The SA government is currently undertaking a review of the legislation governing incorporated associations. The draft amendment to the legislation has been developed to:
- support associations by increasing transparency and reducing red-tape;
- improve regulatory oversight of associations through providing for greater consistency and introducing minimum checks and balances; and
- provide for appropriate regulation of the sector by empowering the Corporate Affairs Commission to address misconduct.
Some of the points to note:
- The original legislation was passed in 1985 and has not been properly reviewed or updated since 1997
- There are approximately 21,000 incorporated associations in South Australia – although it is unknown how many are defunct or inactive.
- Most of the complaints Consumer & Business Services (CBS) receive are about internal governance. Currently the Commissioner has no power to intervene, so complainants have been referred to the courts for resolution. Much of the proposed of the amendments is aimed at giving the Commissioner (i.e. CBS) more power to step in and resolve these disputes, or step in where governance is not adequate. CBS will also be able to appoint an administrator where it is judged necessary.
- For those incorporated associations which don’t report annually to CBS (i.e. are not prescribed associations) a simple, fee-free annual verification will be required.
- CBS will draft and issue model rules with 1) mandatory rules; 2) recommended rules and 3) guiding principles (governance)
- Compliance with the updated legislation will be required for newly incorporated associations; for existing associations there will be transitional arrangements, with grandfathering of existing rules of association.
- CBS is looking at improving transparency and access to information for members and the general public – considering financial information, minutes, rules, public officer, members etc.
- Making it easier to transition into a different corporate structure e.g. where a for profit structure is more appropriate.
- Removing the requirement for a common seal
- Removing the requirement for financial statements to be audited – for associations with income above $500k, financial statements will need to comply with Australian Accounting Standards and be reviewed.
We will provide further information about amendments to the legislation, as details become available