ASSOCIATIONS INCORPORATION AMENDMENT BILL 2010 Explanatory Memoranda
ASSOCIATIONS INCORPORATION AMENDMENT BILL 2010
Associations Incorporation Amendment
Bill 2010
Introduction Print
EXPLANATORY MEMORANDUM
Clause Notes
PART 1--PRELIMINARY
Clause 1 sets out the purposes of the Bill.
Clause 2 provides that the Bill will come into operation on a day or days to
be proclaimed or, if no date has then been proclaimed, on
1 December 2011.
Clause 3 provides that in the Bill the Associations Incorporation Act
1981 is referred to as the Principal Act.
PART 2--AMENDMENTS TO THE ASSOCIATIONS
INCORPORATION ACT 1981
Clause 4 amends section 3(1) of the Principal Act by--
· inserting a new definition of general meeting.
A general meeting means a meeting of the members of
the incorporated association convened in accordance
with its rules and includes a special general meeting and
an annual general meeting;
· inserting a new definition for office holder. The term
office holder means--
· a member of the committee;
· the secretary;
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· an employee of the incorporated association who
makes, or participates in making, decisions that
affect the whole or a substantial part of the
operations of the incorporated association;
· inserting a new definition of tier one association.
A tier one association has the meaning given to it in
section 30AB(2);
· inserting a new definition of tier three association.
A tier three association has the meaning given to it in
section 30AB(4);
· inserting a new definition of tier two association. A tier
two association has the meaning given to it in
section 30AB(3);
· omitting the definition of prescribed association.
Amends section 3(2) of the Principal Act by--
· omitting the words "trade or to" and "trading or";
· repealing paragraphs (b) and (c).
Clause 5 amends section 4(1) of the Principal Act by--
· in paragraph (a) substituting "Australia" for "the State"
and substituting "this Act; and" for "this Act;";
· repealing paragraph (b).
Clause 6 amends section 5 of the Principal Act by--
· substituting paragraph (a)(ii) to remove the requirement
that an application shall state the place or places where
the association was formed and is carried on and
substituting a requirement that an application contain
the proposed registered address of the proposed
incorporated association;
· omitting the words "in Victoria" in paragraph (a)(iii) to
remove the requirement that the applicant for
incorporation must have an address in Victoria;
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· repealing paragraph (b) removing the requirement that
an application for incorporation under the Act be
accompanied by a statement of purposes for the
proposed incorporated association. This is consistent
with clause 15 which amends section 21(1) to provide
that the purposes of an incorporated association are the
purposes provided in the rules of the incorporated
association.
Clause 7 amends section 6(a)(i) by substituting "Schedule 1" for "the
Schedule". This amendment is consequent upon the substitution
of new Schedules 1 to 3 by clause 50.
Clause 8 amends section 10 of the Principal Act by--
· in subsection (3)(a)(iii), omitting "in Victoria" and
substituting "Australia" for "the State". An application
to bring a company under the Principal Act must
include the name of a resident of Australia;
· repealing subsection (3)(b)(ii) to remove the
requirement that an application to bring a company
under the Principal Act be accompanied by a statement
of purpose for the proposed incorporated association;
· omitting "trading or" in subsections (4A)(a) and (6) to
remove the power of the Registrar to refuse to
incorporate an applicant organisation if the Registrar is
satisfied that the applicant organisation is carried on for
the purpose of trading.
Clause 9 amends section 14A of the Principal Act by--
· substituting subsection (1A)(c) to provide that an
incorporated association must not do any act outside the
scope of the purposes provided in its rules; and
· substituting in subsection(2)(ab) "the purposes of the
incorporated association provided for in its rules" for
"its statement of purposes", to reflect the new
requirement to include a statement of purpose in an
incorporated associations rules.
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Clause 10 inserts a new section 14AB into the Principal Act which provides
that--
· if an incorporated association proposes to take
disciplinary action against a member in respect of that
member's status as a member of the incorporated
association, the disciplinary action must be in
accordance with the rules of the incorporated
association;
· in taking the disciplinary action, the incorporated
association must ensure that the member is informed of
the grounds upon which the action is being taken and is
given an opportunity to be heard;
· the outcome of the disciplinary procedure is to be
determined by an unbiased decision-maker;
· the disciplinary procedure must be completed as soon as
reasonably practicable;
· a member who is subject to a disciplinary procedure is
prohibited from initiating a grievance procedure in
relation to the same matter until the disciplinary
procedure is completed.
Clause 11 substitutes section 14B(3) of the Principal Act to clarify that in
applying a grievance procedure, the incorporated association
must ensure that each party to the dispute is given an opportunity
to be heard, and that the dispute is determined by an unbiased
decision maker.
