Board Charter & Delegation of Authority.

Delegation thresholds and how they're set

The delegation of authority schedule fixes specific dollar thresholds and decision categories that management (often tiered by role — CEO, CFO, department head) can approve without board sign-off: routine operating expenditure up to a set amount, capital expenditure up to a separate (usually lower) threshold, entering contracts within ordinary trading terms, and hiring within an approved budget. Decisions above the relevant threshold, or falling into defined reserved categories regardless of dollar value — borrowing, granting security over company assets, related-party transactions, litigation settlement above a set amount, or anything affecting share capital — require board approval. We calibrate thresholds to the company's actual scale and risk appetite rather than adopting a generic figure, since thresholds set too low defeat the purpose of delegating at all, and thresholds set too high leave the board effectively uninformed about decisions that matter.

Delegation and directors' duties under sections 180 to 184

Delegating authority to management doesn't relieve directors of their duties — section 190 of the Corporations Act specifically preserves director responsibility for delegated decisions unless the director believed on reasonable grounds, after making proper inquiry, that the delegate was reliable and competent and would exercise the power in accordance with the delegation. That's why a delegation framework needs accompanying reporting obligations — management reporting to the board on decisions made under delegated authority at each meeting — so directors have the ongoing basis for the reasonable reliance the Act requires, rather than a delegation that simply disappears from view once granted. We also draft the charter to reinforce (not substitute for) the duties in sections 181 to 184 — acting in good faith in the company's best interests, avoiding improper use of position or information, and avoiding conflicts — by requiring specific disclosure and recusal procedures for related-party or conflicted decisions even where they'd otherwise fall within a delegated threshold.

Board and committee structure

For boards large enough to warrant it, the charter establishes committees — audit and risk, remuneration, or a specific transaction committee — with their own terms of reference, delegated authority, and reporting lines back to the full board. We also fix the chair's role and casting vote, meeting frequency and notice requirements, and how conflicts of interest are recorded and managed at board level, cross-referenced to the specific disclosure obligations directors have under section 191 for material personal interests in matters being considered.

Review and version control

Delegation frameworks need periodic review as the company's scale, risk profile and management team change — a threshold set appropriately for a five-person company is generally too low (or occasionally too permissive) for the same company at fifty staff. We build a scheduled review into the charter itself (commonly annual, or triggered by a material change such as a capital raise or acquisition) so the framework doesn't quietly become outdated while everyone assumes it still reflects current practice.

What the fixed fee covers

• Board charter setting out board role, committee structure and reserved matters
• Delegation of authority schedule with thresholds calibrated to your company's scale
• Reporting mechanism so directors maintain the reasonable reliance basis required under section 190
• Conflict of interest and related-party disclosure procedures cross-referenced to sections 181–184 and 191
• Scheduled review clause to keep thresholds current as the company grows

Mistakes we see

• No written delegation framework, leaving 'who can approve what' to informal understanding
• Thresholds copied from a template rather than calibrated to the company's actual scale
• Delegating authority without a reporting mechanism, undermining the reasonable reliance protection under section 190
• Reserved matters list missing related-party transactions or security over company assets
• No scheduled review, so thresholds become outdated as the company grows

Who this is for

• Companies appointing their first non-executive or independent directors
• Boards with investor-appointed directors who aren't involved in daily operations
• Growing companies wanting to delegate day-to-day decisions to management formally
• Companies establishing board committees for the first time

Frequently asked questions

What's the difference between a board charter and a delegation of authority policy?

The board charter sets out how the board itself operates — its role, committee structure and matters reserved to it. The delegation of authority schedule is more granular, fixing specific dollar thresholds and decision categories management can approve without board sign-off. We usually draft them as a linked pair.

Does delegating a decision to management protect directors from liability if it goes wrong?

Not automatically. Section 190 of the Corporations Act preserves director responsibility for a delegated decision unless the director had reasonable grounds to believe the delegate was reliable and competent and acted within the delegation. That's why the framework needs an ongoing reporting mechanism, not just a one-off delegation.

How do we decide what dollar thresholds to set?

Thresholds should reflect the company's actual scale, cash position and risk appetite, not a generic industry figure. We calibrate them with the board directly and build in scheduled review so they don't become outdated as the company grows.

What should always require full board approval regardless of dollar value?

Common reserved matters include borrowing or granting security over company assets, related-party transactions, litigation settlement above a threshold, changes to share capital, and appointment or removal of senior executives — decisions where the risk or conflict profile matters more than the dollar amount.

Do we need board committees if we're a small company?

Not necessarily. Committees generally become useful once the board is large enough, or the company's risk profile complex enough, to warrant delegating specialised oversight (audit, remuneration) to a subset of directors with more detailed reporting lines back to the full board.