The management committee

Under the Act, the management committee is the group of persons that has the authority to exercise the powers and functions of the association and to manage its affairs.  This is an important provision because people who are identified as committee members have special responsibilities under the Act both as individuals and as part of the group.  

This chapter describes the role, functions, structure and liabilities of management committees of incorporated associations under the Act.

Associations usually refer to this group as ‘the committee’, but sometimes may use other names such as ‘the council’ or ‘the board’. 

Some large incorporated associations have both a board of governors and a management committee.  In this case, a distinction may be made between the role of the board and the role of the management committee:

The management committee:

  • derives authority to function from the board of governors;
  • is concerned with the implementation of policy and all the organisational and administrative activities that are carried out in order to achieve the objects of the association; and
  • attends to the day-to-day administration and activities.

The board of governors:

  • is concerned with policy-making and rule making;
  • focuses on the overall strategic direction of the association, compliance with the legislation and policy; and
  • oversees financial management, providing resources and promoting the objects of the association.

In associations where a board of governors and a management committee co-exist, it is essential for these two groups to work together.  Both need to understand and support the different roles and have a clear understanding of the various areas of responsibility and authority.

It is also important to be very clear about which group is the management committee for the purposes of the Act. 

The Act expects there to be only one management committee responsible at law and the rules must clearly identify which group it is.  In most associations one committee is responsible for both governance and management.

Key Points

  • An incorporated association must appoint or elect a management committee that is responsible for managing the affairs of the association.
  • The management committee must comply with the rules of the association and ensure that individual committee members comply with the rules.
  • The management committee has a duty to act in good faith and in the best interests of the association.
  • The management committee has a duty of care to ensure that its activities and the activities of the association are conducted with reasonable care, skill and diligence.

Membership of the committee

Efficient management committees are ideally made up of people with a range of skills, knowledge and experience that can add to the overall strength of the committee.  Members of management committees may also include people who represent certain groups or organisations providing a particular service such as those representing consumers, Indigenous interests, mental health services, disability services, youth services, etc.  Most associations strive to nominate their ‘ideal’ committee as few things create more difficulties than a dysfunctional committee.

The rules of your association will determine what qualifications a committee member must have, and whether a member of the committee must be a member of the association.

Under the Act a person is excluded from being on the committee without special approval from the Commissioner for Consumer Protection if they:

  • are bankrupt or their affairs are under insolvency laws;
  • have been convicted of an indictable offence in relation to the formation or management of a body corporate in the last five years;
  • have been convicted of an offence involving fraud or dishonesty punishable by at least three months imprisonment in the last five years; or
  • have been convicted of an offence under section 127 of the Act, where a person has allowed an association to operate while insolvent in the last five years.

It is the responsibility of each individual nominating for a committee position, rather than the association, to ensure that they are eligible.

A person fitting the above criteria who wishes to accept an appointment to a committee must submit an application for approval through AssociationsOnline to the Commissioner for Consumer Protection with the prescribed fee.

The association can take steps to ensure that all prospective committee members are aware of the requirements, and should also undertake those checks that the association believes are reasonably required to ensure that all committee members are appropriately qualified. 

For example, associations can raise awareness by adding a box to nomination forms requiring candidates to declare that they are not disqualified.  Depending on the nature of the association and the position, an association may also require incoming committee members to provide police clearance certificates. 

This is common in large associations where committee members are paid, but may not be considered appropriate or necessary in a smaller association where committee members are volunteers or are well known to one another.

Associations should ensure that the processes in place for the election of committee members meet the requirements of the new law and that all elected members are eligible to hold their positions.  

For example, associations may wish to add a tick box to nomination forms requiring candidates to confirm that they are not an undischarged bankrupt and do not have one of the current convictions specified by the Act.

The Act requires an incorporated association's rules to include provisions about the name, constitution, membership and powers of the committee responsible for the management of the association.  

The rules need to be clear about the committee’s membership, what it is to be named and what functions are permitted to be carried out.  The rules must also include provisions about:

  • the election or appointment of committee members;
  • terms of office of committee members;
  • how the office of a committee member will become vacant;
  • filling casual vacancies on the committee; and
  • the quorum and procedure at meetings of the committee.

