Board composition
Board composition is about the structure and diversity of people serving on the board.
It's about having the right team to govern your corporation effectively. The ideal number of people to be effective and efficient discussion and making decisions for the corporation. People with the right knowledge, skills, experience, age and character to help the corporation consider a range of information and perspectives when making decisions. What makes the right team will look different for corporations of different purpose, size, location and business activities etc.
Your directors might all be very different people with different knowledge and skills. But they should work towards the corporation’s goal and share a passion for achieving your vision.
The composition of a board influences stakeholder confidence in the board.
Setting your board composition
The CATSI Act sets some requirements for board composition:
Number of directors: The CATSI Act sets a minimum number (for most corporations this is 3) and a maximum number of directors (this is 12). Corporations can change these numbers in limited ways in their rule book, and if the corporation wants more than 12 directors it can apply to the Registrar for an exemption to have more than 12 directors. Check your rule book for how many directors your board requires.
Member control of the board: The majority of directors on the board must be members of the corporation.
Indigenous control of the board: Most of your directors must be Aboriginal or Torres Strait Islander people. This is called the majority of directors requirement.
Live in Australia: The majority of directors must live in Australia
Not be employees: The majority of directors must not be employees of the corporation.
Learn more
- director requirements under the CATSI Act
- the Indigeneity requirement of the CATSI Act and the Registrar's position:
Your rule book can set:
- a higher ratio of Aboriginal and Torres Strait Islander people
- rules that encourage board refreshment through rules limiting terms and/or reappointments
- skills or qualifications of directors
- age diversity
- cultural diversity.
Consider skills and expertise
A board may need specific skills and expertise:
- relevant to the corporation’s purpose, industry or a strategic goal. For example, a health services corporation may need people with medical experience on the board
- to balance and fill skills gaps such as legal, financial, risk management, technology or cyber security.
Assess board skills
When you’re making or changing a board, these are some questions to ask yourself:
- What are the skills and attributes that this board needs?
- What are the skills and attributes that this board has?
- What are the gaps and how can I fill them?
Some boards use a skills matrix to list a set of desired skills, expertise and characteristics to help them assess their capabilities and identify gaps.
To create a board skills matrix:
- identify the skills your corporation needs to address its strategic goals and challenges
- evaluate the skills and characteristics of current board members against the identified requirements
- fill in the matrix to with the skills of your current board members,
- the gaps in the matrix will tell you what skills current directors need to develop or look for when recruiting new directors
- review and update the matrix when there are changes to the corporation's needs or changes in directors
Skills boards need
Learn more about the skills every board needs in a conversation between experts.
Board skills matrix templates
Directors with financial literacy
Financial literacy is vital. Every board should have at least one director with an understanding of complex financial information.
All other directors need a basic level of financial literacy.
Learn about finance for directors
ORIC offers free financial training for directors of Indigenous corporations. Find upcoming training
Consider director independence
One way to build member confidence that the board is operating in the best interests of the corporation is to have an independent director. An independent director is a person who: is not a current or recent corporation employee or contractor; has no family working for the corporation; has no relationship or business interest with the corporation that might be considered a conflict of interests.
Often corporations seeking independent people also look to see if the person has industry knowledge or a special qualification that may help the corporation fill a skills gap on the board.
Learn more about choosing and appointing independent directors.
Board advisory bodies
Directors walk in 2 worlds. There might be tension between:
- acting in the best interests of the corporation
- acting in the interests of the people they’re culturally representing, especially in native title bodies.
An advisory body can give advice while directors manage the governance and finances.
For example, you might have an advisory body of Elders, Traditional Owners or of young people.