Presented by Julia Sweeney, Partner Fisher Jeffries p 8233 0600 e jsweeney@fisherjeffries.com.au w...

Presented by Julia Sweeney, Partner Fisher Jeffries

p 8233 0600e jsweeney@fisherjeffries.com.auw fisherjeffries.com.au

BETTER GOVERNANCE FOR A CHANGING

ENVIRONMENT

Better Governance for a Changing Environment

Structure• Company limited by guarantee

– Corporations Act 2001 (Cth)• Incorporated Association

– Associations Incorporation Act 1985 (SA)• Unincorporated Association• Trust• Partnership

Not for Profit– not for profit– charity

• current definition• new definition

– tax exempt– deductible gift recipient

Not for Profit Reform

• The Australian Charities and Not-for-Profits Commission (ACNC)– from 1 November 2012– until 30 June 2014, will only register and regulate

charities– NFPs that are not charities will continue to be

regulated by the Australian Taxation Office and their respective State legislation

Other Reform

• “gag clauses”• “in Australia”• “unrelated businesses”• Fund raising legislation• NFP Consultation Code• Commonwealth Grant Guidelines• Red tape reduction

Reporting to the ACNC

• Registration• annual information statement • financial information • a “charity passport”• notification of changes • record keeping

Resources

• Australian Charities and Not for Profits Commission– www.acnc.gov.au– Facebook.com/acnc.gov.au– Twitter.com/acnc_gov_au– Youtube.com/ACNC videos– linkedin

• Treasury– www.treasury.gov.au

Resources• Australian Taxation Office

– www.ato.gov.au/Non-profit• Office for the Not for Profit Sector

– www.notforprofit.gov.au• National Compact

– www.nationalcompact.gov.au

Duties of Individuals

• Directors• Officers• Committee Members• Responsible Entity

Top 10 Tips for Charity Directors/Officers/Committee Members• Know what your charity’s purpose is• Be clear about your role• Understand your charity’s financial position• Know your responsibilities• Have a copy of your rules• Don’t just follow the crowd• Know your charity’s obligations• Work as part of a team• Declare and manage conflicts of interest• Always act in your charity’s best interest

Duties Owed to the Entity

• Directors’ duties are owed to the entity and the entity is defined as the owners (members) or the objects

• Once a group has elected a member they assume office as a member of the board with a duty to serve its interests in preference to serving the interests of the group which elected them

• Nominee directors

• Good faith– act bona fide– act for a proper purpose– avoid conflicts of interest

• Care and diligence

Common Law Duties

Statutory Duties – Corporations Act• Care and diligence

– s 180• Good faith

– s 181• Not to make improper use of position

– s 182• Not to make improper use of information

– s 183• Not to trade while insolvent

– s 588G

Statutory Duties – Associations Incorporation Act

– not intentionally deceive or defraud the association• s 39A(1)

– not make improper use of information • s 39A(2)

– not make improper use of position• s 39A(3)

– care and diligence• s 39A(4)

Use of Information or Position

• Diversion of a corporate opportunity

Care and Diligence

Example• In FY 2007 Financial Statements:

– failure to disclose certain guarantees– incorrect classification of non-current liabilities

• Directors were aware of liquidity stresses from US acquisition

• Had seen figures on true position around 2 months before sign off of accounts

Care and Diligence

• Don’t come to court arguing:– relied on auditors– relied on audit committee– not an accountant– papers too numerous to read everything

Exercising Care and Diligence

• Attend meetings regularly• Read board papers and other information provided• Be an active participant in meetings and ask

pertinent questions• Bring an open mind to any decision and consider all

relevant information• Become familiar with the “business” and operations

of the organisation, and its functions and the board’s responsibilities and duties

Exercising Care and Diligence• Don’t rely on expert advice without understanding and

“bringing your own mind to the decision required”• Ensure that delegations and policies are in place for

administration• Ensure adequate monitoring of operations• Ensure minutes properly reflect the discussion and

decisions and are circulated soon after the meeting• Ensure a rolling action list to keep track of business

arising

Conflicts of Interest

• Obligation to disclose - statutory– SS/91-195 Corporations Act 2001– S31 Associations Incorporation Act 1985

• Voting• Present at meeting

Directors’ Rights and Protections

• Delegate within a board-endorsed policy framework

• Deed of access, indemnity and insurance• Right to information – especially financial

information

Directors’ Rights and Protections

• Right to call a board meeting• Right to professional advice• Insurance: directors’ and officers’ liability

insurance