The Act also requires associations to keep up-to-date records of the names and addresses of all members of the committee and any other office bearers.  Members of the association are entitled to inspect and copy the record on request, but are not allowed to remove the record.

Members have a right to know who their committee members are and if necessary how to contact them.  Well-managed associations ensure that this information is readily available to their members, often through newsletters or by other means.

Electing the committee

In most cases, committee members are elected at an annual general meeting.  The procedures for the election of management committee members and office bearers should be set out in the rules of the association.

The model rules also include provisions for the election of management committee members.

The role and duties of the management committee

Membership of a management committee is not necessarily onerous, but does carry a number of significant responsibilities. These responsibilities fall into two categories: those of the committee acting as a group and those held by its members as individuals.

In practice, each member should consider every group responsibility as an individual responsibility. As discussed later, when it comes to any failure to meet a responsibility, the Act places the liability on the individual not the group.

Group responsibilities

The role of the committee is to manage the association in accordance with the purposes or objects as stated in its rules. In undertaking this role, the committee must fulfil a number of legal responsibilities, including ensuring the association complies with:

  • its obligations under the Act (separately highlighted in a table at the end of this chapter);
  • its rules and any funding agreements or other contracts;
  • its legal responsibilities to any employees, such as complying with employment awards or agreements, paying tax and superannuation and providing a safe working environment (dealt with in later chapters);
  • its legal responsibilities to members, volunteers and any clients or customers who may use the association’s services;
  • an assessment has been made whether insurance cover is required and to what extent;
  • any other relevant laws or regulations are complied with; and
  • specific financial responsibilities include making sure that:
    • there is compliance with requirements under the Act in relation to financial accounting and reporting to members;
    • the association can pay all its expenses (it may assist to develop a budget annually);
    • the conditions of any funding agreement are followed;
    • the accounts are audited or reviewed if required by the association’s law, the members, rules or funding agreements; and
    • good risk management procedures are in place.
      For example, a requirement that two authorised signatories sign off on any association cheque and that another member or employee completes cheque account reconciliations.

Depending on the size and nature of the association other areas of responsibility may include staff management, development and implementation of policies and procedures and provision of quality services to members and/or clients.

Duties of officers

Association committee members owe the same duties to association members as company directors owe to members of a company.  These duties apply to committee members and other persons who influence the management committee but who do not hold a formal committee position e.g. senior employees or past committee members who are still actively involved in the association and influencing the decisions of the committee. 

The term ‘officer’ is defined as meaning any of the following:

  1. a member of the management committee of the association;
  2. a person, including an employee of the association, who makes, or participates in making, decisions that affect the whole, or a substantial part, of the operations of the association;
  3. a person who has the capacity to significantly affect the association’s financial standing;
  4. a person in accordance with whose instructions or wishes the management committee of the association is accustomed to act.

When committee members exercise their powers and responsibilities to act on behalf of the association, they must:

  • exercise their powers with due care and diligence;
  • ensure that any business decisions are made in good faith and in the best interests of the association;
  • act in good faith and in the best interests of the association;
  • not make improper use of information or their position for personal profit;
  • avoid any conflicts of interest;
  • exercise powers in accordance with the rules of the association; and
  • not allow the association to incur a debt when the association is insolvent or there are reasonable grounds to believe that by incurring the debt the association will become insolvent.

Duty of care and diligence

While discharging duty of care and diligence a committee member or officer should:

  • be prepared for meetings (reading any papers and the financial statements);
  • broadly understand the financial position of the association;
  • follow up on action items;
  • keep informed about the association’s operations and activities;
  • ask questions; and
  • take steps to ensure that the association meets its obligations under other laws. For example occupational health and safety, taxation and employment.

Duties relating to insolvency

A committee member has a duty to prevent an association incurring debts while it is insolvent or in situations where the debt would cause it to become insolvent. This duty is breached if:

  • an association incurs debt while it is insolvent or it becomes insolvent by incurring the debt;
  • before incurring the debt there were reasonable grounds to expect that the association was already or would become insolvent by incurring the debt; and
  • the person was a member of the committee at the time the debt was incurred.

