2012 LAW REFORMS FOR INCORPORATED ASSOCIATIONS
Written by Victor Hamit

Many clubs in Victoria are Incorporated Associations under the Associations Incorporation Act (“the Act”). In 2009 and 2010 there were significant amendments proposed to the Act which were due to commence on 1 July 2012. However, in December 2011 a new Bill, The Associations Incorporation Reform Bill 2011 (“the Reform Bill”) was introduced to replace the Act. At the time of writing, the Reform Bill is still before Parliament but it was hoped to commence on 1 July 2012. The Reform Bill, if passed, will introduce the following key reforms:- Clarifying the ability to trade, provided profits cannot be distributed to Members. Revise annual reporting requirements and audit thresholds. Introduce provisions clarifying committee members and officeholders’ duties. Require that the Association provide an indemnity to committee members. Clarify the rights of members, in particular in relation to attendance and voting at meetings and rights to access financial and other records. Require that member information not be disclosed inappropriately. Replace the term “Public Officer” with “Secretary”. Revise grievance and dispute resolution procedures. Revise requirements for associations and model rules. Consumer Affairs Victoria has advised that all Incorporated Associations will receive written notification before the new Reform Bill commences. Accordingly, they have requested that all Incorporated Associations ensure their current details are correct. Many of these proposed changes are welcome, particularly the clarification of the definition to permit trading which was a concern for clubs under the Act. The new governance procedures are proposed to be more closely aligned to the Corporations Act requirements for directors’ duties and are arguably simply a codification of the existing general law. Some concerns have been expressed that the changes are complex and the possible civil penalties too high. However, the Reforms do introduce defences of the “Business Judgment Rule” and where reliance has been placed on advice in reaching committee decisions. We do not consider that there is any significant difference to the current general requirements that a committee member must act reasonably, diligently and in good faith for the best interests of the members as a whole. In relation to the directors duties under the Corporations Act, many older clubs, notably golf and bowls clubs, were incorporated as companies limited by guarantee and therefore are already subject to the Corporations Act requirements. There will be a need for all clubs to review their Constitutions and, in some cases, their disciplinary, dispute and grievance procedures. It is unfortunate that after several delays in recent years that a definite date for the commencement of the Reforms has yet to be determined, although it is hoped to be 1 July 2012. Consumer Affairs Victoria has recently launched a new Website “Not for Profit Compliance Support Centre” at www.nfpcompliance.vic.gov.au to assist the 35,000 Associations incorporated in Victoria. Clubs should monitor this site for updates on the commencement of the Reforms. Nevertheless, all clubs will need to review their Constitution and procedures to ensure compliance when the Reforms come into effect.

Article Published: Club Connect –April 2012

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Victor Hamit
Wentworth Lawyers
Level 40,
140 William Street
MELBOURNE VIC 3000

Email: vhamit@wentworthlawyers.com.au
Website: www.wentworthlawyers.com.au

Tel: +61 3 9607 8380
Mobile: +61 408 590 706

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