Associations Incorporation Amendment (Review) Bill 2016

Photo of basketballers
17 February 2016

Mr ALISTER HENSKENS (Ku-ring-gai) [11.01 a.m.]: I thank members of the House for their contribution to the debate on this bill. There have already been important contributions in the House from the members for the electorates of Riverstone, East Hills, Holsworthy and Ballina, and it was a pleasant surprise to see that the member for Prospect could leave his full-time job on Sky News to give some time to his parliamentary duties as a member of this place. The importance of the incorporation of voluntary associations cannot be underestimated. It has been my pleasure over many years to provide legal advice to voluntary organisations and sporting bodies who operate for the benefit of our community and to further the important benefits of voluntary service to our community.

I start by recognising, as examples, two bodies that are incorporated under the Associations Incorporation Act in my electorate: the Hornsby Spiders—their full name being the Hornsby Ku-ring-gai Basketball Association—have incorporation under that legislation, as do their cross-North Shore rivals, the Norths Bears or the Northern Suburbs Basketball Association. They are but two of the many sporting bodies and community service organisations incorporated under the principal legislation that is sought to be amended by this bill.

The incorporation of voluntary associations under the Associations Incorporation Act is very important. Prior to that piece of legislation being enacted in 2009 there were many problems with unincorporated associations concerning their governance. There were problems with their capacity to enter into contracts for periods longer than the term of the committee members appointed by the unincorporated association. There were problems with perpetual succession and the like. So the ability to incorporate under the principal piece of legislation was incredibly important to the operation of voluntary bodies.

Due to the lower costs and lower level of complexity, it was far superior to the much more expensive and complex alternatives—the typical one being to incorporate as a company limited by guarantee under the corporations legislation. Therefore the original legislation which is today being amended is significant, as are the further refinements to it brought about through this bill. Indeed, I remember the complexity of drafting and creating a company limited by guarantee in the early 1990s—before the 2009 legislation—when I was a committee member and later director of the Basketball Association of Newcastle and Lake Macquarie Limited.

The bill before the House has four essential areas of refinement to the 2009 Act. The first is assisting associations to comply with the Act. The bill provides some important innovations and improvements to the Act. The first aspect of that is to permit electronic voting—a very important refinement and addition when people today are very time poor in their busy lives. The second change with regard to compliance with the Act is to enable changes to the official address to which documents can be served to be more streamlined. There are also provisions to deal with the maximum number of consecutive terms of office bearers.

The second area covered by the bill is to simplify the rules relating to the closure of associations. In particular the process of voluntary winding up of an association is streamlined. The third area refined by the bill is the enhancement of governance. The bill sets out common law duties for committee members regarding due diligence and also an important provision with regard to protection from liability. I will say a little more about those provisions in a moment. By those amendments the bill also ensures that where an association has adopted the model constitution the constitution will be updated whenever the model is amended. The fourth area covered by the bill is improvement of enforcement. There are some quite important provisions relating to the cancellation of registration and the winding up of an association by the secretary in certain circumstances.

I turn to more detailed consideration of some of the provisions. With regard to governance, the amendment bill includes two common law duties for committee members of an incorporated association. Under this bill, each member of a committee of an association must now carry out his or her functions for the benefit of the association and, as far as practicable, with due care and diligence. These duties are similar to some of the much more extensive duties that apply to directors of corporations. It is important that, while the committee members do not have onerous duties upon them, they do have some minimal duties to ensure proper governance of their organisation—bearing in mind, too, that the organisations incorporated under the principal Act are providing important services to the community.

On the other hand, another important aspect of governance introduced by the bill is to protect committee members from any personal liability in the discharge of their duties on the committee if they act in good faith for the purpose of exercising their functions. So there is both a duty and a protection under the bill. That is very important for the committee members to know. It is, of course, always prudent for any committee of any incorporated association to take out directors and officers insurance to properly protect them in the performance of their functions.

There are a number of potential offences if committee members do not carry out their roles properly and honestly—for example, offences for failing to disclose personal interests in a matter that is before the committee; offences for dishonest use of information obtained as a committee member; and offences for dishonest use of their position on the committee. To assist committee members to understand the nature of their duties the bill inserts a note prior to part 4, division 1A of the principal Act to make clear that the explicit duties of the committee members also extend to the association remaining solvent and that the association must be financially responsible and in a legal manner—that is, managed in a financially responsible and legal manner. That sort of transparent and simple instruction to committee members is highly desirable and will assist them to understand their duties under the entire Act.

The bill also introduces an important provision as to the number of consecutive terms an office bearer can serve in his or her incorporated association. We have all experienced—another member has already mentioned this—those salts of the earth who remain heavily involved in leadership positions at voluntary associations for long periods of time.

Mr GARETH WARD: We congratulate them.

Mr ALISTER HENSKENS: Indeed. Whilst that is commendable and great from a community point of view, it is important for the load to be evenly shared. This will not only avoid burnout but also all members of the association can be fully engaged so that when that valued volunteer can no longer continue with their duties other people will be able to keep the association vibrant.