This is the third of a series of legal updates that Kott Gunning is producing throughout 2016 on the key features and reforms under the new Associations Incorporation Act 2015 (WA) (Act)
This instalment deals with the operation and functions of the Management Committee.
The management committee are the persons who, under the rules of the incorporated association, have the power to manage the affairs of the association.
Persons who are not to be members of a management committee
Members of an incorporated association need to be confident that suitable persons are running their association. For this reason the Act prohibits the following persons from acting as a member of the management committee without the leave of the Commissioner:
- an undischarged bankrupt or a person whose affairs are under insolvency laws; and
- a person who has been convicted, within or outside of Western Australia, of:
- an indictable offence in connection with the promotion, formation, or management of a body corporate; or
- an offence involving fraud or dishonesty punishable on conviction by 3 months or more imprisonment; or
- a breach of an offence under Division 3 (the duties of officers) or s.127 (duty with respect to incurring of debt and insolvent trading).
Such a person must not, without the consent of the Commissioner, accept an appointment to act, or act as, a member of the management committee.
A fine of $10,000 applies.
How long is a person disqualified?
In the case of bankruptcy or insolvency, the person will be disqualified until the bankruptcy becomes discharged or their affairs are no longer under insolvency laws (i.e. usually around 3 years).
The disqualification period for someone convicted of an offence is five years from the date of the person's conviction, or if the conviction resulted in a term of imprisonment, then five years from the date of release from custody.
Persons who have 'spent convictions' can be committee members without having to seek the consent of the Commissioner.
Committee members must return records when they leave the management committee
As soon as practicable after a person ceases to be a member of the management committee, the person must deliver to a member of the management committee all 'relevant documents and records' pertaining to the management of the affairs of the association that are in the person's possession.
If the relevant documents and records are stored on a computer, then a copy of all such documents and records.
A fine of $10,000 applies.
If the member has died, then the obligation to return the documents falls on the personal representative of the person (i.e. the executor of the estate).
Relevant documents and records means documents and records pertaining to the management of the affairs of the association that are in the possession of the person.
A member of the management committee must disclose a material personal interest
A member of a management committee who has a "material personal interest" in any matter being considered at a management committee meeting must:
- (as soon as they become aware of the interest) disclose the interest to the management committee;
- not be present while the matter is being considered at the meeting;
- not vote on the matter; and
- disclose the interest at the next general meeting of the association.
A fine of $10,000 applies.
A disclosure of interest must include the nature and extent of the interest, and the relation of the interest to the activities of the association.
The disclosure details must be recorded in the minutes of the meeting of the management committee at which the disclosure is made.
If there are not enough members of the management committee to form a quorum to consider a matter, one or more committee members (including those who have a material personal in the matter) may call a general meeting. The general meeting may pass a resolution to deal with the matter.
What is a material personal interest?
Material personal interest is not defined in the Act.
The Courts (in the context of the Corporations Act 2001) have held that a personal interest is material if it has the capacity to influence the director's decision making in relation to a particular matter.1
Where a member of the management committee has a personal interest in a matter, they need to carefully consider whether the interest is material.
A personal interest will be 'material' where it has the capacity to influence the member's consideration of, and vote on, a particular matter.
The material personal interest may be a financial or non-financial interest.
Examples of material personal interests may include:
- an association is seeking a contract with a business to supply it with goods and services, and the committee member owns the business;
- an application for employment with the association is a relative of a committee member; and
- a committee member serves on the committee of two organisations that compete for the same tenders or grants.
What is not a material personal interest? (s.43(2))
The requirement to disclose a material personal interest does not apply in respect of an interest that:
- exists only because the member belongs to a class of persons for whose benefit the association is established; or
- the member has in common with all, or a substantial proportion of, the members of the association.
1Grand Enterprises Pty Ltd v Aurium Resources Ltd  FCA 513
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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