Boards and committees are the leadership teams and decision makers of a Not For Profit. They have additional responsibilities and may also be liable under the Wrongs Act 1958 for the actions of volunteers and other workers in the organisation.
The exact legal responsibilities and compliance considerations vary depending on the legal structure of the organisation.
When you have questions about the board, committee of management or directors of your organisation, first check the rules of association, constitution or rule book. The exact name of the document will vary depending on your organisation's legal structure, but whatever it is called, the rules or constitution are legally binding and will include the answers to most governance questions. If you need more information, ask the agency or authority that regulates your type of organisation.
If your organisation is:
- an incorporated association: you'll find details of what is required of your management committee and your secretary (formerly public officer) in the rules of your association and on the Incorporated Associations page of the CAV website
- a company limited by guarantee: the duties of the officeholders in your company are detailed in your rules or constitution and you can also find information on the ASIC website
- a co-operative: the duties of directors and officers are detailed in your rules on the CAV website
- Indigenous corporation registered under the terms of the CATSI Act: the responsibilities of the directors of the corporation are detailed in the organisation's rule book and you can also find more information on the Directors page on the ORIC website.
If something goes wrong, are our board and committee members and directors liable?
Under the terms of the Wrongs Act 1958 and the Corporations Act 2001, there are some circumstances where an organisation is liable for something that a volunteer or officer does. If this happens, the liability can extend to individual office bearers, committee members or directors (depending on the structure of your organisation). If you are unsure about whether your organisation is liable, get advice from a lawyer.
Your leadership team (board, committee of management or directors) also has responsibilities for the organisation's finances. While a board member might not be involved in day-to-day transactions or maintaining the accounts, they are responsible in the eyes of the law. This means that the leadership team has an obligation to understand the organisation's finances. Read more about this at Managing your finances - Financial reporting and auditing.
Can we insure our board members against claims?
Although public liability insurance will cover your organisation against claims for wrongful acts, individual board members, committee members or directors are not covered, and would need to be covered with directors insurance.
An incorporated association must indemnify its office holders. This will protect these people from liability for activities they undertake in good faith on behalf of the association.
Board members, committee members and directors of Not For Profits can be sued (as individuals) for acts of negligence. For example, if a board member negligently gives wrong advice or dismisses a staff member without following proper processes, they may be sued. If this happens, and the case against them is proven, the law says personal assets of the negligent board or committee members can be seized to meet any damages.