Further changes to governance requirements for incorporated associations

by bqmedia on October 8, 2021

Mullins Lawyers – Matthew Bradford 07 3224 0353

In our March 2021 article we discussed a number of proposed changes to governance requirements for incorporated associations which were due to commence on 30 June 2021. These changes were pushed back by 12 months to coincide with the further changes which are due to apply from 30 June 2022.

These changes will affect most bowls clubs in Queensland, as the majority are incorporated associations.

Refresher on previous article

As a reminder, the changes that have been delayed until 30 June 2021 include:

  1. No Common seal requirement: It will no longer be a requirement for your association to execute documents with a common seal, however you can continue to do so if you wish.
  2. Financial Reporting: If your association is registered as a charity with ACNC, you will no longer be required to lodge a summary of your annual financial records with the Office of Fair Trading or pay annual lodgement fees.
  3. Duties of Committee Members: The Act will set out specific duties and obligations that committee members owe to their association, including:
  • a. duty of care and diligence;
  • b. not profiting from position;
  • c. duty to prevent insolvent trading;
  • d. disclosure of material personal interests and duty to abstain from voting if you have a conflict of interest; and
  • e. disclosure of remuneration or benefits that committee members or senior staff (or their family member) receive from the association. Exact details of what remuneration information needs to be disclosed is still to be confirmed by regulation.
  1. Investigations: The amendments will also extend the powers of Office of Fair Trading inspectors to grant entry and seizure powers to investigate potential offences.

Defences to breach of duties

Several defences will potentially be available to committee members including:

  1. Insolvent Trading: if the debt was incurred without the person’s authority or consent, or at the time it was incurred the person either did not take part in management of the association or had reasonable ground to expect the club was solvent and would remain solvent.
  2. Reasonable Reliance: if the committee member acted in good faith and relied on information or advice provided by an employee, another committee member or a sub-committee of the association or a professional advisor, provided the person made a reasonable independent assessment of the information or advice.
  3. Business Judgement: if the committee member makes a business judgement acting in good faith and for a proper person which it reasonably believed to be in the best interests of the association, and had no material personal interest.

Further Changes: Grievance Procedure

The additional changes are that each association will need to have a Grievance Procedure policy for dealing with any disputes between members, the management committee or the association itself.

Associations will be required to detail the Grievance Procedure in their rules or constitution. If the association does not have such a policy, then the Act’s model rules regarding Grievance Procedures will apply.

These model rules have not been drafted yet, but the Act makes it clear that they must provide for a mediation and for a person to decide the dispute, that a member may appoint someone to act on their behalf to resolve the dispute, and that once a grievance has been initiated the association must not take disciplinary action until the grievance procedure has been completed.

Next steps for bowls club

Bowls clubs that are incorporated associations should ensure their committee is familiar with the duties that will be imposed on committee members as well as the changes to commence from 30 June 2021. Clubs will also want to ensure that they review the model rules for Grievance Procedures once they are released, or alternatively amend their own rules to put in place their own Grievance Procedures.