Clause 12 amends section 15 of the Principal Act by inserting additional
subsections that provide--
· at the request of a member, the incorporated association
must permit the member to inspect the rules of the
association and the minutes of the general meeting;
· if the member requests a copy of the rules or of the
minutes of a general meeting and pays the prescribed
fee (if any), the incorporated association must provide
the member with a copy within 7 days;
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· an incorporated association must not hold a general
meeting unless each member who is entitled to vote has
been notified of the time and date and place of the
meeting in a manner provided by the rules, and if the
rules provide a standard form for proxy voting, the
member is provided with a copy of that form.
This requirement is not contravened if the incorporated
association's failure to comply is accidental or
inadvertent;
· an incorporated association must not prevent any
member from either attending or voting (if they are
entitled to vote) at any general meeting unless such
member has had their rights suspended pursuant to the
rules of the incorporated association.
Clause 13 amends section 16 of the Principal Act by omitting "statement of
purposes or" in subsections (1) and (2) and "the statement of
purposes or" in subsection (3) to reflect the consolidation of an
incorporated association's statement of purpose into the rules of
the incorporated association.
Clause 14 inserts a new section 19A into the Principal Act which provides
that whether or not an incorporated association has a common
seal, an incorporated association may execute a document
(including a deed) if it is signed by either two members of the
committee or, if the secretary is not a member of the committee,
by the secretary and a member of the committee.
Clause 15 substitutes section 21(1) of the Principal Act to provide that the
purposes of an incorporated association are those provided in the
rules of an incorporated association.
Clause 16 amends section 22 of the Principal Act by omitting "its statement
of purposes or" in subsection (1) and "the statement of purposes
or" in subsection (2). This reflects that the statement of purposes
is to be included in the rules of the incorporated association.
Clause 17 amends section 24(2)(c) of the Principal Act by substituting
"Australia" for "the State", removing the requirement that the
secretary of an incorporated association be a resident of Victoria
and replacing it with a requirement that the secretary be a
resident of Australia.
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Clause 18 amends section 25 of the Principal Act by--
· substituting a new subsection (1) and subsection (1A)
for existing subsection (1) to provide that if the office of
the secretary of an incorporated association becomes
vacant, it must be filled within 14 days in accordance
with the rules of the incorporated association. If the
rules provide that the secretary is to be elected, and it is
not practical to hold an election within 14 days, an
interim secretary must be appointed by the committee of
the incorporated association until an election can be
held in accordance with the rules; and
· in subsection (2)(b), substituting "Australia" for "the
State", to replace the requirement that the secretary of
an incorporated association be a resident of Victoria
with a requirement that the secretary be a resident of
Australia.
Clause 19 substitutes section 27 of the Principal Act to provide that--
· a member of the committee must retire, and may be
removed from office, as provided by the rules of an
incorporated association;
· a member of the committee vacates office in the
circumstances (if any) provided in the rules of an
incorporated association and in any of the following
circumstances--
· the member is absent from three consecutive
meetings without leave from the committee;
· the member resigns by written notice to the
committee;
· the member is removed from office by special
resolution at a general meeting;
· the member dies;
· the member becomes bankrupt or applies to or
takes advantage of any law relating to
bankruptcy or insolvency;
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· the member becomes a represented person within
the meaning of the Guardianship and
Administration Act 1986;
· the member ceases to reside in Australia; or
· a statutory manager is appointed to conduct the
affairs of the incorporated association under
section 31D of the Act;
· for the purposes of section 27 (as substituted by
clause 19) the secretary is deemed to be a member of
the committee.
Clause 20 omits "in Victoria" from section 28(1) of the Principal Act to
remove the requirement that the secretary provide a Victorian
address to the Registrar.
Clause 21 inserts a new section 29AA into the Principal Act which provides
that--
· a committee may hold meetings using any technology
that allows all participating members to clearly and
simultaneously communicate with each participating
member; and
· that a member who participates in a meeting via
technology is taken to be present at that meeting.
Clause 22 substitutes section 29A of the Principal Act.
New section 29A(1) provides that an office holder or former
office holder of an incorporated association must not make
improper use of information obtained because of their position to
either gain advantage for themselves or to cause detriment to the
incorporated association.
· Under proposed section 37AB to be inserted by
clause 41 this provision is declared to be a civil penalty
provision and the provisions of Part 9.4B of the
Corporations Act 2001 (Civil consequences of
contravening civil penalty provisions) apply.
· A person who contravenes this provision may be liable
to pay a pecuniary penalty of up to $20 000.
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New section 29A(2) provides that an office holder of an
incorporated association must not make improper use of that
office to either gain advantage for themselves or to cause
detriment to the incorporated association.
