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General approval to provide an indemnity

Department of Infrastructure, Local Government and Planning

Purpose

This bulletin is to advise that the Treasurer has granted a general approval until 31 December 2017 for local governments to provide an indemnity.

Background

Section 60A of the Statutory Bodies Financial Arrangements Act 1982 (SBFA Act) prescribes that a statutory body, which includes local governments, may enter into a type 1 financial arrangement with the Treasurer’s approval. A type 1 financial arrangement includes an arrangement that provides for, relates to, is directed towards or includes entering into an arrangement, covenant, guarantee, promise or undertaking to meet the liabilities or obligations incurred by or to a person, whether or not the person is a party to the arrangement, covenant, guarantee, promise or undertaking. The definition of ‘guarantee’ includes an indemnity.

Pursuant to sections 60A and 70 of the SBFA Act, the Treasurer granted a general approval (PDF icon 255 KB) on 6 January 2017 for all statutory bodies to provide an indemnity.

Key points

Please note the following:

  • The general approval is effective from 6 January 2017 until 31 December 2017.
  • 'Indemnity' means an indemnity in an agreement entered into for the purpose of undertaking activities associated with the discharging of a local government’s statutory functions.
  • The general approval does not apply to the provision of a guarantee.

Before finalising any agreement or contract containing an indemnity clause, local governments should ensure that the indemnity is covered by their insurance policy. Legal advice should also be sought where appropriate. In addition, it is good business practice for each local government to maintain a register of all indemnities that it has provided.

It remains the responsibility of each local government to familiarise themselves with the requirements of the SBFA Act.

Further information

Any further enquiries on this matter should be addressed to:

Lynne Marlow
Principal Project Officer
Department of Infrastructure, Local Government and Planning
PO Box 15009
City East
Brisbane  QLD  4002
(07) 3452 6720
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