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COMMERCIAL ACTIVITY GUIDELINES


Date approved:	14 May 2002	Date Guideline will take effect:	On approval	Date of Next Review:
Approved by:	Minister for Education and Training on the recommendation of the University Administrative Committee (14 May 2002 - 2002/17)
Custodian title & e-mail address:	Associate Director Financial Services finance_managers@uow.edu.au
Author:	Director, Financial Services
Responsible Faculty/Division & Unit:	Financial Services Division
Supporting documents, procedures & forms of this guideline:	Register of Commercial Activities
References & Legislation:	University of Wollongong Act, 1989 Purchasing and Procurement Policy Delegations of Authority Policy IP Commercialisation Revenue Policy Corruption Prevention Policy Conflict of Interest Policy
Audience:	Public – accessible to anyone
Expiry Date of Guideline:	Not applicable

1 Introduction 3
2 Scope / Purpose 3
3 Definitions 4
4 Evaluation and Risk Assessment 4
5 Approval Process 5
6 Governance and Reporting 6
7 Register of Commercial Activities 6
8 Roles & Responsibilities 6
9 Version Control Table 6
Appendix A – Checklist for Commercial Activity Evaluation & Risk Assessment 8

1 Introduction

1. Under the University of Wollongong Act 1989, the University has powers to undertake commercial activities.
2. These guidelines provide a set of principles and processes for the development and conduct of commercial activities.
3. Core elements include requirements for undertaking feasibility and due diligence assessments, identifying appropriate governance and administrative arrangements, undertaking risk assessment and risk management measures, and monitoring and reporting on commercial activities.
4. These guidelines are supported by, and should be read in conjunction with, other University policies and procedures that underpin University activities. In particular, Purchasing and Procurement Policy, Delegation of Authority Policy, IP Commercialisation Revenue Policy, Corruption Prevention Policy, Conflict of Interest Policy and University Council Handbook.

2 Scope / Purpose

1. Commercial activities, like other University functions, may be carried on outside or anywhere within Australia.
2. General indicators of commercial activity may include one or all of the following:

a. The main purpose of the activity is profit and involves user charges for goods or services;
b. The activity involves association with one or more third parties and requires or is likely to require University resources exceeding $100,000. This amount is to include the full cost of service provision (i.e. cash and other forms of resources). Artificial separation of a commercial activity into component parts in order not to reach this threshold is prohibited.
c. The degree of independence Managers of an activity can exercise in determining both the quantum and price of goods or services to be provided will also indicate whether an activity is commercial.

3. Specific activities that are commercial activities under these guidelines:

a. The exploitation of intellectual property rights in which the University claims an interest, except where this occurs through research activities that are funded through National Competitive Grants;
b. Any activity involving the University establishing or acquiring a controlled entity, except for the purpose of investing University funds as contemplated in Schedule 2 of the University of Wollongong Act;
c. Any activity involving the University establishing or acquiring an interest in a company, or an incorporated association, except for the purpose of investing University funds as contemplated in Schedule 2 of the University of Wollongong Act;
d. Any joint venture with a third party that involves a total contribution exceeding $100,000;
e. Consultancy services provided by the University (through its staff) to external parties for a fee;
f. The acquisition, sale or management of real estate not used primarily for teaching or research purposes;
g. The lease or licensing of real estate to third parties;
h. The lease or licensing of real estate to bodies affiliated with the University where the term of that lease or licence exceeds 21 years;

4. Specific activities that are not covered by these guidelines:

a. The following activities are not covered by these guidelines, but may in some cases still be subject to evaluation, risk assessment and approval processes prescribed elsewhere. For example in the Purchasing & Procurement Policy:
b. The acquisition of services, facilities, equipment or other assets by or on behalf of the University;
c. The sale or provision of services, facilities or equipment to academic, administrative or support units within the University;
d. The casual hire of University venues or facilities that are managed through faculty offices or other administrative units;
e. The lease or licensing of University venues or facilities to bodies affiliated with the University for the purpose of those bodies providing facilities or other services to the University community, where the term of the lease or license does not exceed 21 years;
f. A research activity that does not involve the exploitation of intellectual property rights;
g. Any activity involving the management, maintenance, restoration or improvement of University lands or buildings in accordance with the University’s capital management plan;
h. Any activity involving the management, maintenance, restoration or improvement of other types of University assets, for example, libraries, art collections;
i. Charitable fundraising or sponsorship activities conducted by or on behalf of the University;

3 Definitions

Word/Term

Definition (with examples if required)

Commercial Activity

The exercise of a commercial function of the University. The commercial functions of the University are those where the University exploits or develops commercially any of its facilities, resources or property (including intellectual property).

4 Evaluation and Risk Assessment

1. Any proposed commercial activity must be subject to evaluation and risk assessment (see Appendix A).
2. Risk may be an actual or contingent risk that involves any:

a. Adverse financial loss or consequences to the University, including, without limitation, tax consequences;
b. Legal liability to the University, including, without limitation, indirect legal liability consequences such as occupational health and safety, discrimination, etc.
c. Risk or loss or damage to the University’s reputation;
d. Impairment to the University in conducting its principal functions under the Act;
e. Probity or compliance risk.