Allowing an association to trade while insolvent is a serious matter with a high penalty. It should also be noted that a breach of this duty would not make a committee member personally liable for the association’s debt.

To fulfil their duty committee members should all work to ensure:

  • that accounts are kept of the transactions, financial position and performance of the association; and
  • the association’s solvency status is monitored on an ongoing basis.

These duties set the basic standards of acceptable conduct. A breach of a duty is a rare event and is usually accompanied by a significant degree of deliberate wrong doing or gross negligence.

Duty offences under the Act require deliberate misconduct and are only applicable in the case of serious and wilful abuse of the officer’s position.

If a committee member or officer makes a business judgement in good faith for a proper purpose they will not be liable for an offence even if the outcome for the association is not ideal.

Committee members must ensure they are fully informed about the association by keeping up to date with matters, attending meetings, reading agendas and minutes and asking questions. In the event of a problem, dispute or legal challenge committee members cannot claim they 'did not know' about the rules and activities of the association.

Individual committee members’ responsibilities

Complying with the rules

The management committee is responsible for implementing the association’s rules and ensuring that it meets its obligations under the Act. Committee members must comply with and act within the rules at all times.

All committee members should be supplied with an up-to-date copy of the association’s rules and be familiar with its main and most-used provisions. It may also be beneficial for committee members to bring the rules with them to every meeting. As a minimum, the Secretary should ensure that a copy of the rules is on the table at each meeting.

Conflicts of interest

Committee members must not put themselves in a position where there is a conflict between their duties and responsibilities to the association and their personal interests.

The Act requires members of the committee to disclose any material personal interest they may have in any contract, or proposed contract, entered into or being considered by the committee. A committee member has a material personal interest when that member has a personal interest in a matter which could be seen to compromise their ability to act in the interests of the association and make an impartial decision. The interest may be financial or non-financial. The interest may be financial or non-financial.

Examples of material personal interests include:

  • the committee member owns a business an association is seeking to contract with to supply it with goods or services;
  • a relative of the committee member submits an application for employment with the association; and
  • the committee member serves on the committee for two associations that are competing for the same tender or grant.

In a small, volunteer run association, it can seem difficult to manage these obligations while providing effective management, but members are entitled to expect that committee decisions will reflect the interests of the association rather than the personal interests of its committee members.  

It must be remembered that not all personal interests are ‘material’ in the context of the decision being made and common sense should apply. 

For example, in a junior sports club, committee members are likely to have children who participate and, as a result, an interest in matters such as team selection, coaching and scheduling of matches.  That would not ordinarily be a situation requiring declaration of an interest, but in the event that a committee member has a child who has been singled out for potential disciplinary action or for consideration for a substantial prize or sponsorship, then it would be appropriate for the committee member to declare a conflict of interest with regard to any consideration of that matter.

Disclosures must explain the nature and extent of the interest and be made as soon as the member becomes aware of it. Failure to declare an interest as soon as possible is a criminal offence and could result in a fine if convicted.

For example:

Brian sits on the management committee of an association. The association is planning to give small grants to local groups for tree planting programs. Brian is the president of the local tree planting co-operative which wants to apply for the funds. As the co-operative is a potential benefactor of the grant, Brian must tell the management committee of his involvement in the co-operative.

If a committee member declares an interest in a contract or proposed contract, the Act requires that:

  1. the disclosure must be recorded in the minutes of the meeting;
  2. the committee member with the conflict of interest must not discuss or vote on the contract; and
  3. the committee member with the conflict of interest must leave the meeting while the matter is being considered. If there are not enough members remaining to form a quorum, a special general meeting must be called and a resolution on the matter passed by the members.

In addition to the above, the member with the conflict of interest must also disclose the nature and extent of their interest in the matter at the next general meeting of the association.

A useful way to help committee members comply with these requirements is to make ‘disclosures of interest’ a standard item on the committee meeting agenda. In most cases there will be nothing to note, and will serve as a reminder to members of the need to remain aware of conflicts of interest.

