This has made significant changes to the law that regulates associations and after receiving assent will commence in 2011. It is complex reform but the changes can be broken down into five categories.

1. New company law-like duties on “office holders”, the definition of which is expanded to cover not just committee members etc but also employees who affect significant decisions. Most of these new duties are in sections 29AB-AD and they introduce civil penalties on office holders of up to $20,000. They  are:

• Duty of care and diligence – this adopts the “business judgement rule” which requires that the decision is made in good faith, not made in self interest, is made after ensuring you are reasonably  informed, and that the office holder rationally believes the decision is in the best interest of the association
• Duty of good faith and proper purpose – office holders must exercise power in best interests of, and for the purposes of, the association
• Duty to avoid trading while insolvent – inserted into section 37AH. This is a complex duty modelled on section 558 G of the Corporations Act. It applies where the decision to take on a debt makes the association insolvent, or where the association is already insolvent when taking on the debt, and the decision maker suspected this. As a breach of this section can constitute an offense depending on circumstances, Volunteering Victoria will publish further detailed information on this.

In addition there are new provisions that make office holders, or former office holders, liable for civil penalties where it is found they used information gained by their office to gain personal advantage or to cause detriment to the association. Penalties also apply if a current office holder uses that position to gain advantage for themselves or to cause detriment to the association. (Section 29A)

2. Removal of requirement to have a separate statement of purpose. Purposes will be incorporated into the association’s rules with transitional provisions to ensure current associations’ arrangements are valid. Note that the model rules have been significantly reformed: Volunteering Victoria was involved in that review and we will publish detailed analysis of these practical rule changes.

3. Changes to the association “tiering” which reduces financial reporting requirements for small associations.

• Tier one associations: total revenue allowed lifted to $250,000 p.a. – no change to reporting
• Tier two now $250,000-$1 million revenue p.a. – no longer required to have an audit, though a review by an independent accountant will be required (this is the major change)
• Tier three: $1 million plus – still need audit

4. Removal of restriction on associations trading in support of their purposes. This somewhat artificial provision has never fit the actual work done by associations in delivering services under contract from government or others. The prohibition on profit remains.

5. Changes to members’ rights, discipline and grievances regimes. This gives members greater access to documentation, and more strongly states the natural justice requirements in dealing with discipline and grievance procedures (section 14). The clarity is welcome.

There are a range of other important changes, including a requirement to replace a secretary within 14 days, and changes to meeting requirements. Volunteering Victoria will publish a more comprehensive guide on the changes, but the ones above are the key ones. Keep an eye on our new E-newsletter and on our website for further developments.

Volunteering Victoria is interested in getting your feedback on regulatory reform as we feed back to government on the effects of reform on volunteering. Contact This e-mail address is being protected from spambots. You need JavaScript enabled to view it to have your say.