· Under proposed section 37AB to be inserted by
clause 41 this provision is declared to be a civil penalty
provision and the provisions of Part 9.4B of the
Corporations Act 2001 (Civil consequences of
contravening civil penalty provisions) apply.
· A person who contravenes this provision may be liable
to pay a pecuniary penalty of up to $20 000.
New section 29A(3) creates an offence for an office holder or
former office holder of an incorporated association to knowingly
or recklessly make improper use of information obtained because
of their position to either gain advantage for themselves or cause
detriment to the incorporated association. The penalty for this
offence is 60 penalty units. Under new section 29A(5), the court
may also order a person to pay compensation to the incorporated
association.
New section 29A(4) creates an offence for an office holder to
knowingly or recklessly make improper use of that office to gain
an advantage for themselves or another person or to cause
detriment to the incorporated association. The penalty for this
offence is 60 penalty units. Under new section 29A(5), the court
may also order a person to pay compensation to the incorporated
association.
New section 29A(6) provides that section 29A has effect in
addition to and does not detract from any other rule of law
relating to the duties or liability of a person because of their
office or employment in relation to an incorporated association
and does not prevent the commencement of civil proceedings in
respect of such a duty or liability.
· The Note clarifies that civil proceedings under
Part 9.4B of the Corporations Act may not be
commenced against a person in respect of conduct for
which they have already been convicted of an offence
Clause 23 inserts new sections 29AB to 29AD into the Principal Act--
New section 29AB(1) requires that an office holder of an
incorporated association must exercise his or her powers and
must discharge his or her duties with the degree of care and
diligence that a reasonable person would if that person were an
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office holder of the incorporated association in the circumstances
that applied at the time the power was exercised or the duty was
discharged and as if that person occupied the same office and
held the same responsibilities within the incorporated association
as the office holder.
This provision is modelled on section 180 of the Corporations
Act.
· Under proposed section 37AB to be inserted by
clause 41 this provision is declared to be a civil penalty
provision and the provisions of Part 9.4B of the
Corporations Act 2001 (Civil consequences of
contravening civil penalty provisions) apply.
· A person who contravenes this provision may be liable
to pay a pecuniary penalty of up to $20 000.
New section 29AB(2) provides that an office holder is taken to
have acted with the required degree of care and diligence if the
office holder makes a business judgment, and--
· makes the judgment in good faith for a proper purpose;
and
· does not have personal interest in the subject matter of
the judgment; and
· informs himself or herself about the subject matter of
the judgment to the extent that he or she reasonably
believes to be appropriate; and
· rationally believes that the judgment is in the best
interests of the incorporated association.
business judgment is defined in new section 29AB(3) as a
decision to take or not to take action in respect to a matter
relevant to the operations of the incorporated association.
Such judgment is considered to be rational, unless the belief is
one that no reasonable person in the position of the office holder
would hold.
New section 29AB(2) is modelled on the expression of the
business judgment rule in section 180(2) of the Corporations Act.
While many incorporated associations may not consider
themselves to be conducting "business" in the sense of a
commercial "for profit" operation, the definition of business
judgment contained in the section makes it clear that in the
context of an incorporated association, a business judgment
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means a judgment relating to the operations of the incorporated
association.
New section 29AB(4) provides that section 29AB has effect in
addition to and does not derogate from any other rule of law
relating to the duty or liability of a person because of their office
or employment in relation to an incorporated association and
does not prevent the commencement of civil proceedings for a
contravention of the duty or in respect of such a liability.
New section 29AB(4) is qualified by subsection (5) which
provides that subsection (4) does not apply to subsections (2) and
(3) which outline the requirements of a business judgement, to
the extent to which those provisions may operate on the duties at
common law and in equity that are equivalent to the duty of care
and diligence imposed under subsection (1)
New section 29AC, provides that an office holder of an
incorporated association must exercise his or her powers and
discharge his or her duties in good faith in the best interests of the
incorporated association and for a proper purpose.
This provision is modelled on section 181 of the Corporations
Act.
· Under proposed section 37AB to be inserted by
clause 41 this provision is declared to be a civil penalty
provision and the provisions of Part 9.4B of the
Corporations Act 2001 (Civil consequences of
contravening civil penalty provisions) apply.
· A person who contravenes this provision may be liable
to pay a pecuniary penalty of up to $20 000.
New section 29AC has effect in addition to and does not derogate
from any other rule of law relating to the duty or liability of a
person because of their office or employment in relation to an
incorporated association and does not prevent the commencement
of civil proceedings for a contravention of the duty or in respect
of such a liability.
