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The legal landscape that the Incorporated Associations (IAs) operates within, has recently undergone a major overhaul, resulting in the assent of the Associations Incorporation and Other Legislation Amendment Act 2020 in June 2022.

Law changes are being introduced to reduce red tape and improve internal governance for the 23,300 incorporated associations in Queensland, including 3,750 that have registered as charities.

These law changes result from passage of the Associations Incorporation and Other Legislation Amendment Act 2020

The law changes come into effect in stages, commencing with changes that started on assent of the legislation on 22 June 2020.

Further stages are outlined below:

  • Law changes commencing 22 June 2022
  • Law changes anticipated to formally commence in August 2022
  • Regulation changes anticipated to commence in 2023.

Law changes commencing on 22 June 2022

Using a common seal

It is optional for incorporated associations to use a common seal when executing contracts and documents. The association will need to amend its rules to specify it will not use a common seal. It is anticipated that the Model Rules contained in the Associations Incorporation Regulation 1999 will be amended to remove the requirement for a common seal in August 2022.

Secretary must be 18 or older

The secretary of an association will have to be 18 or older to help improve the internal governance standards for associations. This will align with other management committee members.

Clarifying duty of care and diligence

The standard of care and diligence that management committees are expected to apply will be better clarified to help management committee members and officers undertake their duties and exercise their powers.

They will have to carry out their functions in the best interests of the association, with due care and diligence. A maximum penalty of 60 penalty units (equivalent to $8,625 from 1 July 2022) will apply for breaches of these duties.

Duty to prevent insolvent trading

Members of the management committee have a duty to prevent the association from incurring a debt if there are reasonable grounds to expect that the association is insolvent or will become insolvent if the debt is incurred. A maximum penalty of 60 penalty units (equivalent to $8,625 from 1 July 2022) applies for breaching this provision.

Not profiting from position

A committee member or officer of an incorporated association must not use their position, or information obtained from their position, to:

  • gain a benefit or material advantage for themselves or another person
  • cause detriment to the association.

Maximum penalties of up to 60 penalty units (equivalent to $8,625 from 1 July 2022) apply for breaching these provisions.

Disclosure of material personal interest

Management committee members will have to disclose when they have a material personal interest in a matter being considered at a management committee meeting, to the management committee as soon as they become aware of the interest and to members at the next general meeting of the association. This will help improve internal governance and give members greater transparency.

If a committee member has a personal interest in a matter being considered at a management committee meeting, the member will not be able to be present at the meeting or vote on the matter unless permitted to do so by the rest of the management committee.

Maximum penalties of up to 60 penalty units (equivalent to $8,625 from 1 July 2022) will apply for a breach.

Extend powers of OFT inspectors

The Fair Trading Inspectors Act 2014 (FTIA) has been amended to include investigations under the Associations Incorporation Act 1981.

The application of the FTIA will result in inspectors having entry and seizure powers, including the power to enter a place where an incorporated association carries out its activities, holds its meetings or keeps its records.

Some powers are not available to inspectors if they are deemed unnecessary to investigations of incorporated associations. For example, inspectors will not have the power to stop and move vehicles, or the power to obtain criminal history reports.

Law changes anticipated to formally commence in August 2022

Reduction in duplicated annual reporting

Associations also registered as a charity with the Australian Charities and Not-for-profits Commission (Opens in new window) (ACNC) for the purpose of obtaining tax concessions, who comply with ACNC reporting requirements, will no longer need to lodge their annual summary of financial affairs with the OFT or pay the annual lodgement fee. Likewise, duplicated reporting requirements for charities and community purpose organisations registered under the Collections Act 2008 will be removed.

The formal removal of reporting requirements will not occur until August 2022. If an ACNC-registered organisation does not submit a report to the OFT that is due between 1 July 2022 and the formal commencement of these changes, the OFT will not take action provided the organisation has met ACNC reporting requirements.

Organisations that have reports due before 1 July 2022 are still expected to lodge their reports with the OFT.

If an association, charity, or community purpose organisation is not on the ACNC charities register, reporting obligations will not change. All annual reporting will still need to be lodged with the OFT and the lodgement fee paid.

