This eBulletin outlines the impact of the Associations Incorporation Bill 2014 (WA), which has entered into force and makes numerous reforms to the legislation governing incorporated associations in Western Australia.
The eBulletin outlines those reforms and what your sport needs to do to ensure ongoing compliance with legislative requirements.
New law takes effect
On 2 November 2015, the Associations Incorporation Bill 2014 (WA) (Bill) received royal assent and came into effect as the Associations Incorporation Act 2015 (WA) (Act).
The remainder of the Act will come into force as it is proclaimed by the Western Australian parliament. There is no indication as to when this will occur, and different provisions of the Act may be proclaimed to enter into force at different times.
The Act aligns Western Australia's incorporated associations legislation with contemporary legislation in other Australian jurisdictions.
Specifically, the Act makes a number of major reforms from the previous regime under the Associations Incorporation Act 1987(WA) (Previous Act).
The major reforms include:
Financial Reporting: The Act introduces a new three-tiered system of financial reporting and accounting which will require all associations to prepare accurate financial reports. The tiers are determined by revenue and are designed to minimise the reporting burden on smaller associations, whilst recognising that larger associations should be accountable for the significant resources under their control.
Associations with revenue of over $250,000 per annum are required under the Act to prepare true and accurate financial reports and have those reports reviewed (but not audited) in accordance with Australian accounting standards. Associations with an annual revenue exceeding $1m must have their financial reports audited by an appropriately qualified auditor.
Personal Information: The Act provides a flexible approach to the personal information that must be provided by a member to their association, whilst limiting the association's use of that information.
Statement of Duties: The Act modernises the statement of duties owed by committee members and officers by codifying those that already exist at law. Duties that apply to committee members and officers under the Act include:
- the duty of care and diligence;
- the duty of good faith and proper purpose;
- the duty to disclose material personal interests; and
- the duty not to misuse their position, or information gained through their position, for their own gain or to the detriment of the association.
Internal Dispute Resolution: Under the Act, an association is required to include an internal dispute resolution process in its governing rules. This process must also provide a pathway for unresolved disputes to be heard by the State Administrative Tribunal.
Association Trading: The Act removes a restriction on association trading that was in the Previous Act. The removal retains the not-for-profit nature of incorporated associations, yet recognises that some trading by associations is necessary for financial self-sustainability.
Statutory Manager: The Act implements a process whereby a statutory manager may be appointed to administer the affairs of an association. This appointment is designed to be a 'last resort' suitable only for when an association is not functioning effectively and in accordance with its functions or purposes.
Cancellation of Incorporation: The Act introduces a new "simplified and streamlined" process by which associations can resolve their affairs and cancel their incorporation by a method that best suits their needs.
What the amendments mean for your sport
Although the substantive provisions of the Act are not yet in effect, it would be prudent for sports that will be governed by the Act to start to prepare for the new regime to ensure compliance.
The Act provides a three-year transitional period for associated incorporations to alter their governing rules to comply with the requirements of the Act. After that transitional period expires, associations who have not adjusted their governing rules accordingly will be in breach of the law.
Upon expiration of the transitional period, monetary sanctions can apply to associations who breach the Act. The Act provides fines that may be imposed for breaches of procedural requirements that associations are subject to. The fines generally range from $1,000 to $5,500 per contravention.
Fines of $10,000 can be imposed on individual office holders in breach of their personal duties, including those outlined above.
Changes or updates to your sports governance structure are likely to be required as a result of the Act entering into force. If you require assistance ensuring compliance with the requirements of the Act please do not hesitate to contact us.