A Bill to amend the Associations Incorporation Act was passed without amendment on 16 June 2020.
The Explanatory Notes to the Bill identify the key aims of the changes as being:
A. Modernisation the Act;
B. Improvement of the internal governance of associations; and
C. Reduction of red tape.
New laws for associations
The key changes for Associations to be aware of are:
- The legislation now spells out the governance obligations of management committee members which are:
- To exercise their powers and discharge their duties with care and diligence, in good faith in the best interests of the association, and for a proper purpose;
- To not improperly use their position to gain, directly or indirectly, a pecuniary benefit or material advantage for themselves or another person;
- To not improperly use information obtained from their position to gain, directly or indirectly, a pecuniary benefit or material advantage for themselves or another person; and
- To prevent insolvent trading.
- Management committee members are now also required to disclose:
- Material personal interests; and
- Remuneration or benefits paid/given to themselves, senior staff members and their relatives.
The disclosure must be made to members at the AGM in relation to the relevant financial year.
- A new requirement for the constitution of an Association to include a grievance procedure for dealing with any dispute under the constitution between:
- A member and another member;
- A member and the management committee; or
- A member and the Association.
The grievance procedure must be consistent with the prescribed principles in the new section 47A. The most significant being:
- The grievance procedure must include mediation;
- A member must be allowed to appoint any person to act on behalf of the member; and
- Where there is a dispute between a member and the association, no disciplinary action can be taken until the grievance procedure has been completed.
- Associations that are registered charities & provide financial reporting to the Australian Charities & Not for Profits Commission (ACNC) will no longer be required to also provide financial reporting to the Office of Fair Trading under the Associations Incorporation Act or the Collections Act.
- Simplified procedures have been introduced for:
- The voluntary cancellation of incorporation where an association has ceased to operate and has no outstanding debts or liabilities; and
- Associations to place themselves into voluntary administration if they experience financial difficulties.
- Associations will no longer be required to have and use a common seal.
There are a number of steps management committees should take to ensure their association is ready for the operation of these changes including:
- A review and amendment of their constitution to ensure they adopt and comply with the changes;
- Ensuring the members of management committees are aware of and understand the implications of the changes and how they should be applied to their association; and
- Making any necessary changes to governance policies and procedures to accommodate the new laws.
For more information about the changes please contact Joanne O’Brien.