What are the repercussions if your incorporated club fails to comply with the Associations Incorporation Act 2015 (the Act) and their constitution?
“Oh, we’ll be all right, we’re just a small club.”
“But it’s always been this way!”
“That doesn’t apply to us.”
“That’s never going to happen to us.”
“She’ll be right, mate.”
Famous last words indeed.
American Civil War General John Sedgwick once uttered the now-famous last words, “they couldn’t hit an elephant at this distance”, just moments before being shot dead by Confederate sharpshooters. Famous last words are often used ironically when a remark or prediction is likely to be proved wrong by events. Of course, we are not suggesting that this is a matter of life or death. However, when it comes to club compliance, it’s not merely going to be a mild inconvenience.
The old adage of “money talks” is a good place to start.
As per the Act (administered by the Department of Mines, Industry Regulation and Safety – Consumer Protection Division), penalties for non-compliance can vary from $1,000 up to $10,000; and infringement notices from $100 to $300.
Let’s take the example of a local incorporated club that decided to alter its by-laws around where alcohol could be consumed. The committee held a meeting on the 1st of July and passed a motion of no alcohol consumption in the change rooms, even though the change rooms are part of the licensed area. On the 2nd of July the Club Secretary sent out a bulletin to all members detailing the change to the by-laws, with an effective date of the 1st of August.
“Tom”, a passionate long-term member of the club, felt that the changes were somewhat divisive and not in line with the spirit of the club. He contacted the Club Secretary to discuss this and at this point, requested a copy of the member register so that he could discuss the matter with other members.
The Club Secretary advised him that this wasn’t possible, as the member register contained the confidential information of members such as addresses and phone numbers. It also included the details of junior members – and, as those members were under 18, it would be inappropriate for those details to be handed over.
Under Section 53 (2) of the Act, the register of members must include each member’s name, and:
a. Postal address; or
b. Residential Address; or
c. Email address; or
d. Information, by means of which contact can be made with the member.
Often a club will suggest that for junior members, the parent/guardian email address be used for the register.
Tom wasn’t happy with this advice, so he sought guidance from “Dick”, a friend who was familiar with the Act and Constitutions. Dick told Tom that the Act stated that an incorporated association must, at the request of a member, make the register of members available for inspection by the member. A penalty of $2,750 or an infringement notice of $300 was applicable if the club failed to provide the register to the member.
Armed with this information, Tom approached the club again. The Club secretary said that they would review the situation and after checking the Act themselves, discovered that they needed to comply.
So, in this instance the Club avoided a penalty or infringement. However, this triggered a dissatisfied member to take a more focused approach to the club’s non-compliance.
Tom took every opportunity he could to talk to other members about the change rooms issue and of course, the perceived inaction and incompetence of the club in handling the situation. He learnt that there were other members that were unhappy with the committee’s approach to club matters.
One in particular, “Harry”, raised an alarming situation.
Harry advised that he had it on very good authority that the company who won the project to upgrade the Club’s change rooms was part owned by the Club President. The Club President became a part owner of the Acme Construction Company at the beginning of the calendar year, six months prior to the upgrade project.
Tom contacted Dick again and he recommended to review the minutes of the committee meetings from the beginning of the year. He told Tom that a member of the management committee of an incorporated association who has a material personal interest in a matter being considered at a management committee meeting must, as soon as the member becomes aware of the interest, disclose the nature and extent of the interest to the management committee, leave the meeting during the discussion, not vote on the matter and then disclose the interest at the next general meeting.
A material personal interest is a personal interest in a matter which could be seen to compromise the committee member’s ability to act in the interests of the club and make an impartial decision.
Upon examination of the meeting minutes (as allowed for in this club’s constitution), it was clear that the Club President had not declared his material personal interest in the construction business at any point. The project was approved by the Committee in January at the Committee Meeting and vendors chosen at a subsequent Committee Meeting in April.
As per the Act, the committee member could be subject to penalties of $10,000 for each offence of not disclosing the nature and extent of the interest to the committee; not disclosing the interest at the next general meeting; and being present and/or voting on the matter at the committee meeting.
While the financial impact of non-compliance for clubs and committee members can not only be significant and potentially detrimental, the impact on the culture and image of clubs can be just as devastating.
The time and energy that needs to be allocated to resolve and navigate non-compliance issues is far greater than the perceived time it would take to be compliant in the first instance. In the overall context of the club goals, having to fend off non-compliance issues instead of focusing on growing the club is draining and counterproductive.
Let’s face it: the Constitution is the guiding light for your incorporated club and the source of truth. Getting it right at the front end and knowing how to implement according to the Associations Incorporation Act 2015 will allow you to focus on areas that will bear fruit.
Given that the backbone of the club industry is based on volunteerism, it is fair to say that people are more often than not acting in good faith – the moral compass is running true the majority of the time. However, instances of noncompliance occur generally because “you don’t know what you don’t know”.
That’s where Clubs WA comes in.
You don’t need be blindsided on non-compliance issues – help is only a phone call away. The team at Clubs WA are industry experts in all things to do with compliance, and are more than happy to assist you with guidance and advice.
So, don’t leave it up to any old Tom, Dick or Harry to determine your club compliance – talk to the experts.