Officers of Corporate Charities Get ‘Switched Off’

Office building to sky  We are all now aware that the Australian Charities and Not-for-Profits Commission (ACNC) has arrived. What you might not know is that charities with a corporate vehicle (typically a company limited by guarantee) who are registered  with the ACNC will received significant relief from some provisions under the Corporations Act. The major substance of this relief is that ‘officers’ of the company get many of the duties under the Corps Act ‘switched off’. As the Australian Charities and Not-for-profits Commission Act 2102 does not come into effect until 1 July 2013, don’t jump the gun on these as they only apply to the 30 June 2014 financial year and beyond.

An officer of a company is defined in section 9 of the Corps Act and supported by common law. In short, officers are directors, company secretaries and any decision makers or participants in decisions affecting a substantial part of the business or can significantly affect the corporations financial standing. CEO’s, CFO’s and general council may all fit the bill here. Under the Corps Act, officers have serious duties and obligations and breaching these duties can lead to the officer being held personally liable, but if the company registers with the ACNC, some of these duties are lifted.

An officer has the responsibility to;

  • exercise due care and diligence (s180);
  • exercise powers in good faith and for a proper purpose (s181 and s184);
  • not improperly use their position or information to gain advantage for self or others or cause detriment to the company (s182 – 183). This requirement extends to employees of the company as well;
  • disclose conflicts of interest (s191-194); and
  • prevent insolvent trading (directors only).

However, once registered with the ACNC non ‘responsible entity’ officers (CEO and CFO etc) get relief from s 180 – 183 and simplified disclosure of directors interests. Further more, employees are no longer subject to s182-183.

The purpose of these changes is clearly to protect benevolent CEO and CFO, many of whom are volunteers. I don’t think any of us want good people discouraged from working for charities through fear of civil or even criminal charges. It would appear that, for once, common sense has prevailed.

Officers of Corporate Charities Get ‘Switched Off’
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