Roles of particular office bearers

The Act does not assign specific responsibilities to individual committee members.  It is up to the association to decide what the role and responsibilities of each committee member will be, and to ensure that these are correctly set out in the association’s rules. The roles of some common office bearers are summarised below:

Chairperson (sometimes called the president)

The chairperson is usually the formal 'voice' of the association and is responsible for the overall coordination of the activities of the association.

The chair is responsible for:

  • chairing meetings;
  • signing documents on behalf of the association;
  • ensuring all relevant information is made available to committee members;
  • ensuring the association is run according to its rules and any other strategic plan that has been agreed to;
  • resolving disputes and grievances;
  • initiating projects;
  • overseeing activities and projects; and
  • representing the association at external meetings and events.

In the chairperson’s absence the vice-chairperson can represent the association and preside over meetings. See Meetings for the role of the chairperson in meetings.

Treasurer

The treasurer is responsible for managing the finances of the association. This involves:

  • maintaining all financial records;
  • monitoring the income and expenditure of the association;
  • keeping committee members informed of the financial position of the association;
  • preparing and presenting financial statements to the Annual General Meeting;
  • allocating funds;
  • developing budgets for new projects;
  • making payments and bank deposits;
  • preparing and managing the budget;
  • representing the association on funding applications; and
  • maintaining custody of all securities, books and documents of a financial nature.

Secretary

The secretary is responsible for day-to-day administrative tasks which include:

  • maintaining the register of members;
  • arranging meetings;
  • assisting the chairperson to prepare the agenda;
  • sending out notices for meetings;
  • keeping minutes and records;
  • attending to correspondence;
  • making sure all letters and other documents are properly filed;
  • organising activities and events;
  • preparing newsletters; and
  • maintaining custody of all books, documents, records and registers of the association.

Paying committee members

Out of pocket expenses

The Act allows a member to be reimbursed for any out of pocket expenses relating to the affairs of the association. It is normal to request that the member provide evidence of the payment such as a receipt before the refund is paid.

Honorariums

There may some situations were an association would like to pay a committee member an honorarium for the service they provide to the group. The Act does not refer to ‘honorariums’ and whether the payment is permitted will depend on the actual reason for the payment.

For example, an association cannot use honorariums as a way of distributing its income to members, but can make payments of wages or other remuneration to members, so these payments may be made if they represent remuneration for services actually provided to the association (even if the rate at which payment is made is less than the usual market rate). 

Important note

If any payments are to be made to committee members (apart from reimbursement of expenses) the rules must provide for approval of the payments by the members of the association.

Liability of management committee members

One of the benefits of incorporation is that members (including the management committee) and office bearers of the association are generally not liable for debts or liabilities of the association. However, this does not apply to liabilities incurred by or on behalf of the association before incorporation.

The most common form of liability an association incurs is liability under the contracts it enters into. An association may also incur liability under tort law, such as for negligent acts done by the management committee, employees or volunteers. An association can also be liable under criminal law, such as for fraud.

Management committee members are not immune from personal liability. There is a duty to fulfil the functions of their office to the best of their ability. If a committee member or officer acts in bad faith or contrary to the rules of association, he or she may personally be criminally prosecuted or be the subject of civil proceedings. An example is where an officer enters into a contract against the instructions of the management committee.

Likewise, if a management committee member acts negligently in the performance of his or her office, he or she may be held personally liable for any resulting loss or damage (See Insurance and Risk Management for information on insurance for office bearers/committee members).

It is possible for incorporated associations to adopt rules which indemnify committee members against breaches of their duties to the association and/or against liability to third parties. Before an indemnity is granted, the association should consider their objects and make an assessment of the risks the organisation may face.

Duty of care and risk management

Incorporated associations have a duty of care to ensure the activities of the association do not cause harm, damage or injury to any participant or recipient of its services, or any other person who is reasonably likely to be affected. If an injury is a foreseeable result of the association failing to exercise reasonable care in providing these services, then the association will be liable for any loss or damage suffered. For example:

  • while participating in a sporting event or school holiday program provided by the association; or
  • while attending a childcare facility provided by the association.

