Does your Board understand what it means to be a ‘Corporate Entity’? Has this been discussed by the Board, and are the implications understood by your individual members? This is something which can often be overlooked during induction processes.
To quote chapter and verse from the Governance Handbook, (Section 2.3) ‘As the accountable body, the board is the key decision maker. It may delegate operational matters to executive leaders and governance functions to committees (including in MATs, local governing boards (LGBs)) or in some cases to individuals, but the board as a corporate entity remains accountable and responsible for all decisions made and executive leaders operate within the autonomy, powers and functions delegated to them by the Board.’
Along with confidentiality, this is probably one of the most important concepts covered in a Governors’ Code of Conduct, but the implications are less well understood. At the time of writing the COVID-19 crisis has brought a general halt to normal modes of Governance, and most Boards are trying to continue business through virtual meetings, often alongside increased delegation. Under these circumstances an understanding of ‘Corporacy’ is even more important.
Governing bodies are Corporate Bodies in legal terms. A corporate body has a legal identity which is separate from its individual members. This means that individuals are protected from personal liability in the event of things going wrong, as long as they have acted honestly, reasonably and in good faith. One of the questions new and discerning Governors often ask is ‘what is my liability as a Board member?’, This ‘Corporacy Clause’ is important in this respect
Those who have a background as a Charity Trustee or as a non-executive Director will almost certainly have been protected by some form of Indemnity Insurance which covers the risk of defending a claim against individuals or the Board as a whole. In that type of organisation, without insurance in place, compensation claims could spell the end of the organisation, and serious reputational damage for those involved.
Corporacy means that individual governors do not have the authority or the right to act on behalf of the governing body unless the Board has delegated a specific responsibility to that individual, or group, or if regulations specify that a function must be carried out in a particular way. Decisions are the joint responsibility of the Board.
Implications of corporate status for individual Governors are:-
So, ensure that lines of delegation are clearly identified and minuted and assure Governors that, as long as we act responsibly, accountability for the Board’s decisions and their consequences is collective, not individual.
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