3 October 2014 | Author: CSA Canberra
The Associations Incorporations Bill (the Bill) was recently introduced into the Western Australian Legislative Assembly. The Bill, if passed, will repeal and replace the Associations Incorporation Act 1987 (Current Act) and make significant changes to the laws governing associations in Western Australia. Many Christian schools in Western Australia are incorporated as associations and potentially impacted by the proposed new provisions.
The key changes that Christian schools, and other associations will need to be aware of should be Bill be passed are:
Constitutions to be updated to reflect new requirements
Constitutions will need to be updated to:
- contain an internal dispute resolution procedure.
- provide for circumstances in which payments may be made to a committee member.
- reflect the new rules relating to the number of members that may request the convening of a general meeting.
- reflect rules relating to the appointment of a statutory manager.
- incorporate new requirements of the management committee.
- encompass new winding up and amalgamation procedures.
The Bill has transitional provisions that allow associations to update constitutions in line with the new Act without approval by members just a notice to members of such changes. A three year transition period will also apply.
Adjusted financial reporting requirements
Financial reporting requirements will be tiered in line with the approach of other States such that:
- Tier 1 (annual revenue of less than $250k) – association to prepare basic financial statements for consideration at each AGM. No independent review or audit requirement.
- Tier 2 (annual revenue of between $250k and $1m) – association to prepare basic financial statements in accordance with Australian Accounting Standards which must be reviewed by an accountant prior to consideration at each AGM. No audit requirement.
- Tier 3 (annual revenue of more than $1m) – financial statements to be audited by a practising accountant prior to consideration at each AGM.
Christian schools will still need to meet funding requirements that impose more onerous auditing requirements.
Management committee requirements
The Current Act does not impose management committee eligibility requirements. The Bill prohibits certain persons from being members of a management committee of an association. This will need to be reflected in Constitutions.
The Current Act does not set out the duties of committee members. The Bill introduces fiduciary duties (in line with general law and the Corporations Act 2001) owed to the association by its “officers”.
“Officers” includes members of a management committee, senior/key employees and “a person who has the capacity to significantly affect the association’s financial standing”.
New measures are introduced to enhance the privacy of members. This includes the removal of the requirement for a member’s residential address or postal address from the register of members and that information on the register is only to be used for purposes “directly connected with the affairs of the association” or “related to the administration of the Act”.
Dispute Resolution Procedures
The Bill introduces a dispute resolution system that requires each association to have an internal dispute resolution process in its rules/constitution, and that any unresolved disputes between members of an incorporated association, and incorporated associations and their members can be heard by the State Administrative Tribunal (SAT). This is potentially quite a significant change.
The Bill is expected to be debated this month with the commencement date some time thereafter.
Schools in Western Australia will need to consider the impact of these changes and evaluate whether their current structure is the most beneficial or whether incorporation as a company limited by guarantee may be preferable.