The Note following section 29AC alerts readers that under
proposed section 37AH to be inserted by clause 41, the
provisions of Part 5.7B of the Corporations Act are declared to
be an applied Corporations matter for the purposes of an
incorporated association that is insolvent. Section 588G in
Part 5.7B provides for a duty to avoid insolvent trading.
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· Contravention of the duty to avoid insolvent trading
under section 588G will constitute an offence where--
· an incorporated association incurs a debt at a
particular time; and
· at that time a person is an office holder of the
incorporated association; and
· the incorporated association is insolvent or
becomes insolvent by incurring the debt or by
incurring at that time more than one debt
including that debt; and
· the office holder suspected at the time when the
incorporated association incurred the debt that
the association was insolvent or would become
insolvent as a result of incurring that debt or
other debts; and
· the office holder's failure to prevent the
incorporated association incurring the debt was
dishonest;
· a penalty of 240 penalty units applies for an offence
under section 588G;
· contravention of section 588G is also a civil penalty
provision. A civil penalty will apply where, in failing to
prevent an incorporated association from incurring a
debt, an office holder of an incorporate association was
aware at the time that the debt was incurred that there
were grounds for suspecting that the incorporated
association was insolvent or that by incurring the debt
the incorporated association would become insolvent
and a reasonable person in a similar position in the
incorporated association would have been so aware.
Under new section 29AD(1), section 29AD will apply if the
reasonableness of an office holder's reliance on information or
advice given to the office holder arises in any proceedings
brought to determine if the office holder has performed a duty
under the Act or an equivalent duty at common law.
New section 29AD(2) provides that an officeholder's reliance on
information or advice is taken to be reasonable if the reliance was
made in good faith and after making an independent assessment
of the information and advice (having regard to the office
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holder's knowledge of the incorporated association and the
complexity and structure of that incorporated association) and the
information or advice was prepared by--
· an employee of the incorporated association whom the
officeholder reasonably believed was reliable and
competent in relation to the matters concerned; or
· a professional or expert adviser and it was reasonable to
believe that the matter was within their professional
expertise or competence; or
· another officer holder in relation to matters within their
authority; or
· a committee of the incorporated association of which
the office holder was not a member and in relation to a
matter within the committee's authority--
and the reliance was made in good faith and after making an
independent assessment of the information and advice having
regard to the office holder's knowledge of the incorporated
association and the complexity and structure of the incorporated
association.
Clause 24 amends section 29B, which provides for disclosure of interests by
committee members, by--
· in section 29B(1) substituting the phrase "material
personal interest in a matter that is being considered at
a committee meeting" for the words "any direct or
indirect pecuniary interest in a contract or proposed
contract with the incorporated association". "Material
personal interest" is the terminology used in equivalent
disclosure of interest provisions in the Corporations Act
and is broader in scope than the previous reference to a
"pecuniary interest";
· substituting the word "matter" for "contract" in section
29B(1)(b); and
· in section 29B(2) and (3) substituting "material personal
interest" for "pecuniary interest" wherever the term
occurs.
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Clause 25 amends section 29C of the Principal Act by--
· inserting a new heading to the section;
· substituting a new subsection (1), to provide that it is an
offence for a member of the committee of an
incorporated association who has a material personal
interest in a matter being considered by the committee
to be present while the matter is being considered or to
vote on the matter. A penalty of 10 penalty units
applies;
· substituting "material personal interest" for "pecuniary
interest" in subsection (2);
· inserting a new subsection (3), to provide that where
there are not enough members of the committee to form
a quorum to determine a matter because a number of
committee members have a material personal interest in
the matter under consideration, one or more committee
members may call a general meeting and the general
meeting may deal with the matter by resolution.
Clause 26 inserts a new section 29E into the Principal Act that requires an
incorporated association to indemnify each member of the
committee against any liability incurred in good faith by the
member of the committee on behalf of the incorporated
association in the course of performing his or her duties as a
member.
For the purposes of this section a "member of the committee" is
taken to include the secretary of an incorporated association
(whether or not the secretary is usually considered to be a
member of the committee).
Clause 27 inserts a new section 30AA into the Principal Act that allows an
incorporated association to hold general meetings or permit
members to participate in general meetings by using any
technology that allows members to clearly and simultaneously
communicate with each other participating member. This will
allow a meeting of an incorporated association to be held with
members participating from distinct physical locations.
If a member participates in the meeting by using technology as
authorised by this section, they are taken to have been present at
that meeting and if they vote at the meeting they will be taken to
have voted in person.
