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Better Governance for a Changing Environment. BETTER GOVERNANCE FOR A CHANGING ENVIRONMENT. Presented by Julia Sweeney, Partner Fisher Jeffries. p 8233 0600 e jsweeney@fisherjeffries.com.au w fisherjeffries.com.au. Structure. Company limited by guarantee Corporations Act 2001 (Cth)

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better governance for a changing environment
Better Governance for a Changing Environment

BETTER GOVERNANCE FOR A CHANGING ENVIRONMENT

Presented by Julia Sweeney, Partner Fisher Jeffries

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

structure
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
  • not for profit
  • charity
    • current definition
    • new definition
  • tax exempt
  • deductible gift recipient
not for profit reform
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
Other Reform
  • “gag clauses”
  • “in Australia”
  • “unrelated businesses”
  • Fund raising legislation
  • NFP Consultation Code
  • Commonwealth Grant Guidelines
  • Red tape reduction
reporting to the acnc
Reporting to the ACNC
  • Registration
  • annual information statement
  • financial information
  • a “charity passport”
  • notification of changes
  • record keeping
resources
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
resources1
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
Duties of Individuals
  • Directors
  • Officers
  • Committee Members
  • Responsible Entity
top 10 tips for charity directors officers committee members
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
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
common law duties
Common Law Duties
  • Good faith
    • act bona fide
    • act for a proper purpose
    • avoid conflicts of interest
  • Care and diligence
statutory duties corporations act
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
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
Use of Information or Position
  • Diversion of a corporate opportunity
care and diligence
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 diligence1
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
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 diligence1
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
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
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 protections1
Directors’ Rights and Protections
  • Right to call a board meeting
  • Right to professional advice
  • Insurance: directors’ and officers’ liability insurance