3. Evaluation and risk assessment will be managed by the Legal Services and Commercial Research Units of the University.
4. Board of Directors of any controlled entities are responsible for ensuring that evaluation, risk management and accountability processes are in place, consistent with these Guidelines, for any commercial activities that are conducted by the entity.
5. The evaluation and risk assessment process includes the following steps:

a. ensure the activity proposed comes within the objects and functions of the University as prescribed in the Act;
b. identify whether the proposal is for the overall benefit of the University, taking into account the risks, opportunity costs, effect on the University’s activities and non-financial benefits to the University;
c. ensure the structure for a particular activity is appropriate from a legal, tax and accounting perspective;
d. ensure there is appropriate accounting, auditing and reporting mechanisms for the proposal;
e. carry out financial analysis, identification of risks, analysis of projected cash flow models and expected rates of return to the University (where applicable);
f. assess compliance with competitive neutrality principles as outlined by NSW Treasury from time to time, and assess compliance with relevant University pricing processes;
g. determination of an appropriate level of funding from the University required to implement the proposal or carry on the proposal;
h. carry out analysis of risks (including liability exposure) and recommended risk management procedures required for the proposal;
i. any third parties with whom the University contracts should be subject to appropriate due diligence checks and should have, where appropriate, a proven track record of reputation and capability in the area concerned;
j. identify the effect of the proposal on IP ownership and value, and to recommend a strategy for protecting the University’s interests in the IP;
k. assess the insurance coverage and limitations and make recommendations as to appropriate insurance. If possible, uninsured risk in excess of $100,000 is to be expressly noted;
l. preparation of a summary of the evaluation and risk assessment outlining the risks and benefits and stating how any risks are to be managed. Appendix A provides a checklist for this purpose.

5 Approval Process

1. All commercial activity proposals will be evaluated and risk-assessed by the University’s Legal Services Unit or the Commercial Research Unit, within the delegation authorised to the Director of the Commercial Research Unit.
2. Following evaluation and risk assessment, commercial activities are approved in accordance with the University’s Delegations of Authority Policy.
3. A delegate exercising their approval authority must not approve an activity for which they are the sponsor. Regard must always be had to the University’s policies on Conflict of Interests and Corruption Prevention.
4. Financial Services will ensure all approved commercial activities are entered into the Council’s register of commercial activities.
5. Financial Services is authorised to alter any details included in the register if:

a. it considers that the details are inaccurate or incomplete;
b. there is a change in a proposal or in a commercial activity that necessitates a change to the details included in the register.

6 Governance and Reporting

1. A report detailing approved commercial activities will be provided to each meeting of the Administrative Committee and to the University’s Council on an annual basis. The report will provide the following information in respect to each commercial activity:

a. The nature of the activity and the parties involved;
b. The cost and benefits to the University of the activity;
c. Contributions of any third parties;
d. Benefits to flow to third parties;
e. A summary of risks associated with the activity and how these are managed.

7 Register of Commercial Activities

1. A register of commercial activities will be maintained by the Legal Services Unit. The register will be designated and dealt with as “Commercial-in-Confidence”. It will contain the following information:

a. A description of the activity;
b. Names of all parties to that activity;
c. The names of any people that the University appoints to the boards or other governing bodies overseeing that activity;
d. Details of any meetings at which relevant matters were considered and approved for the purpose of compliance with these guidelines;
e. Who approved the activity (for example, the Council, Vice-Chancellor or other authorised delegate).

2. Each member of the Council and of any committee appointed by the Council, and any University Officer acting within authorised delegation in relation to commercialisation of any of the University’s resources will be required to notify [the registrar] of any financial interest in any company, institution or other entity which is involved in a commercial activity with the University. A notification may be made generally or with respect to a particular activity or proposal.
3. Any member of the Council or of a relevant committee or any University Officer acting within authorised delegation who has a financial interest in any company, institution or other entity which is, or is proposed to be, involved in any commercial activity of the University shall be required to:

a. not vote in respect of the commercial activity or the proposal;
b. not participate in any discussion by the Council or the relevant committee about the commercial activity or the proposal.

4. The register of commercial activities is required to be open to inspection by any member of the Council, the Auditor General of New South Wales and any representative of the Minister or the Treasurer.

8 Roles & Responsibilities

1. Roles and responsibilities are as set out in these guidelines.

9 Version Control Table

Version Control	Date Effective	Approved By	Amendment
1	14 May 2002 (Administrative Committee)	Minister for Education and Training on recommendation of the University Administrative Committee (2002/17)	First Version
2	6 May 2009	Vice-Principal (Administration)	Migrated to UOW Procedure Template as per Policy Directory Refresh
3	25 May 2009	Vice-Principal (Administration)	1. Clause 4.3: The amendment notes that evaluations and risk assessments will be carried out by the Commercial Research Unit as well as by the Legal Services Unit. 2. Clause 5.2: The previous table of delegates is replaced with a cross-reference to the Delegations of Authority Policy so that there is no inconsistency of application. 3. Clauses 5.4 and 5.5: Financial Services (previously Legal Services) will ensure all approved commercial activities are entered into the Council’s register of commercial activities and can alter details if they are inaccurate or if the commercial activity proposal changes.

Appendix A – Checklist for Commercial Activity Evaluation & Risk Assessment

1. Identify:

a. The nature of the activity and the parties involved;
b. The structure proposed to facilitate the activity;
c. The expected term or duration of the activity;
d. The cost and benefits to the University of the activity;
e. Accounting & reporting arrangements
f. Contributions of any third parties;
g. Benefits to flow to third parties;
h. Source of funds for the activity.

2. Determine:

a. The purpose for any third party’s involvement in the activity;
b. How any third party was identified and selected;
c. What due diligence has been performed with respect to third parties, ie. Inquiries made and their outcome as to the third party’s reputation, experience, financial and other resources, and legal status;

3. Assess and state:

a. The risks associated with the activity, e.g.

i. Financial
ii. Probity/compliance risks
iii. Liability/indemnity/insurance coverage
iv. Reputation
v. Occupational Health & Safety
vi. Fraud and Corruption

b. How those risks are to be managed;

4. State:

a. Whether expert advice been obtained from sources external to the University;
b. The nature of such advice.

Last reviewed: 23 June, 2009

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