Duties of management committee members
Management committee (MC) members are subject to duties established by the Associations Incorporation Act 1981, which includes the following:
These duties underpin good governance and ensure that MC members act in the club’s, rather than their own, best interests. This list is a guide to ensuring this occurs when making decisions.
There are also specific legal and administrative duties that come with being an incorporated association, including:
Duty to act with care and diligence
MC member ‘duty of care’ extends to your entire club.
Examples of ‘acting with care’
Examples of ‘acting with diligence’
Duty to act in good faith and for a proper purpose
Acting in good faith means dealing honestly and fairly, so as to maintain the rights of other parties and with loyalty to your club.
Acting for a proper purpose means in accord with your club’s purpose, which will be defined in the objects in your constitution.
Duty to not make improper use of position or information
This means using your position as a MC member or any information you may learn in that role for the best interests of the club, not for your advantage, or that of anyone you know.
An example might be coercing someone to do you a favour because you are a member of the MC (e.g. seeking free drinks at an event) or making excessive or unreasonable demands of an operational volunteer.
Your duty to keep confidential information you learn in your role private applies equally while you are in office and when you leave the committee.
Duty to disclose and manage material personal interests (also known as conflicts of interests)
This duty is closely related to the duty not to improperly use your position or information.
A conflict of interest arises when a MC member has an opportunity to use their position, or information they know from being in that position, for personal gain or the personal benefit of someone else. For example, a MC member owns a business that may be able to supply goods or services to the club, or a MC member’s child is being considered for a head coaching job at the club.
To comply with this duty
These material personal interests must be declared at a MC meeting or in writing between meetings. If a conflict of interest is declared at a MC meeting, as well as being noted in the minutes, it must be entered into a register of declared interests, which is to be shared with members at each AGM.
Case study
The MC is discussing an IT project. One of the MC members works part-time in a family IT company that could quote for the work and must therefore declare their material personal interest. This is to prevent the possibility of that MC member using their knowledge to win that business unfairly over any competition.
The interest is noted in the minutes of the meeting and entered in the club’s register of declared interests. The rest of the MC must then determine how to manage the conflict of interest, perhaps by simply asking the member to leave the room and not take part in the discussion on the matter.
Alternatively, the other MC members might decide that since the member has a good understanding of IT there is benefit in them contributing to the discussion about the work required.
However, when it comes time to vote on the preferred contractor to complete the work, the member will need to leave the meeting and not vote on the matter.
As an incorporated association, the MC is required to disclose all entries on the register of declared interests at a general meeting of members, such as the AGM.
Duty to prevent insolvent trading
Insolvency means an organisation is not able to pay its debts as and when they fall due. It occurs if the money that the organisation has access to or has coming (i.e. accounts receivable) is insufficient to pay the money that it owes.
As a MC member, you have a duty to ensure that the club does not incur any further debts if you know, or reasonably suspect, that the club doesn’t have the ability to repay its debts as and when they fall due.
To comply with this duty, you must keep yourself informed about the club’s financial position at all times (as well as how it is tracking against its budget) and not allowing the club to incur further debts – this might mean the club must cease trading.
Consequences for breaching duties
As your duties as a MC member are based on sound judgment, it is rare that breaches lead to serious consequences. Breaches that are likely to lead to legal action would typically involve serious and deliberate wrongdoing or gross negligence, not simply mistakes or minor lapses.
If the committee makes a decision in line with the above duties and that decision ends up causing an unexpected negative outcome (e.g. a fundraising event was unsuccessful and actually lost money), MC members won’t necessarily be personally responsible for that outcome.
As an incorporated association, club members are not personally liable for the debts of the club (unless of course they stole money or committed fraud).
However, if a MC member is found to have breached a legal duty, likely to be because of deliberate wrongdoing or gross negligence, they can be held personally liable for that breach.
Consequences for breaches may include:
Put simply, being an effective MC member comes down to always working in the best interest of your club.
Rights of committee members
As well as duties and obligations, MC members also have rights.
Indemnity
All MC members are protected against damages and losses (including legal costs) for which you may become liable to any third party as a consequence of acting in good faith exercising the club’s functions. This indemnity would not apply to any loss or damage resulting from wilful misconduct
MC members have the right to attend all MC meetings to be able to participate in constructive debate on all MC matters and decisions. This includes meetings for activities like developing the strategic plan and setting policies.
Information
MC members have a right to access all reasonable information that they would need in order to make well-informed decisions and to defend those decisions to regulators. This could include financial reports, strategic plans, past meeting papers and minutes, information on insurance claims and past actions against the club and annual reports. Some information may be reasonably withheld, or documents partly redacted for reasons of protection of privacy.
If you feel that you do not have access to the information you need, ask.
Insurance
It is recommended that MC members are insured against liability that they incur as club MC members, including liability for legal costs.
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