13
Clause 28 amends section 30 of the Principal Act by--
· in subsection (3), deleting the words "the incorporated
association shall submit to its members" and
substituting "the committee must submit to the
members" to clarify that it is the responsibility of the
committee to submit the financial statements of the
association to the membership at the annual general
meeting;
· substituting subsection 30(3A)(b) to require that--
· the financial statements of the incorporated
association that are submitted to the annual
general meeting under subsection (3) are
accompanied by a certificate signed by the
Treasurer of the incorporated association and at
least one other member of the committee
certifying that the statements give a true and fair
view of the financial position of the incorporated
association during and at the end of its last
financial year;
· in the case of a tier two association, that the
statements are accompanied by a written report
of a review of the accounts by an independent
accountant as required by new section 30BA
(which is inserted by clause 31); and
· in the case of a tier three association, the
statements are accompanied by the accounts
audited in accordance with section 30B;
· inserting a new subsection (3C) that provides that the
committee must ensure that the minutes of the annual
general meeting include a copy of the financial
statements of the incorporated association that were
submitted to members at that annual general meeting;
· in subsection (4)(aa) substituting "tier three association"
for "prescribed association"; and
· in subsection (4), inserting a new paragraph (ab) that
provides that a tier two association must lodge with the
Registrar a copy of the incorporated association's
accounts and a copy of the written report of the review
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of the accounts prepared by an independent accountant
as required by section 30BA.
Clause 29 inserts a new section 30AB into the Principal Act.
New section 30AB(1) provides that for the purposes of the
requirements under the Act relating to accounting records for a
financial year, incorporated association's are divided into three
categories, tier one, tier two and tier three, based on their total
revenue. The revenue threshold may be prescribed by regulation,
or if no amount is prescribed, the thresholds are--
· tier one: total revenue less than $250 000;
· tier two: total revenue between $250 000 to $1 000 000;
· tier three: total revenue more than $1 000 000;
New sections 30AB(5) and (6) provide that on application by an
incorporated association, the Registrar may declare for the
purposes of a particular financial year, an incorporated
association to be a tier one or tier two association. This is to
allow for unusual or non-recurring circumstances that may have
caused an incorporated association's revenue to temporarily
exceed the tier one or tier two threshold.
Under new section 30AB(7) an application to the Registrar must
be made within 3 months of the end of the financial year.
New section 30AB(8) contains a definition of total revenue.
"Total revenue" is defined to mean the total income of the
incorporated association during the last financial year from all the
activities of the incorporated association before any expenses are
deducted. Any income received as capital, such as capital grants
or bequests, is not to be included in the calculation of the total
revenue of an incorporated association.
Clause 30 amends section 30B of the Principal Act by--
· inserting a new heading to the section;
· substituting "tier three association" for "prescribed
association" in subsection (1) to reflect the introduction
of the three tiers of incorporated associations;
· substituting subsection (1)(c) to provide for the accounts
of a tier three association to be audited by a member of
CPA Australia, the Institute of Chartered Accountants in
Australia or the National Institute of Accountants and
providing that in each case, the member must hold a
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current practising certificate from the relevant
professional body.;
· substituting "tier three association" for "prescribed
association" in subsection (1A) to reflect the
introduction of the three tiers of incorporated
associations;
· substituting "tier three association or a class of three tier
three association" for "prescribed association or class of
prescribed association" in subsection (2A) to reflect the
introduction of the three tiers of incorporated
associations; and
· substituting "tier three association" for "prescribed
association" in subsection (3) to reflect the introduction
of the three tiers of incorporated associations.
Clause 31 inserts a new section 30BA into the Principal Act.
Under new section 30BA(1), a tier two association must, at the
end of each financial year have its accounts reviewed by a person
who is a member of and holds a current practising certificate
from CPA Australia, the Institute of Chartered Accountants in
Australia or the National Institute of Accountants or by any other
person approved by the Registrar. It is an offence not to comply
with subsection (1), with a penalty of 10 penalty units.
New section 30BA(2) requires that where a person conducts a
review of an incorporated association for the purposes of
subsection (1), they must conduct the review in accordance with
the Australian Accounting Standards issued by the Auditing and
Assurance Standards Board and they must provide the
incorporated association with a written report of the review.
New section 30BA(3) provides that the person who conducts the
review for the purpose of subsection (1) must not be either a
member of the committee or an employer or employee of a
member of the committee, or a member of the same partnership
as a member of the committee or an employee of the incorporated
association.
New section 30BA(4) requires that a tier two association must
keep all accounting records for 7 years. It is an offence not to
comply with subsection (4), with the penalty being 5 penalty
units.
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Under new sections 30BA(5) to (7) an incorporated association
may apply in writing to the Registrar for an exemption to the
requirements under subsection (1). The Registrar may grant the
exemption subject to any condition he or she sees fit, and may
revoke the exemption at any time by notice in writing.
