It is important for any organisation to stay on top of regulatory changes. For associations incorporated in the ACT (Associations) there have been at least two important changes to be aware, changes to the Associations Incorporation Act 1991 (ACT) (Associations Act) and the potential new requirement to have a Whistleblower Policy, brought in by the Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2019 (Cth). Both took effect on 1 July 2019.
Associations Incorporation Act
Ironically, these additional obligations on Associations were introduced as part of the Red Tape Reduction Legislation Amendment Act 2018 (ACT).
Given AGM season is approaching, there is one pressing change of concern if:
- your organisation did not adopt the Model Rules provided under the Associations Act;
- the rules or Constitution of your association (Association Rules) does not include a dispute resolution procedure; and
- you are intending to modify your rules or constitution at this year’s AGM.
The Associations Act now requires that Association Rules, which are not the Model Rules, include a dispute resolution clause that stipulates how disputes between members, committee members, and the association (or any combination) are dealt with. This is in addition to any disciplinary procedures for members.
Even if your organisation originally adopted the Model Rules, if you have since modified them you may be deemed to not be using the Model Rules, and this new requirement will apply.
This means that the next time your association changes the Association Rules, you must add a dispute resolution clause if you don’t already have one. If the Association Rules does not include a dispute resolution clause you will be in breach of section 33 of the Act.
The other changes to the Act of interest include:
- a right for Members to request a wider scope of the Association’s documents such as a summary of meeting minutes;
- new duties for officers of the association to act in the best interest of the association and not make improper use of their position, note these duties are personal to the officers and may result in personal liability for a breach;
- fines if a member of the committee is present at a discussion about, or votes on, a matter in which they have a material personal interest in;
- a right for Members to request that access to their personal information in the Members Register is restricted; and
- changes around reviewing or auditing financial accounts, based on revenue thresholds of below $400,000 (small-sized association), between $400,000 and $1,000,000 (medium-sized association), and above $1,000,000 (large-sized association).
We can assist by:
- preparing dispute resolution clauses for your association and providing support in the AGM process;
- providing training to your committee members in relation to the new duties;
- providing advice if you have been considering changing the corporate structure to a company limited by guarantee; or
- providing further advice on any of the above.
ASIC has advised that Associations incorporated in the ACT that conduct particular activities may be required to implement a Whistleblower Policy before 1 January 2020.
The Corporations Act 2001 (Cth) (Corporations Act) now requires certain types of organisations to implement a Whistleblower Policy, including associations that are financial or trading organisations. This policy is required to include certain information prescribed by ASIC, but essentially sets out the protections and procedures for potential whistleblowers within the organisation. Please see our recent article on our website which includes some more specifics.
If your Association has employees or provides goods and services for a fee, it may qualify as a financial or trading company. Some examples provided by ASIC include:
Financial of trading corporations
- animal welfare charity that derives substantial income from trading activities;
- a not-for-profit sporting club that pays players and charges spectators admission fees and sells television and advertising rights; and
- not-for-profit superannuation entity incorporated under state legislation, where its investments in providing loans are a ‘substantial and significant part of its overall activities’,
Not a financial of trading corporations
- a not-for-profit sporting club that does not pay players or charge spectators; and
- a medical research charity that has research as its central activity, with any trading activities being only ‘insubstantial and peripheral’ to this purpose.
We suggest that every Association seek advice as to whether they qualify as a financial or trading corporation, and if required implement a compliant Whistleblower Policy before 1 January 2020, otherwise, you may be in breach on the Corporations Act, with fines up to $12,600.
We can assist by:
- providing advice on whether your Association is a financial or trading corporation; and
- preparing a compliant Whistleblower Policy; and
- advising on the Corporations Act requirements on the implementation.
You can contact us for an in depth discussion on your Incorporated Association’s current processes and procedures, the implementation of a Whistleblower Policy, and the impact of these new legislative changes.