Management committees need to ensure the standard of care provided by their association is reasonable in order to minimise the risk of liability. The committee should identify and evaluate the risks for all activities. In situations where there is a likelihood of harm or a greater risk of harm, a higher degree of care is required. For example a higher degree of care and supervision is required for young children taking part in physical games than for children sitting listening to stories being read.

An example of duty of care:

An association arranges a day of activities to celebrate Youth Day. Activities include:

  • Crazy sports.
  • Competitions that involve activities with some risk (eg darts).
  • Go-kart racing.
  • Animal rides.
  • Amusement park rides.

These activities all involve some foreseeable risk. The association has a duty to take reasonable steps to ensure all activities and rides are safe, appropriate for the age levels and properly supervised. Attendees and participants must be warned of any dangers.

It is important the association’s insurance policy covers such an event and if not, to take out additional insurance for the day (see also Public liability insurance in Insurance and Risk Management).

Codes of conduct

Increasingly, management committees are developing codes of conduct for management, staff and volunteers. A code of conduct defines the expectations about the behaviour of people involved in the association’s activities. While a code of conduct can theoretically cover a range of behaviours, it cannot be discriminatory, unreasonable or advocate unlawful activities.

A code of conduct for committee members might include:

  • complying with all policies, procedures and rules of the association;
  • attendance and participation in management committee meetings and the work of the management committee;
  • clarifying who has authority to speak on behalf of the association;
  • maintaining confidentiality;
  • behaving in a manner that does not obstruct the association's pursuit and fulfilment of its objectives;
  • behaviour that is respectful of diversity, is non-discriminatory and upholds the association's values (if defined); and
  • behaviour that does not abuse, physically, sexually or verbally any member of the association, staff, volunteers or members of the public.

Leaving the committee

The committee is responsible for maintaining the documents and records of the association, but these are the property of the association.  The act requires any committee member who has possession of these documents when he or she ceases to be a committee member to ensure that they are delivered to a current member of the committee as soon as possible.  See also Custody and handover of records.

Committee handover checklist

There are things that both new and outgoing committee members can do to make the handover of responsibility for managing an association as smooth as possible.

The following list is not exhaustive but may assist an association to develop a handover checklist for committee members:

  1. Hold a meeting of new and outgoing committees to familiarise new members with association’s policies, procedures and current issues.

    This would also be a good opportunity to provide the new committee with a summary of the association’s registration details, licences and reporting obligations (see Sample - about our association).

  2. Outgoing committee members must return all documents in their possession to the new committee as soon as practicable after the election. 
  3. Update bank signatories replacing outgoing committee members with signatories from the new committee.
  4. Update AssociationsOnline users by retiring any outgoing users and adding new primary users. The Manage users video will help you complete these changes. 
  5. Update contact details with external agencies and association stakeholders. For example:
    • Consumer Protection;
    • Licensing authorities;
    • Australian Taxation Office (ATO);
    • Australia Charities and Not for Profits Commission (ACNC);
    • Insurance providers;
    • Accountants, bookkeepers, reviewers and auditors;
    • Funding bodies; and/or
    • Parent/affiliated bodies.
  6. Update the record of office holders to reflect the new committee.
  7. Provide relevant passwords and log in information for any online accounts to the new committee.
  8. Update website to include details of new committee members, and any relevant contact details.

Orientation and training for management committee members

New management committee members need to know about their responsibilities and the workings of the association.  It is good practice to provide a structured, comprehensive and practical orientation to the activities, policies and structure of the association.  This may take the form of interactive workshops and seminars as well as informal individual discussions with outgoing members and experienced committee members.  

An orientation program might include:

  • association objectives and rules of the association;
  • legal responsibilities of committee members;
  • strategic and business planning;
  • policies and procedures;
  • current issues impacting on the association;
  • record systems;
  • occupational health and safety; and
  • financial management.

The Western Australian Council for Social Services Inc (WACOSS) provides training and resources for boards and committees on the function and elements of organisational governance.  

Contact WACOSS on (08) 9420 7222 for further information or visit their website at www.wacoss.org.au.