Inserts a new section 30BB into the Principal Act.
Under new section 30BB(1), a tier one association must have its
accounts reviewed by an independent accountant if a majority of
members present at a general meeting vote to do so or the
association is directed by the Registrar in writing to do so. It is
an offence not to comply with subsection (1), with the penalty
being 10 penalty units.
Under new section 30BB(2) a tier one or a tier two association
must have its accounts audited by an independent accountant if a
majority of members present at a general meeting vote to do so or
if the association is directed by the Registrar in writing to do so.
It is an offence not to comply with subsection (2), with the
penalty being 10 penalty units.
New section 30BB(3) provides that for the purposes of section
30BB, an accountant is considered not to be an independent
accountant if they are either a member of the committee or an
employer or employee of a member of the committee, or a
member of the same partnership as a member of the committee or
an employee of the incorporated association.
Clause 32 amends section 31 of the Principal Act by--
· omitting the words "and the statement of purposes" in
subsection (1) and repealing subsection (3)(a);
· in subsection (3)(d)(ia) omitting "in Victoria" and
substituting for "the State", "Australia" consistent with
the repeal of the requirement that the secretary of the
incorporated association be a resident of Victoria;
· in subsection (4) omitting the words "the proposed
statement of purposes and";
· substituting section 31(5) to provide that upon the grant
of a certificate of incorporation--
· the bodies corporate that form the new
incorporated association are taken to be
subsumed into the new incorporated association;
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· the property of each amalgamating incorporated
association vests in the new incorporated
association by virtue of the subsection without
the need for any other conveyance, transfer or
assignment;
· the incorporated association formed by the
amalgamation is substituted as a party into any
arrangement or contract entered into by
amalgamating associations;
· inserting a new subsection (8) that provides that a
reference in a will to an incorporated association that
was a party to an amalgamation must, unless the will
provides otherwise, be construed as a reference to the
new incorporated association.
Clause 33 amends section 31E of the Principal Act by inserting references
to the secretary in subsections (1) and (2). This will have the
effect that upon the appointment of a statutory manager, the
office of members of the committee and the office of the
secretary (where the secretary is not also a member of the
committee) will become vacant.
Clause 34 repeals part VIIAC of the Principal Act which has been replaced
by section 37AD. Former Part VIIAC declared the voluntary
administration of an incorporated association to be an applied
Corporations legislation matter for the purposes of Part 3 of the
Corporations (Ancillary Provisions) Act 2001 in respect of
certain provisions of the Corporations Act. New Part VIIIAA to
be inserted by clause 41 consolidates the various provisions that
relate to the declaration of applied Corporations legislation
matters.
Clause 35 inserts a note into the foot of section 33 of the Principal Act
explaining the interaction of that section with the applied
Corporations Act voluntary winding up and general winding up
provisions under new sections 37AE and 37AG to be inserted by
clause 41.
Clause 36 repeals section 34(1)(c) of the Principal Act. This provision
authorised the court to order the winding up of an incorporated
association on the basis that it was unable to pay its debts. Under
the Corporations Act provisions applied under new Part VIIIAA,
the Supreme Court will be able to order the winding up of an
incorporated association on the grounds of insolvency under
section 459A in Part 5.4 of the Corporations Act.
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The clause also omits "traded (except in accordance with
section 51) or" from sections 34(1)(d) and (e) of the Principal Act
to amend the grounds upon which the Supreme Court can order
the winding up of an incorporated association. This is consistent
with the general repeal of the limitations against trading effected
by clause 45.
Clause 37 omits "traded (except in accordance with section 51) or" from
sections 35(2)(c) and (d) of the Principal Act to amend the
grounds upon which the Registrar can order the winding up of an
incorporated association. This is consistent with the general
repeal of the limitations against trading effected by clause 45.
Clause 38 repeals section 36C of the Principal Act which provides that the
costs involved in winding up an incorporated association on the
certificate of the Registrar are payable out of the property of the
incorporated association. There are comprehensive provisions
relating to the costs of winding up in the Corporations Act
provisions applied by new Part VIIIAA.
Clause 39 repeals Division 4 of Part VIII of the Principal Act which has
been replaced by sections 37AE and 37AG of new Part VIIIAA
which consolidates the various provisions relating to the
declaration of applied Corporations Act provisions.
Clause 40 amends section 36EC(3) of the Principal Act to clarify that where
the Registrar receives an objection to an application for the
voluntary cancellation of the registration of an incorporated
association, the Registrar must remain satisfied that the
circumstances listed in section 36EA(1) exist for the cancellation
to proceed..
Clause 41 inserts a new part VIIIAA into the Principal Act.
