In our previous BLOG series which you can find here, we have been discussing the need for good governance in all organisations. To round out this series we have put together an outline of the members of a committee board and a fact sheet of the obligations of committee board members of an incorporated association. Please note that this is not a conclusive or exhaustive piece and should merely be used as a brief and general outline.
Please note that a terms “committee” and “board” in this setting may be used interchangeably both describing those persons who comprise the governance and leadership of an organisation.
The way in which an association operates is largely governed by its rules/constitution. Generally the rules will provide for members of the association to elect a committee of management and for the management of the affairs of the association to rest with the committee. In addition to providing for a Chairperson, the rules often make provision for the committee to include a Secretary and a Treasurer.
Under the Associations Incorporation Act 1985 (SA), the management of an incorporated association is vested in a committee (see s.29 of the Associations Incorporation Act). The committee is like a board of directors in a company registered under the Corporations Act 2001 (Cth).
This committee includes the following positions which all have their own corresponding functions and responsibilities.
The Chairperson presides at meetings of members of the association and of the committee. The Chair Person has many responsibilities as the leader of an organisations governance which needs to work hand in hand with the operational leadership. This is further discussed in our BLOG, ‘The Executive Member and the Board’.
The Secretary is normally responsible for all general correspondence. He or she should maintain adequate correspondence files and bring relevant correspondence before the committee for consideration. They are an appointed person who (in most cases do not enter the discussion or debate of the meeting although ensure compliance with all statutory regulations and provisions, prepare and issue notices of each meeting and, during the meeting take minutes. For more information on their responsibilities click here.
The Treasurer normally attends to the banking of the association’s income and recording transactions in the association’s books and records. He or she should provide regular financial reports to the committee. The Treasurer should also prepare the association’s financial reports and statements for consideration and adoption by the committee before they are presented to members.
Incorporated associations must also have a public officer. That is a person who must be a resident in the state or territory of registration and must be over 18 years of age.
A public officer is the official point of contact for an incorporated association and one of the authorised signatories. Their responsibilities include
– notifying changes of details of the association;
– lodging documents such as financial statements; and
– being the principal point of contact for the Australian Taxation Office.
The other members of the management committee owe duties to the association that are not materially different to those of directors of companies registered under the Corporations Act. For example, committee members must:
– Disclose any interest in a matter that conflicts with their ability to perform their duties (see s.31 of the Associations Incorporation Act);
– Keep confidences / maintain secrecy of sensitive information acquired in their position (see s.17 of the Associations Incorporation Act);
– Not use their position or information acquired as a committee member dishonestly, i.e. to deceive or defraud, or gain any pecuniary benefit or material advantage for them self or another, or to cause detriment to the association (see ss.17 and 39A of the Associations Incorporation Act);
– Act with reasonable care and diligence in the exercise of their powers and discharge of their duties (see s.39A of the Associations Incorporation Act). A committee member will have acted in accordance with this obligation if they have made an informed decision in good faith and for a proper purpose, and rationally believe the decision to be in the best interests of the association; and
– Prevent the association from trading while insolvent. A past committee member may be found to have breached this provision if they were a committee member at the time that an association incurred the debt that caused it to become insolvent, and, at that time, there were reasonable grounds for suspecting insolvency, or potential insolvency if the debt were to be incurred (see s.588G of the Corporations Act).
In addition to the above duties, committee members should be aware that:
– Associations are intended to be administered in a democratic manner, and the rights of members should be preserved at all times in accordance with the constitution rules of the association and in the spirit of natural justice;
– Adequate minutes of meetings of the committee and meetings of the members of the association must be prepared. Once adopted by the participants and signed by the Chairperson, the minutes must not later be destroyed or altered because they form a historical record of the association’s activities;
– The Chairperson signs the minutes on behalf of the relevant participants (the committee or the members of the association) and as a result of them having adopted the minutes as a sufficiently accurate record of proceedings. The Chairperson should avoid establishing any general practice of signing the minutes in private. Often he or she will be able to sign them at the meeting when they are adopted. If changes need to be made to the draft minutes it is preferable if the Chairperson initials the changes before signing the minutes; and
– The affairs of an incorporated association should not be conducted as if it were a “secret society”, with the flow of information to members being unduly or unnecessarily restricted.
The Associations Incorporation Act imposes on the committee certain mandatory record keeping obligations, including:
– maintaining a register of members;
– A record of any committee member conflicts of interest;
– A record of the association’s financial transactions and position (see ss.35, 39C and 48 of the Associations Incorporation Act);
– Lodging an association’s annual financial statements with the regulating authority (see s.36 of the Associations Incorporation Act); and
– Minutes of the proceedings of committee and general meetings (see s.51 of the Associations Incorporation Act);
The committee is responsible for lodging an association’s annual financial statements with the regulating authority (see s.36 of the Associations Incorporation Act).
Annual general meeting and reporting
An incorporated association must hold an annual general meeting (AGM) within 5 months of the close of its financial year (or as allowed by the regulating authority, Consumer and Business Services). A newly incorporated association in all jurisdictions must hold its first annual general meeting within 18 months of registration (see s.39 of the Associations Incorporation Act).
If you require any further information or advice on the matter of governance in the area of incorporated associations or are unsure of your obligations and liabilities then do not hesitate to contact us at Tri-meridian.
For further information, please contact the author.
This article is posted in Adelaide, South Australia by Tri-meridian Corporate & Commercial Law and is intended to be used as a guide only. It is not, and is not intended to be, advice on any specific matter. We do not accept responsibility for any acts or omissions resulting from reliance upon the content of this article. Before acting on the basis of any material in this article, we recommend that you consult your professional adviser.