As featured in the October edition of Bowler Magazine
Bowls clubs are often closely connected with their local communities. Committee members and directors may also be local business owners, sponsors or suppliers, or have personal or professional relationships with people who deal with the club.
These connections can be valuable, but they can also give rise to conflicts of interest when decisions are made on behalf of the club.
Having a conflict does not necessarily mean someone has done anything wrong or prevented the club from proceeding. However, conflicts need to be identified, disclosed, and appropriately managed.
Common conflict of interest examples in sporting and community clubs
Consider a club planning a clubhouse renovation where one of the businesses tendering is owned by a member of the club’s management committee. A conflict might also arise if the club is:
- Considering a sponsorship proposal from a business owned by a committee member or their family
- Hiring a relative of a committee member, or
- Making another decision that could provide a committee member with a personal benefit.
The key is to recognise a potential conflict early and consider what steps are required before the club makes its decision.
What does the law require?
The precise requirements depend on how your club is structured, although the key requirements are similar. For incorporated associations, sections 70B and 70C of the Associations Incorporation Act 1981 (Qld) (AI Act) deal with material personal interests. For companies limited by guarantee, similar requirements are contained in sections 191 and 195 of the Corporations Act 2001 (Cth) (Corporations Act).
Under both frameworks, a committee member or director with a material personal interest must generally disclose that interest, with details of the disclosure recorded in the meeting minutes. Subject to certain exceptions, they must also not be present while the matter is considered or vote on it. Both frameworks allow the non-interested committee members or directors to permit their participation in certain circumstances.
However, there are some differences, including that a committee member of an incorporated association must generally also disclose the interest at the association’s next general meeting.
The legislation is not the only consideration. The club’s constitution and any relevant by-laws or policies should also be reviewed, as they may contain additional requirements for identifying, disclosing or managing conflicts.
Why disclosure is only the first step
Declaring a conflict is not the end of the process. Committee members and directors are also subject to broader duties, including:
- To exercise care and diligence
- To act in good faith in the best interests of the club and for a proper purpose.
These duties are reflected in sections 70E and 70F of the AI Act and sections 180 and 181 of the Corporations Act.
Clubs should therefore consider how a conflict should be managed in the circumstances, rather than treating disclosure as a box-ticking exercise. Practical steps may include:
- Maintaining a register of interests
- Including potential conflicts as a standing agenda item
- Properly recording disclosures and the steps taken to manage them.
For significant transactions or decisions, further safeguards may be appropriate. For example, if a committee member’s business is tendering for club work, obtaining competing quotes and following a clear process can help the club determine whether the arrangement is in its best interests and maintain member confidence in the decision-making process.
Best practice strategies for managing conflicts of interest
Conflicts of interest at a club are not always avoidable, particularly in community organisations with close relationships between committee members, local businesses, and members, however, can create significant governance and compliance risks if not identified and managed appropriately.
The key is to identify conflicts early, check the requirements applying to the club, make any required disclosures, and appropriately manage the conflict. Clear processes can help committee members and directors meet their obligations and ensure club decisions are made transparently and in the interests of the club.
How Mullins Lawyers can help
If your club requires assistance reviewing its constitution, by-laws, sporting club governance policies, or managing a potential conflict of interest, please contact Matthew Bradford at Mullins Lawyers for an obligation-free conversation.