New section 37AA(1) sets out the common modifications to the
text of the Corporations Act provisions that are applied under
Part VIIIAA.
New section 37AA(2) provides that for the purposes of any
matter declared under Part VIIIAA to be an applied Corporations
legislation matter, a reference in a provision of the Corporations
Act to "this Act" is to be read as a reference to both the
provisions of the Corporations Act declared to apply to the matter
with any modifications to which that declaration has been made
subject and to the provisions of the Corporations Act that are
taken to apply to the matter by virtue of section 19(1) of the
Corporations (Ancillary Provisions) Act 2001.
19
New section 37AB(1) declares that the following sections of the
Principal Act are an applied Corporations matter for the
purposes of Part 3 of the Corporations (Ancillary Provisions)
Act 2001, in respect of the provisions of Part 9.4B (Civil
consequences of contravening civil penalty provisions) subject to
the modifications listed in subsection (2)--
· section 29A(1) (improper use of information);
· section 29A(2) (improper use of position);
· section 29AB(1) (breach of duty of care and diligence);
and
· section 29AC (breach of duty of good faith and proper
purpose).
These provisions are the civil penalty provisions introduced into
the Principal Act by this Bill.
New section 37AB(2) provides that a reference to the provisions
specified in section 1317E(1) of the Corporations Act is to be
read as a reference to the provisions referred to in section
37AB(1). Section 1317E(1) provides that if the Court is satisfied
that a person has contravened one of the provisions listed in that
subsection, then the Court may make a declaration of
contravention. A declaration of contravention is required to be
made before a court can order payment of a pecuniary penalty in
respect of the contravention of a civil pecuniary penalty
provision.
Section 1317G(1) of the Corporations Act provides that where a
court has made a declaration of contravention under section
1317E, the Court may order a person to pay a pecuniary penalty
of up to $200 000. That penalty is modified by section
37AB(2)(c) to be read as a reference to $20 000.
New section 37AC provides that the entering into possession or
assumption of control of any property of an incorporated
association by a receiver or any other controller is declared to be
an applied Corporations matter for the purposes of Part 3 of the
Corporations (Ancillary Provisions) Act 2001 in relation to the
provisions of Part 5.2 (Receivers and other controllers of
property of corporations) subject to the listed modifications.
New section 37AD provides that the voluntary administration of
an incorporated association is declared to be an applied
Corporations matter for the purposes of Part 3 of the
Corporations (Ancillary Provisions) Act 2001 in relation to
Part 5.3A (Administration of a company's affairs with a view to
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executing a deed of company arrangement) of the Corporations
Act subject to the listed modifications.
New section 37AE deems that the voluntary winding up of an
incorporated association under Division 1 of Part VIII of the
Principal Act is declared to be an applied Corporations matter for
the purposes of Part 3 of the Corporations (Ancillary
Provisions) Act 2001 in relation to the provisions of Part 5.3
(Voluntary winding up) of the Corporations Act subject to the
listed modifications.
New section 37AF deems that the winding up of an incorporated
association by the court under Division 2 of Part VIII of the
Principal Act is declared to be an applied Corporations matter
for the purposes of Part 3 of the Corporations (Ancillary
Provisions) Act 2001 in relation to the provisions of Part 5.4
(Winding up in insolvency) and Part 5.4B (Winding up in
insolvency or by the court) of the Corporations Act subject to the
listed modifications.
New section 37AG deems that the winding up generally of an
incorporated association under Part VIII of the Principal Act is
declared to be an applied Corporations matter for the purposes of
Part 3 of the Corporations (Ancillary Provisions) Act 2001 in
relation to the provisions of Part 5.6 (Winding up generally) of
the Corporations Act subject to the listed modifications.
New section 37AH(1) provides that an incorporated association
that is insolvent is declared to be an applied Corporations matter
for the purposes of Part 3 of the Corporations (Ancillary
Provisions) Act 2001 in relation to the provisions of Part 5.7B
(Recovering property or compensation for the benefit of creditors
of insolvent company) of the Corporations Act subject to the
listed modifications.
New section 37AH(2) provides that to the extent that Part 9.4B
(Civil consequences of contravening civil penalty provisions) of
the Corporations Act applies to a contravention of section 588G
of the Corporations Act (duty to avoid insolvent trading), the
application of Part 9.4B is subject to the listed modifications, in
particular, a reference to a pecuniary penalty in section 1317G(1)
of the Corporations Act is to be read as a reference to a penalty of
$20 000.
New section 37AI provides that any matter declared to be an
applied Corporations legislation matter under Division 3 of
Part VIIIAA is also declared to be an applied Corporations matter
in relation to Part 5.8 (Offences), Part 5.8A (Employee
entitlements) and Part 5.9 (Miscellaneous) of the Corporations
Act subject to the listed modifications.
