In a raft of reforms to the responsibilities of approved providers of aged care related to governance which commenced in December 2022, the term ‘governing body’ was inserted into the Aged Care Act 1997. It has created a lot of confusion in the context of the obligation to have a governing body comprised of a majority of independent non-executive persons.
For example, we have been recently asked by a number of approved providers that are companies whether they could meet this obligation but not appoint them as directors. The confusion is not helped by statements such as the following on a website (it was recently removed):
Does a member of the governing body need to be a director of the company?
No. It is possible for a member of your governing body to be a director of the company, but it is not essential. It is important to remember that the majority of your governing body should consist of independent non-executive members. A company director would not be considered independent in this context.
This alert provides an overview of the meaning of ‘governing body’ in aged care legislation, how the term ‘governing person’ is not relevant, and how the new responsibilities relating to approved providers’ governing bodies will affect their organisations.