key takeaways
In Queensland, there are over 23,000 not-for profit entities incorporated under the Associations Incorporation Act 1981 (Qld).
These legal entities are known as “incorporated associations” and can be formed by a group of individuals who seek to further a particular interest or pursuit without the purpose of seeking financial gain for members.
Management committee members and officers of Queensland incorporated associations must comply with new statutory governance requirements based upon existing common law duties and those imposed on company directors.
A person is an “officer” if they are a member of the association’s management committee or have been appointed as a manager of the association by the management committee.
WHAT ARE THE NEW STATUTORY GOVERNANCE REQUIREMENTS?
Several new statutory governance requirements for management committee members and officers of Queensland incorporated associations came into effect on 22 June 2022. They are:
Duty of care and diligence
Officers must exercise their powers and discharge their duties with the degree of care and diligence that a reasonable person would exercise if that person:
- Were an officer of the association in the association’s circumstances; and
- Occupied the office held by, and had the same responsibilities within the association as, the officer.
Duty of good faith
Officers must ensure that they act in the best interests of the association and for a proper purpose when exercising their powers and discharging their duties.
Duty to prevent insolvent trading
Management committee members are obligated to prevent the association from incurring debt whilst insolvent or incurring a debt that may result in insolvency.
A breach of this duty will arise by incurring the above debts when either there were reasonable grounds to expect that:
- The association was already insolvent; or
- If the association were to incur the debt, it would consequently become insolvent.
Use of position and information
Officers must not use their position, or information obtained from their position, to:
- Gain any pecuniary or material advantage for themselves or another person; or
- Cause detriment to the association.
Disclosure of material personal interest
Management committee members must disclose any material personal interest they may have in a matter being considered at committee meetings.
Such disclosures must be made to the management committee as soon as the member becomes aware of the interest and at the next general meeting of the association.
Details of all personal interests must be recorded in the meeting’s minutes and provided to any member of the association upon request.
Voting on matters in which a member has material personal interest
Where a disclosure of personal interest has been made, the member with the interest cannot be present at the management committee meeting and cannot vote on the matter being considered unless expressly permitted to do so by the rest of the management committee.
However, an interest does not need to be disclosed if it merely arises from a person’s position as an employee or member of an association.
Disclosure of remuneration
The management committee must disclose any remuneration or other benefit given to management committee members, their relatives and staff to the association’s members at their annual general meeting in the way prescribed by regulation.
The types of remuneration that must be disclosed include any salary, allowance, or other entitlement. However, this does not include reimbursement for out-of-pocket expenses.
It should be noted that the manner in which this disclosure must be made has yet to be prescribed in the regulation, which is not expected until 2023.
expected LAW CHANGES for 2023
There are further changes to the Queensland legislation that are expected to come into effect next year.
These include the implementation of an internal grievance procedure designed to reduce the need for members to apply to the Supreme Court of Queensland to resolve a dispute.
A model rule grievance procedure is to be developed by the regulator, the Queensland Office of Fair Trading, as part of the consultation process. Incorporated associations will then be given time to determine whether they want to adopt the grievance procedure outlined in the model rules or adopt their own procedure.
If an incorporated association adopts their own customised procedure, a special resolution must be passed to have this included in the rules of the association. This procedure must also meet certain requirements, including:
- Allowing a member to appoint any person to act on their behalf;
- Allowing each involved party to have an opportunity to be heard;
- Providing for unbiased mediation if disputes cannot be resolved initially; and
- Ensuring the decision-maker is unbiased where the grievance procedure provides for a person to decide the outcome of the dispute.
conclusion
It's vital that Queensland incorporated associations should review their existing governance arrangements to ensure that they are operating in line with the new requirements.
If your association requires assistance to review its governance policies and procedures, please contact Tim Smith at tsmith@mcw.com.au or 07 3231 0628.
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