By Lachlan Clark, Graduate
The recently introduced Associations Incorporation and Other Legislation Amendment Act 2020 (Qld) (Amendment Act) has resulted in an array of changes for incorporated associations in Queensland, including for those that are registered as charities. This is the first substantial reform to the Associations Incorporation Act 1981 (Qld) (Associations Act) since 2007.
The Amendment Act aims to improve the internal governance and reduce regulatory burden for incorporated associations that are registered as charities with the Australian Charities and Not-for-Profits Commission (ACNC).
This article will discuss the new amendments and the reasons behind these amendments to the Associations Act.
What are the new amendments?
The Amendment Act has introduced several changes to the Associations Act that minimise ‘red tape’ and modernise the governance processes of incorporated associations. Substantial amendments that have taken effect from 22 June 2020 include:
- Communications technology – Where an incorporated association uses video conferencing or similar technology to hold its general meetings, the provision of this technology no longer needs to be stated in the governing documents of the association;
- Model rules – The Amendment Act has clarified that incorporated associations are able to adopt model rules, or completely replace their own rules with the model rules, at any time;
- Voluntary administration – If an incorporated association is experiencing financial difficulties, committee members are now able to voluntarily appoint an administrator to manage the association’s financial affairs;
- Voluntary cancellation – Rather than going through a potentially expensive formal winding up process, an incorporated association can now apply to the Chief Executive of the Office of Fair Trading (OFT) for a voluntary cancellation;
- Distribution of surplus assets on cancellation – Where an incorporated association is cancelled by the Chief Executive of the OFT or wound up by the Supreme Court, notification of the distribution of surplus assets will now be provided by gazette notice; and
- Eligibility for people with convictions – A person convicted of certain offences is able to sit on a management committee after 5 years. This period has been reduced from 10 years.
Additionally, there are several significant amendments that will take effect from 30 June 2021. These amendments include:
- Reduction in duplicated annual reporting – An incorporated association that is registered as a charity with the ACNC will not need to lodge its annual summary of financial affairs with the OFT;
- Duty of care and diligence – The Associations Act will specifically detail the expected standard of care and diligence that management committee members must apply in the fulfilment of their roles. Penalties will apply for breaching this provision;
- Duty to prevent insolvent trading – Members of the management committee of an incorporated association will have a duty to prevent the association from trading while insolvent. Penalties will apply for breaching this provision;
- Not profiting from position – An officer or committee member of an incorporated association will be prohibited from using their position to obtain a benefit or material advantage for themselves or another person. Penalties will apply for breaching this provision;
- Disclosure of personal interests – Management committee members will be required to disclose when they have material personal interests in a matter. Where this matter is being considered at a management committee meeting, the member will not be able to be present at the meeting without the permission of the management committee; and
- Disclosure of remuneration – The members of the management committee of an incorporated association will be required to disclose details of the remuneration paid to them, senior staff and their relatives.
From 30 June 2022, an incorporated association will be required to have an internal grievance procedure. If the rules of the association do not set out a procedure that is consistent with the requirements detailed in the Amendment Act, the grievance procedure specified in the model rules will apply instead.
Why were these amendments introduced?
The Queensland Parliament has explained the policy objectives that are achieved by introducing the Amendment Act. These objectives are to:
- clarify the operation of the Associations Act;
- improve the internal governance of incorporated associations;
- reduce regulatory burden for incorporated associations and charitable entities; and
- streamline, enhance or otherwise improve government processes.
The Amendment Act provides a much-needed overhaul to the Associations Act. The Amendment Act imposes obligations on management committee members and officers that encourage good governance, whilst also simplifying reporting requirements for entities registered with the ACNC. Furthermore, if an incorporated association is in financial distress, the Amendment Act will allow management committee members to appoint an administrator to assist in overcoming the financial difficulties. If the association is instead wound up, this administrator can improve outcomes for the association’s creditors and members.
The Amendment Act introduces significant changes for the operation of incorporated associations in Queensland. These amendments will hopefully provide additional clarity for members of associations, as well as increase operational efficiency and good governance. Members of management committees of these associations are strongly encouraged to familiarise themselves with these amendments in order to ensure that they are complying with the new legislation.