Orientation kits for management committee members are a useful way of providing newcomers with all the essential information.  The kits can be given to newly elected members and may contain:

  • information on the association, objectives, structure, activities and achievements;
  • the role of committee members;
  • a list of committee members and their contact details;
  • practical expectations (eg number of meetings, other tasks);
  • general requirements and expectations; 
  • the rules of the association;
  • a guide to meeting practices; and
  • policies and procedures.

This sample form can be used as a starting point to develop a summary sheet about your association.

Key obligations of associations under the Associations Incorporation Act 2015

Committee members of associations are required to take all reasonable steps to ensure that their association complies with all of these obligations.

Annual general meeting

Must be held each year within six months after the end of the association’s financial year.

Section 50 of the Act

Annual accounts must be prepared and presented to members at each Annual General Meeting.

Tier 1 – Sections 68 and 70 of the Act
Tier 2 – Sections 71 and 73 of the Act
Tier 3 – Sections 74 and 76 of the Act

 

Special resolutions

Special resolutions are needed to amend the rules, voluntarily cancel or amalgamate the association.

A special resolution must be approved by 75% of the members who attend and vote at a general meeting that has been properly convened under the rules.

Details of the special resolution must be lodged with Consumer Protection for it to have legal effect.

Section 51 of the Act

 

Records

Accounting records must be kept in such a way that true and fair accounts of the association can be prepared from time to time according to the requirements for the association’s financial reporting Tier.

Section 66 of the Act

An up-to-date members’ register must be maintained and made available to any member to inspect and copy on request.

Section 53 of the Act

The rules of association must be kept up-to-date and made available to any member to inspect and copy on request.

Section 35 of the Act

A copy of the rules must be provided to each member when they join the association.

Section 36 of the Act

A list of committee members and office bearers, together with their residential, postal, business or email address must be maintained and made available to any member to access or copy on request.

Section 58 of the Act

 

Notifying Consumer Protection

Notify Consumer Protection of any change in the association’s address within 28 days of the change occurring.

Section 175 of the Act

Submit annual information statements within 6 months after the end of each financial year.

Section 156 of the Act

 

Rights and responsibilities of members

All members have significant rights and responsibilities. The specific responsibilities that apply to committee members are outlined in this chapter.

Members' responsibilities

Members agree to be bound by the rules of the association unless those rules are inconsistent with the Act or some other legal obligation.

The agreed rules of an incorporated association set out the purposes of the association (referred to as objects in the Act) and the basis on which the association is to be run. In some circumstances members or others could take civil action against committee members or the association if it fails to comply with its rules.

Conduct of the association

As incorporated associations are traditionally regarded as essentially community-based organisations, they are largely independent of government intervention. Members have a crucial role in ensuring that their association conducts itself in a way that is acceptable to them. If members fail to ensure their association is run in a fair, democratic and financially accountable manner, the association may be one they no longer wish to be associated with.

False or misleading statements

All members are responsible for ensuring all documents lodged with Consumer Protection under the Act or presented at members meetings are accurate. If a person knowingly lodges a document that is false or misleading they commit an offence that can result in criminal prosecution and be subject to a maximum fine of $5,000.

Members' rights

The Act sets out some other important rights for members. Members cannot give up these rights by simply agreeing to association rules which are inconsistent with these.

All members have the right to:

Records

Inspect and copy the association's register of members.

Section 53 of the Act

Inspect and copy the association's rules.

Section 35 of the Act

Inspect and copy the association's record of office holders.

Section 58 of the Act

Receive a copy of the rules when they join the association.

Section 36 of the Act

 

Annual general meeting

Attend the annual general meeting.

Section 50 of the Act

Have financial accounts showing the financial position of the association submitted to them at the annual general meeting.

Tier 1 – Section 70 of the Act
Tier 2 – Section 73 of the Act
Tier 3 – Section 76 of the Act

 

Special resolutions

Have proper notice of and to attend any general meeting at which it is proposed to alter the association's rules.

Sections 30 and 51 of the Act

Have proper notice of and to attend any general meeting at which it is proposed to voluntarily cancel the association

Sections 51, 129 and 141 of the Act

Have proper notice of and to attend any general meeting at which it is proposed to amalgamate the association with another group.

Sections 51 and 102 of the Act