21
New section 37AJ(1) provides that the offences contained in the
provisions of the Corporations Act applied by Part VIIIAA are to
be read subject to the modifications listed in Schedule 2 of the
Principal Act.
New section 37AJ(2) provides that a contravention of an offence
contained in the provisions of the Corporations Act applied by
Part VIIIAA and listed in Schedule 3 is to be taken as an offence
against the Principal Act and is subject to the penalty specified in
Schedule 3.
Schedule 2 and Schedule 3 are inserted into the Principal Act by
clause 50 of this bill.
New section 37AK excludes the operation of the Commonwealth
Criminal Code in respect of proceedings for a contravention of a
provision referred to in section 37AJ(1) (i.e. the offences listed in
Schedule 2). A note to an applied provision that refers to the
Commonwealth Criminal Code must be disregarded.
Clause 42 amends section 39(1B) of the Principal Act by substituting
paragraph (n) to reflect the introduction of the three tiers of
incorporated associations and repeals paragraph (o) to reflect the
inclusion of an incorporated association's statement of purposes
into its rules.
Clause 43 substitutes section 43 of the Principal Act to provide that the
records of the incorporated association may be kept in a language
other than English provided that a certified English translation is
made available upon the request of a member of the incorporated
association or the Registrar or by anyone else who is entitled to
inspect the record.
If under the Principal Act a person gives to or lodges a record or
document with the Registrar that is not written in English, they
must at the same time provide a certified English translation of
that document. For the purposes of this provision, certified
means certified by a statement in writing that the document is a
correct translation of the original record or document.
Clause 44 substitutes section 44(1)(d) of the Principal Act to reflect the
inclusion of an incorporated association's statement of purpose
into its rules.
Clause 45 inserts a new heading to section 51 of the Principal Act and
repeals the limitations on trading by an incorporated association
by--
· repealing section 51(1)(a) of the Principal Act;
22
· omitting "trade or" in section 51(1)(c) of the Principal
Act;
· omitting "trading or" in section 51(3) of the Principal
Act; and
· repealing section 51(4), (5) and (6) of the Principal Act.
Clause 46 amends section 53 of the Principal Act so that where an
incorporated association holds a subsidiary company
(incorporated under the Corporations Act) and the subsidiary
company has engaged in insolvent trading, Division 5 of
Part 5.7B of the Corporations Act (Liability of holding company
for insolvent trading by subsidiary) will apply to the incorporated
association.
Clause 47 amends section 53C by--
· omitting the words "of auditor, statutory manager and
administrator" in the heading to the section so that the
heading will simply read "Qualified privilege";
· inserting a new subsection (2) that extends qualified
privilege to an independent accountant that conducts a
review of the accounts of a tier two association under
section 30BA or section 30BB in respect of a statement
made in the course of conducting that review;
· inserting a new subsection (3) to provide that a person
has qualified privilege in respect of publishing a
document that is prepared by an auditor for the purposes
of the Act or that is required by or under the Act to be
lodged, whether or not the document has actually been
lodged.
Clause 48 substitutes the reference to "the Schedule" in section 54(2)(c)
with "Schedule 1" consequent upon the insertion of new
Schedules 1, 2 and 3 by clause 50.
Clause 49 inserts new section 57 which provides for the continuing validity
of rules and purposes for existing incorporated associations that
currently have included in the Register of Incorporated
Associations a statement of purposes separate from their rules of
association. The statement of purposes of those associations is to
be taken to be part of the rules of the incorporated association
until such time as an alteration of their rules is approved by the
Registrar.
23
Clause 50 substitutes new Schedule 1, Schedule 2 and Schedule 3 for
the Schedule to the Principal Act. Schedule 1 lists the matters
to be provided for in the rules of an incorporated association.
Schedule 2 lists the modifications to the applied offence
provisions of the Corporations Act and Schedule 3 lists the
penalties for the offences under the applied provisions of the
Corporations Act.
Clause 51 amends section 32(1) and repeals section 32(8) of the
Associations Incorporation Amendment Act 2009 for
consistency with amendments to those provisions to be effected
by this Bill.
Clause 52 repeals Part 4 of the Associations Incorporation Amendment
Act 2009. Part 4 provided for new items to be inserted into the
Schedule to the Principal Act. Those items have been
incorporated into Schedule 1 to be inserted by clause 50.
Clause 53 provides for the repeal of the Associations Incorporation Act
2010, once passed, on 1 December 2012. The repeal of the Act
does not affect the continuing operation of the amendments made
by it (see section 15(1) of the Interpretation of Legislation Act
1984).
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