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Transcript of Presented by Julia Sweeney, Partner Fisher Jeffries p 8233 0600 e [email protected] w...
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Presented by Julia Sweeney, Partner Fisher Jeffries
p 8233 0600e [email protected] fisherjeffries.com.au
BETTER GOVERNANCE FOR A CHANGING
ENVIRONMENT
Better Governance for a Changing Environment
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Structure• Company limited by guarantee
– Corporations Act 2001 (Cth)• Incorporated Association
– Associations Incorporation Act 1985 (SA)• Unincorporated Association• Trust• Partnership
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Not for Profit– not for profit– charity
• current definition• new definition
– tax exempt– deductible gift recipient
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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
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Other Reform
• “gag clauses”• “in Australia”• “unrelated businesses”• Fund raising legislation• NFP Consultation Code• Commonwealth Grant Guidelines• Red tape reduction
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Reporting to the ACNC
• Registration• annual information statement • financial information • a “charity passport”• notification of changes • record keeping
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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
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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
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Duties of Individuals
• Directors• Officers• Committee Members• Responsible Entity
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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
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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
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• Good faith– act bona fide– act for a proper purpose– avoid conflicts of interest
• Care and diligence
Common Law Duties
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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
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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)
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Use of Information or Position
• Diversion of a corporate opportunity
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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
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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
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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
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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
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Conflicts of Interest
• Obligation to disclose - statutory– SS/91-195 Corporations Act 2001– S31 Associations Incorporation Act 1985
• Voting• Present at meeting
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Directors’ Rights and Protections
• Delegate within a board-endorsed policy framework
• Deed of access, indemnity and insurance• Right to information – especially financial
information
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Directors’ Rights and Protections
• Right to call a board meeting• Right to professional advice• Insurance: directors’ and officers’ liability
insurance