ACNC Governance Standard 4 – Suitability of Responsible Persons

A “Responsible Person” is a person that is responsible for governing a charity, for example a member of the board or committee or trustee of a charity. The Australian Charities and Not-for-profits Commission (ACNC) has high expectations on Responsible Persons and ACNC Governance Standard 4 is premised on the expectation that Responsible Persons governing a charity are suitable for the responsibilities they have to uphold. The Standard applies to all charities, not just those that are companies.

In order to meet this Standard, charities must take reasonable steps to be satisfied that its Responsible Persons are not disqualified from:

  • managing a corporation under the Corporations Act 2001 (Cth); or
  • being a Responsible Person by the ACNC Commissioner, within the previous 12 months.

Charities must not appoint a person if they are not satisfied that a person is not disqualified, and further they must take reasonable steps to remove any Responsible Person that they later becomes aware does not meet this requirement.

Practically, there a number of steps that can be taken to ensure that this Governance Standard is met including:

  • ensure that Responsible Persons understand what “disqualification” means and how you can become disqualified;
  • conduct a search on the ACNC and ASIC disqualified persons registries annually and before new and continuing appointments; and
  • require a declaration for new and ongoing Responsible Persons that they are not disqualified.

There are currently no listings on the ACNC disqualified persons registry. However, last year’s Federal Budget allocated funds to the ACNC for litigation and we expect that in the coming year, we will see the ACNC take action and add disqualified persons to their register. ASIC list of banned and disqualified persons can be found here

More information on who may be disqualified and a suggested declaration can be found on the ACNC website here.

Removing a Responsible Person that is or may be disqualified will generally require legal advice. As a starting point, gather the facts, review your governing documents and proceed from there. For more advice or information, you can contact us here.

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