Incorporated associations, charities and community purpose organisations also will continue to be required to notify the OFT of certain changes to their details. For more information see:

Law changes that are expected to commence in 2023

Several other changes requiring stakeholder consultation are expected to commence in 2023. Consultation on disclosure of remuneration, a model grievance procedure and changes to financial reporting requirements (for non-ACNC registered organisations) is expected to commence in 2022. If you would like to be part of the consultation process you can register your interest by emailing nfpconsultation@justice.qld.gov.au.

Disclosure of remuneration

Associations will be required to disclose remuneration or other benefits given to management committee members, senior staff, and relatives of management committee members or staff at the annual general meeting. The details of what must be disclosed, and how, are subject to consultation before being set out in a regulation.

Internal grievance procedure in place

An incorporated association will have to either follow the grievance procedure to be developed in the model rules or outline an internal grievance procedure in its own rules. This may reduce the need for members to apply to the Supreme Court of Queensland to resolve a matter and may result in significantly less cost.

The model rule grievance procedure will be developed by the OFT as part of a consultation process. Incorporated associations will then be given time to determine whether they want to adopt the grievance procedure outlined in the model rules or adopt their own procedure.

If an incorporated association wants to use its own customised dispute resolution process, it will need to include it in its rules by passing a special resolution. Incorporated associations can adopt their own grievance procedures at any time before or after the model rule grievance procedure is developed, but they must include the requirements below.

A grievance procedure must meet certain requirements set out in section 47A of the Associations Incorporation Act 1981, including:

  • allowing a member to appoint any person to act on their behalf
  • giving each party involved an opportunity to be heard
  • providing for unbiased mediation if the dispute cannot be initially resolved amongst parties
  • if the grievance procedure provides for a person to decide the outcome of the dispute, the decision maker must be unbiased.

Law changes that started on assent 22 June 2020

Use of communications technology

If an incorporated association uses technology such as video conferencing to hold its general meetings, the use of this technology no longer needs to be set out in its rules.

Clarifying adoption of model rules

Incorporated associations will be able to either adopt the model rules, or completely replace their own rules with the model rules at any time. To do so, they must pass a special resolution at a general meeting and apply to the Office of Fair Trading (OFT) for registration within 3 months of passing the resolution.

Introduction of voluntary administration

Committee members now have the option to voluntarily appoint an administrator to place the incorporated association into voluntary administration if they are experiencing financial difficulties. The administrator will help manage the financial affairs of an incorporated association if it can’t pay debts or as an alternative to applying to the Supreme Court for appointment of a provisional liquidator.

Introduction of voluntary cancellation

An incorporated association can opt to apply for a voluntary cancellation, rather than going through a lengthy, formal winding up process. Upon application, the Chief Executive of OFT can cancel the incorporated association, provided the association:

  • has no outstanding debts or liabilities
  • has paid all applicable fees and penalties under the Associations Incorporation Act 1981
  • is not a party to any legal proceedings.

Vesting of property on cancellation

If an incorporated association is wound up by the Supreme Court or its incorporation has been cancelled by the Chief Executive of OFT, notification of how surplus assets, property or money is vested will be notified by gazette notice rather than regulation.

When the Chief Executive determines that property attained under the Collections Act 1966 is unlikely to reach the intended beneficiaries, the property may be vested in the Public Trustee by gazette notice rather than by regulation.

Management committee eligibility for people with convictions

People convicted of certain offences can sit on a management committee after a rehabilitation period of 5 years (reduced from 10 years).

The 5-year period begins on the later of the following dates:

  • the day the conviction is recorded
  • the day the person is released from prison (if applicable)
  • the day any other court order relating to the conviction or term of imprisonment is satisfied.

Whether a conviction affects a person’s eligibility to sit on a committee depends on the offence and how they were convicted. A person may be ineligible until the expiry of their rehabilitation period if:

  • they have been convicted of any indictable offence
  • they have been convicted of a summary offence and sentenced to a period of imprisonment (other than in default of payment of a fine).

Increased maximum penalties

The maximum penalty that may be prescribed for an offence against the Associations Incorporation Regulation 1999 or Collections Regulation 2008 has been increased to 20 penalty units. There has been no change to the penalties that are already prescribed in the Regulations.

More information

 

Taken from Qld Government website

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