Law changes for incorporated associations
Law changes have been introduced to reduce red tape and improve internal governances for the 22,900 incorporated associations in Queensland, including 3,750 that have registered as charities.
These law changes were introduced by Queensland Parliament with the passing of the Associations Incorporation and Other Legislation Amendment Act 2020.
Some law changes start on assent, while the remaining will come into effect over the next couple of years.
The changes are outlined below:
- Law changes that started on assent 22 June 2020
- Law changes expected by 30 June 2021
- Law changes expected by 30 June 2022
Further law changes are being considered to amend the Associations Incorporation Regulation 1999, and will be released as part of a consultation process later in 2020. If you would like to be part of the consultation process you can register your interest by emailing us at firstname.lastname@example.org.
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 provision of using this technology no longer needs to be stated 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. They can apply to the Chief Executive of OFT, to 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, we will provide notification of how surplus assets, property or money is vested 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, they may vest that property to 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 5 years (reduced from 10 years) and when the rehabilitation period for the conviction has not expired.
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 your committee depends on the offence and how they were convicted. A person may be ineligible 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 for breaches of some provisions will be increased to 20 penalty units.
Law changes expected by 30 June 2021
Please note the below law changes have not commenced. These changes are subject to proclamation by government and are expected to commence by 30 June 2021.
Using a common seal
It will be optional for incorporated associations to use a common seal when executing contracts and documents, rather than a regulation. However, if they wish to continue using a common seal they can. They will need to amend their rules to specify they will not use a common seal.
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 help align the requirements of the secretary with those of other management committee members.
Reduction in duplicated annual reporting
Associations also registered as a charity with the Australian Charities and Not-for-profits Commission (ACNC) for the purpose of obtaining tax concessions, will no longer need to lodge their annual summary of financial affairs with OFT or pay the annual lodgement fee. Likewise, duplicated reporting requirements for community purpose organisations will be removed.
If the association is not on the ACNC charities register, the reporting obligations will not change. All annual reporting will still need to be lodged with OFT and the lodgement fee paid.
Clarifying duty of care and diligence
The expected standard of care and diligence that management committees are expected to apply will be better clarified to help management committee members and officers meet their duties and exercise their powers.
They will have to carry out their functions in the best interests of the association, and with due care and diligence. Penalty units will apply for breaches of these duties.
Duty to prevent insolvent trading
If the incorporated association is insolvent at the time a debt was incurred, or becomes insolvent by incurring the debt, members of the management committee have a duty to prevent the association from trading while insolvent. Otherwise it will be an offence for a person who took part in the management committee unless they:
- can prove that the debt was incurred without their authority or consent
- can prove they did not take part in the management of the association when the debt was incurred because of illness or some other good reason
- had reasonable grounds to expect that the association was solvent when the debt was incurred and would remain solvent.
Not profiting from position
A committee member or officer of an incorporated association will not be able to 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.
Penalties apply for breaching this provision.
Disclosure of personal interests
Management committee members will have to disclose when they have material personal interests in a matter. This will help improve internal governance and give members greater transparency.
Disclosure of remuneration
At the association’s annual general meeting, management committee members will have to disclose remuneration or other benefits given to them, to senior staff and to their relatives. The details of what must be disclosed, and how, will be introduced by regulation.
Disclosure of material personal interest
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 management committee. Penalties will apply for a breach.
Extend powers of OFT inspectors
The application of the FTIA will result in our 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 not-for-profit 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 expected by 30 June 2022
Please note the below law changes have not commenced. They are expected to commence by 30 June 2022.
Internal grievance procedure in place
An incorporated association will have to have an internal grievance procedure or dispute resolution process in place by 30 June 2022, and this may be outlined in your rules. This may eliminate the need for members to apply to the Supreme Court of Queensland to resolve a matter and may result in significantly less cost.
Under the grievance procedure a member may appoint any person to act on their behalf and each party involved will be given an opportunity to be heard. The grievance procedure must also provide for unbiased mediation if the dispute cannot be initially resolved amongst parties.
If an incorporated association wants to use their own customised dispute resolution process, they will need to include it in their rules by passing a special resolution.
If the association doesn’t have a grievance procedure in place by 30 June 2022, it will need to observe the grievance procedure contained in the model rules. These will be developed by OFT as part of a consultation process with industry bodies and will be made available before this law change starts. This will give incorporated associations time to determine whether they want to adopt the grievance procedure outlined in the model rules or adopt their own.
If you would like to be part of the consultation process, you can register your interest by emailing us at email@example.com.