M3: Learner Manual

4.4. Seeking Legal Support and Advice when Needed

Organisations, whether on the initiative of management or by board resolution, often take external professional or consultancy advice on matters under consideration by the organisation and/or its board. This can include legal, accounting and financial advice. The advice may be for the benefit of the organisation generally, or even only for the benefit of the board discretely from management; for example, in the performance of its oversight role of management, the board may need advice independent of any affiliation with management.

In terms of seeking external professional advice, the following good governance practice is recognised:

·       On occasions, the entire board may wish to obtain external professional advice separately from the organisation on matters relating to their duties and responsibilities as a director(s);

·       On other occasions, an individual director or a subset of directors may wish to obtain external professional advice separately from the organisation and the board on matters relating to their duties and responsibilities as a director(s);

·       Provided they are acting in good faith, it is reasonable for them to do so at the expense of the organisation and accordingly.

o   They should be entitled to reimbursement of expenses for the external professional advice taken.

o   They should not risk breaching confidentiality obligations owed to the organisation by taking that advice.

·       In such a case, an authority to do so should be given in accordance with applicable policies and procedures.

·       Commonly, such an authority is found in one or more of the following instruments which have contractual status between the organisation and the director:

o   Organisation’s constitution;

o   Organisation’s governance or board charter;

o   Letter of appointment by which the director was appointed to office;

o   Deed of access, indemnity and insurance between the organisation and the director.[1]