Need to know now: Legislative reforms for incorporated associations

As seen in the March 2021 edition of Bowls Queensland's Queensland Bowler.

Most bowls clubs are incorporated associations. In November 2019, the Queensland Government proposed amendments to the legislation governing incorporated associations aimed at reducing red tape and improving internal governances. While some changes have already come into effect, other amendments are expected to commence over the coming months.

Who does this affect?

The changes will apply to any bowls club that is an incorporated association under the Associations Incorporation Act 1981 (Qld) (the Act).

When did the changes come into effect?

The changes were introduced in Queensland Parliament in December 2019. Since then, a raft of changes came into effect on 22 June 2020.

The remaining changes are expected to come into effect in two tranches over the next two years, on 30 June 2021 and 30 June 2022.

Law changes are also being considered to amend the Associations Incorporation Regulation 1999, however the details of these changes and expected timeframes have not been released.

 So, what are the changes?

Set out below is a breakdown of the impending amendments, along with the corresponding date each change will come into effect.

 Changes expected to commence by 30 June 2021

The changes that are expected to commence on 30 June 2021 include:

1. Common seal: It will no longer be a requirement for your association to execute documents with a common seal, however you can continue to do so if you wish. If you intend to abandon the use of a common seal, you should update your Constitution to reflect this.
   
   
2. Secretary: The secretary of your association will need to be 18 years or older.
   
   
3. Financial Reporting: If your association is registered as a charity with ACNC, you will no longer be required to lodge a summary of your annual financial records with the Office of Fair Trading or pay annual lodgement fees. Likewise, duplicated reporting obligations for community purpose organisations will be removed.
   
   
4. Duties of Committee Members: The duties of management committee members have historically been governed by common law principles. From 30 June 2021 (estimated), the Act will be amended to set out specific duties that committee members owe to their association, including:
   
   
   1. Duty of care and diligence: The committee members will have to carry out their functions in the best interests of the association and with due care and diligence. In order to meet this obligation, they must act in the same manner that a reasonable person would if that person were in the same position in the same circumstances.
      
      
   2. Not profiting from position: Committee members will be prohibited from improperly using their position or information obtained from their position to gain benefits or material advantages for themselves or another person, or from causing detriment to the association.
      
      
   3. Disclosure of material personal interests: Committee members will need to disclose any material personal conflicts of interest and disclose any remuneration or benefits they (or their family) receive in their role or that senior staff receive. Details of what remuneration information needs to be disclosed, and how it will need to be disclosed, will be introduced by a regulation.
      
      A committee member with a conflict will not be able to be present at the meeting or vote on such matters, unless permitted by the committee to do so.
      
      
   4. Duty to prevent insolvent trading: Committee members will have a duty to prevent the association from trading while insolvent.

Breaching these duties or failing to disclose conflicts and benefits will incur a penalty and be administered by the Office of Fair Trading. There will be defences against an alleged breach of these duties in certain circumstances.

5. Investigations: The amendments will also extend the powers of Office of Fair Trading inspectors to grant entry and seizure powers, including entering your premises, to investigate potential offences.

Changes expected to commence by 30 June 2022

Further changes are then expected to commence by 30 June 2022 that will require associations to have an internal dispute resolution process or grievance procedure. We will provide an update in the future edition regarding these changes.

What should my bowls club do next?

Bowls clubs that are incorporated associations should – in conjunction with their committee members –  familiarise themselves with these proposed changes and ensure they are prepared for when the changes come into effect. Practically, these will not have a major impact on the day-to-day operation of your club, but will need to be incorporated into your internal governance policies and practices.

Article written by Matthew Bradford (Partner) and Annabelle Efstathis (Associate).