New Association rules for Material Personal Interests

A raft of new provisions were introduced recently under the Associations Incorporation Act 1991 (ACT), and notably those which deal with material personal interests. Here is what you need to know.

What are material personal interests

Committee members have obligations (and are subject to penalties) under Part 4 of the Act that relate to:

  • declaring material personal interests; and
  • managing material personal interests.

Material personal interests are those where a member has a conflict of profit or duty.  This may be:

  • a financial conflict e.g. holds shares in a company that the association is dealing with; or
  • a duty of conflict e.g. a person is a member of two associations/organisations doing business together.

Moreover, conflicts can be actual, perceived or potential interests.

Committee/Board Meetings

Where there is a material personal interest in a matter being considered at a committee meeting, that member must as soon as they are aware of the interest:

  • disclose both the nature of and extent of the interest to the committee; and
  • disclose the same information at the next general meeting of the association.

Additionally, where there is a material personal interest, that member must:

  • be excluded from the meeting while the matter is being considered; and
  • must not vote on the matter.

General Meetings

As noted above, where a material personal interest is disclosed at a committee meeting, it must be disclosed at the next general meeting of the association. That is, a member must be told of the material personal interest. As we approach AGM season, this effectively creates a new agenda item for many Associations.

Keeping track declared interests

The Act specifies that a declared interest should be recorded in the minutes of the meeting at which the disclosure is made.

Additionally, it is good practice to:

  • ask all new committee members to declare actual, or potential conflicts of interests when joining and record these in the register;
  • review the register of conflicts whenever the association has dealings with new businesses or organisations.

Please contact us if you would like to discuss how this affects you or your Association.

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