Tool 10: Establishing Written Agreements for a WSI

 

Quick reference

Purpose Purpose Among other benefits, coming to a shared formal understanding among WSI participants about appropriate behavior, as well as agreed roles, objectives, and goals, allows a WSI to be implemented in a way that WSI participants are accountable for their performance and conduct:

  • Sets purpose, objectives, and goals of the WSI.
  • Sets agreed ground rules for the WSI.
  • Sets agreed expectations around behavior and conduct.
  • Increases transparency and accountability of the WSI’s governance.
Possible Users WSI participants.
WSI Phase 2. Formalization.

Internal written agreements allow WSIs to address integrity risks related to poor participant conduct, inequitable decision making and communications, and potential financial management issues. These agreements most often take the form of a Memorandum of Understanding and/or Code of Conduct, which codify not only the objectives of the WSI but also the agreed internal governance aspects and expectations for participant behavior. In most cases, these written agreements will provide enough structure for a WSI, particularly in cases where a partnership agreement is enough. However, when a WSI begins to develop into a permanent organization, it may consider a number of different options. These options should take into account the local legal context where the WSI is operating as well as existing institutions with whom the WSI might engage.

Relevant Tools

Overview of Organizational Forms for WSIs

Type Description
Initiative hosted in existing multi-stakeholder platform Where functional multi-stakeholder partnerships or platforms exist, a WSI may emerge from such platforms or be integrated into them to avoid parallel structures. In more informal arrangements, this could be to operate as a working group, or more formally to enter into a partnership agreement giving the role of hosting the WSI — and the secretariat, if needed — to the existing platform.
Partnership agreement A partnership agreement between a range of stakeholders represents a commitment of resources from each stakeholder toward meeting the objectives of the WSI. An agreement is best suited to the less intensive WSI arrangements such as information sharing. The partnership may be formal through the drawing up of a contract among the parties, or it may be informal through a forum with open engagement. It may evolve over time and include the establishment of a WSI secretariat, typically hosted by one of the partners.
Corporate entity For profit: A company is set up as a separate body to manage and coordinate the activities of a WSI. Companies are usually governed by a country’s Companies Act, which confers particular regulatory requirements. For instance, a private company is a legal entity that must also register as a tax payer. It is considered a separate entity from its owners or shareholders. Depending on the size of the company, the managers may be different from the shareholders. Shareholders have limited liability; however, under a Companies Act, liability is imposed only on those directors who knowingly take part in an illegal or fraudulent act. Private companies are deemed to be more stable, as they have a perpetual lifespan.

Not for profit: These are trusts or foundations. The most common types of non-profit organizations (NPOs) are voluntary associations (VAs), trusts, and not-for-profit companies, which in many countries are all governed by a Non-Profit Organization Act. A trust is an institutional arrangement that is regulated by the common law and often by some specific legislation in the country, such as a Trust Property Control Act. In addition to registering as a trust, a trust that also registers as an NPO is recognized by the law as a corporate body with an independent legal personality.

Statutory entity Statutory entities are public sector institutions governed by the laws of the particular country. Their ability to act and implement activities suggested by the WSI is dependent on the activities stipulated within the legal legislation developed for the entity. In many cases there are likely to be statutory entities already able to carry out the WSI needs, rather than undergoing the tedious and often lengthy process of setting up an additional statutory body.
Third-party contractor or implementing agent Another option for the implementation of the WSI is to contract a third party or implementing agent. This is not mutually exclusive of the previous options, but may be a useful option in implementing activities for the WSI.
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