The plan was designed to focus on reform to the Associated Incorporations Act and the Fundraising Appeals Act, as well as to work with community organisations and the Commonwealth to develop a regulatory framework appropriate for both large and small not-for-profits (NFPs).
A report was released in December 2008 from the Senate Standing Committee on Economics – Inquiry into Disclosure Regimes for Charities and NFP organisations.
Recommendations that were used in the new legislation include:
- A single, independent national regulator for NFPs;
- The adoption of a single, mandatory, specialist legal structure for NFPs through a referral of state and territory powers;
- The development of a national Fundraising Act following a referral of state and territory powers;
- Position of ‘Minister for the Third Sector’; and
- An expert taskforce to manage the implementation of the recommendations.
In March 2009, the COAG (Council of Australian Governments) Business Regulation and Working Group agreed to include an examination of the case for regulatory reform of the NFP sector, with particular focus on introducing a Standard Chart of Accounts.
ASSOCIATED INCORPORATIONS AMENDMENT ACT 2009
Amendments to the original 1981 Act came into effect on 8 April 2009, comprising three broad areas of reform:
1. To enhance the rights of members and improve governance arrangements;
2. To enhance the supervisory role of the Registrar of Incorporated Associations; and
3. To introduce additional provisions in relation to winding up and liquidation of associations.
Consumer Affairs Victoria (CAV) – as the primary Victorian Government regulator of the NFP sector – acts as Registrar for both Incorporated Associations and Co-operatives, as well as overseeing the register of Fundraisers and Co-operatives. CAV’s supervisory role has been somewhat enhanced through the changes to the legislation.
Other changes recently coming into effect include:
- Provisions relating to the preparation and retention of minutes of general meetings and committee meetings, and right of member access to these minutes;
- New rules governing termination of auditors
- New rules governing the return of documents by office holders/former office holders and members (within 28 days);
- The Registrar will now have the capacity to accept or reject proposed Rule changes of the NFP;
- Small associations – less than $10,000 of assets, with no debts or liabilities – may apply for voluntary cancellation of registration; and
- Provision for voluntary administration.
New powers given to the Magistrates’ Court
An association member or Registrar may now apply to the Magistrates’ Court for an order giving direction for conduct and observance of the rules of the NFP, or restrain an association from acting outside the Rules’ scope of purposes, as well as enforcing the rights and obligations of members and the association. The Registrar may only make such an application, however, when it is in the public’s best interest to do so.
The Magistrates’ Court now has authority to:
- Make orders regulating the conduct of an association’s affairs in the future;
- Direct an association or authorise a member to commence or defend a proceeding;
- Restrain a person from engaging in specific conduct, or require a person to do a specific thing;
- Alter the rules of an incorporated association;
- Reinstate a former member or terminate an individual’s membership; and
- Appoint a statutory manager.
The powers given to the Magistrates’ Court are quite broad, with a catch –all provision stating “any other order necessary to remedy any default or resolve a dispute”.
The Magistrates’ Court can transfer a matter to the Supreme Court if the lower Court deems that winding up may be appropriate. There are also new provisions regarding the distribution of surplus assets.
In the case where an organisation is dysfunctional and runs the risk of termination, the Registrar can apply to the Magistrates’ Court for the appointment of a statutory manager, but only with sufficient proof that the appointment would be in the best interest of members, creditors or the general public. Subsequent to the appointment, all further proceedings against the association must obtain the Magistrates’ Court’s permission.
Committee members cease to hold office on appointment of a statutory manager, who then controls property and the association’s affairs and holds office until the appointment is revoked by the Magistrates’ Court; a liquidator is appointed by the Supreme Court; or the Registrar cancels the NFP’s incorporation.
Next set of legislative reforms
The next stage of legislative reforms to be considered in late 2009 will include consideration of:
- Annual reporting requirements, including financial reporting;
- Streamlining submission of annual statements (allowances of online facilities);
- Review of audit thresholds and requirements;
- Review the existing trading prohibition;
- Revise and improve grievance and dispute resolution procedures; and
- Revision of the Model Rules.
FUNDRAISING APPEALS AMENDMENT ACT 2009
The amendments to the original 1998 Act came into operation on 4 May 2009. The major legislative changes are:
- Commercial fundraisers must now register;
- The exemption for solicitors of bequests is now removed – although a wide range of exemptions apply (schools, unions, medical research entities etc.);
- A commercial for-profit entity representing that it will distribute a proportion of funds from a commercial transaction to a fundraising appeal must disclose to the donor the percentage of funds or exact amount in writing;
- Extension of the default registration period to three years; and
- Direct debit forms to be legible and minimal ten point font.
Catherine Brooks is a lawyer at Holding Redlich and is also a board member for Victorian Women with Disabilities Network.