you will avoid power-plays and clashes. A power-play is: My idea versus your idea. Someone will win and someone will lose, which is obviously not healthy.
3. Be independent in judgment and actions and to take all reasonable steps to be satisfied as to the soundness of all Board decisions.
1. Did the board seek good information and advice on which to make decisions?
2. Did the board seek to identify all relevant legal requirements with which it must comply?
3. Did it actively consider the decision?
4. Did it examine any risks?
5. If it involves other people or organizations, did it make reasonable attempts to locate them and communicate with them?
3. Act in food faith
   Board decisions are considered in good faith if they are made:
1. in the best interests of the whole organization (not a factional group)
2. for a proper purpose according to the objects of the organization
3. without personal interest or conflict
4. with appropriate information.
4. Do not take improper advantage of the position of Board member.
5. Do not engage in conduct likely to discredit the organization.
6. Always comply with the spirit, as well as the letter of the law and with the principles of this Code.
7. Be honest.
1. In common law, fraud refers to advantage gained by unfair means, as by knowingly misrepresenting a fact, or without belief in its truth, or recklessly, not knowing whether it is true or false.
2. In equity, fraud means violating the rules of fair dealing, whether intentional or not.
8. Act in the best interests of the organization as a whole.
   Always act in the best interests of the whole organization, not in the interests of any particular groups or constituencies. This includes recognizing that the board's responsibility to the organization's shareholders as a whole.
9. Be bound by the decisions of the the Board.
10. Keep board records safe.
11. Do not make any public statements on behalf of the board unless the board specifically authorizes it.
12. If problems arise, contact the Chairperson as soon as possible and explain the situation.
13. Maintain the solidarity of the board.
1. If you personally don't agree with a decision, refer to it in a way that promotes the aims of the organization.
2. You need to be as balanced and fair as possible in your views, especially in the way you represent opinions of those with whom you disagree.
3. Don't let it become gossip; in fact, your respect for them as persons will put you in good light. Be aware that even good explanations might be passed on to others in a distorted form and be used destructively.
4. Do not compromise the board, e.g. by closing options for subsequent decisions, making public comments, or creating factions or lobby-groups.
14. Use board information ethically.
1. Do not make improper use of information acquired as a Board member.
2. Confidential information received by a Board member in the course his/her duties remains the property of the organization from which it was obtained. Do not disclose it, or allow it to be disclosed, without authorization from the Board, or the person from whom the information was provided, or as required by law.
3. Maintain the confidentiality of information on individuals and any matters that the Board wishes to keep confidential.
4. You can't discuss any information that is commercial in confidence. That is, if a business deal is still in discussion and has not yet been finalized, the details are confidential. If knowledge of the deal were leaked to any other parties, it could disadvantage your organization and give an advantage to a competitor.
5. Be careful how you discuss any non-confidential proceedings of the Board. It is not always simple:
1. In difficult, non-confidential matters, the board may appoint a spokesperson. If you are not the appointed spokesperson, you are not permitted to discuss it with anybody, so the matter is confidential as far as you are concerned.
2. When you give information and express views to those outside the Board, be consistent with its decisions. Even in private conversations, you cannot easily speak on your own behalf.

15. Avoid conflicts of interest
1. A conflict of interest can arise in a number of situations. For example, you, one of your associates, or a relative, has an interest of any kind in a transaction (for monetary gain) to be discussed by the Board. You might be involved in a decision that could affect another organization where you have a role.
2. Declare any actual, percieved, or potential conflict of interest before the meeting of the Board or a committee discusses any matter. Check that it is recorded in the minutes.
3. Two kinds:
1. A conflict of pecuniary interest means that you either stand to make money out of the matter, or that you will able to prevent losing money that you would otherwise have made. The Associations Incorporations Act (WA) recognizes only this kind of conflict of interest. That is, board members of bodies incorporated under this Act are legally required to declare pecuniary interest. Other kinds of conflict of interest are only ethical requirements.
2. A conflict of duty (sometimes called an institutional conflict of interest) means that you hold a position somewhere else that compromises your Board member role on an item of business.
4. Boards normally have rules for actual or potential conflicts of interest, often imposed by legislation. Most normally, the conflicted person must leave that part of the meeting unless a motion is passed to remain, and must abstain from voting on the matter.
5. Boards can adopt additional guidelines for actual or potential conflicts of interest. These can vary according to the kind of incorporation, but may include:
1. A Board member must notify the Board of any conflict or potential conflict as soon as it occurs.
2. A procedure for reporting any conflict or potential conflict.
3. Some organizations have rules that even forbid board members accepting papers on matters with a conflict of interest.
4. The Board should keep a register of Board member's interests.
5. Board members who cannot or will not remove the conflict of interest must remove themselves from the decision-making process, including discussion of the issue at hand.