The role and duties of the management committee
The responsibilities of committee members fall into two categories:
- those of the committee acting as a group and
- those held by its members as individuals.
The committee has the responsibility to ensure the association complies with obligations under the Act, in it’s rules and other legal responsibilities:
- to members, volunteers and clients using the association’s services;
- to employees including complying with relevant employment awards or agreements, taxation, superannuation and occupational health and safety;
- in order to comply with any other relevant laws or regulation; and
- under funding agreements or contracts.
The committee is also responsible for the association’s financial management ensuring:
- compliance with the financial record keeping and reporting requirements.
- the association can pay all its expenses as they fall due.
- appropriate insurance cover is in place where required.
- the accounts are reviewed or audited where required under the Act, by the rules or members or for funding agreements.
- good risk management procedures are in place such as a requirement for payments to be authorised by two unrelated committee members.
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
Committee members and officers have duties to make decisions and act in the best interests of their association. These duties are set out in the Act and apply to committee members and other persons, known as officers, 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.
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;
- not make improper use of information or their position for personal gain or to cause detriment to the association;
- disclose and manage 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 the association will become insolvent.
These duties set the basic standards of acceptable conduct. A breach of a duty is usually accompanied by deliberate wrong doing, misconduct, gross negligence or 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 are required to be 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.
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.
It should be noted that a breach of this duty would not generally make a committee member personally liable for the association’s debt. However, allowing an association to trade while insolvent is a serious matter and 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;
- the association’s solvency status is monitored on an ongoing basis; and
- the committee are fully aware of the association’s financial position when considering decisions that will incur new debt.
Individual committee members’ responsibilities
Complying with the rules
The management committee is responsible for implementing the association’s rules and ensuring it meets its obligations under the Act. Committee members must comply with the rules at all times and be familiar with the main provisions. A copy of the rules should also be on hand at each committee meeting for easy reference.
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 committee members to disclose any material personal interest they may have in any matter 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 influence their decision. The interest may be financial or non-financial. For example:
- the committee member owns a business that contracts with the association; and
- a committee member’s spouse applies for employment with the association.
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 have an interest in matters such as team selection, coaching and scheduling of matches. These situations would not ordinarily require declaration of an interest, but should a committee member have a child who has been singled out for disciplinary action or to receive a substantial prize, 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 be made as soon as the member becomes aware of their conflict. If a committee member declares an interest in a matter being considered, the Act requires that:
- the disclosure must be recorded in the minutes of the meeting and include the nature and extent of the interest;
- the committee member with the conflict of interest must not discuss or vote on the contract and 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.
- the member with the conflict of interest must then 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 agenda item for committee meetings. 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 the role and responsibilities of each committee member and ensure these are correctly set out in the association’s rules.