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Duties and Obligations for Not-For-Profit Organisations

Tuesday, June 21, 2016

The introduction of the Australian Charities and Not-for-profit Commission Act (ACNC Act) and the Australian Charities and Not-for-profit Commission Regulations (ACNC Regulations) on 3 December 2012 changed both directors and company obligations for charities in Australia. The ACNC Act established the Australian Charities and Not-for-profit Commission (ACNC) which has largely replaced the Australian Securities and Investments Commission (ASIC) as the primary regulator for charities and to ensure compliance with governance standards. Despite plans to abolish the ACNC, the Federal Government has indicated that the ACNC will continue its operations into the foreseeable future and any change is not a priority on its legislative agenda.

 

ACNC Governance Standards

 

The ACNC Regulations outline a series of Governance Standards that must be met by charities registered with the ACNC. These governance standards are general in nature and apply to all charities regardless of corporate structure. Broadly, the standards require charities to remain in association with the vision of the ACNC, maintaining a charitable status, operating within the law and to ensure accountability and responsibility of the charity.

 

In order to remain registered under the ACNC, a charity has an obligation to:

 

(a)       keep a charitable status;

(b)       notify the ACNC of any changes to the charity’s legal name, address for service, responsible persons and governing documents;

(c)       keep required records;

(d)       report information regarding the charity’s charitably status to the ACNC annually; and

(e)       meet the governance standards.

 

Directors Duties

 

Companies registered with the ACNC have obligations under the ACNC Act and the ACNC Regulations that replace the standard obligations on companies under the Corporations Act 2001 (Cth) (Corporations Act). Obligations for a company registered with ACNC are found in ACNC Governance Standard 5, which set out the duties of responsible persons, such as directors and the Chief Executive Officers, including to:

 

(a)       act with reasonable care and diligence;

(b)       act honestly in the best interests of the charity and for its purposes;

(c)       not misuse the position of responsible person;

(d)       not to misuse information obtained in performing duties;

(e)       disclose any actual or perceived conflict of interest;

(f)        ensure that the charity’s financial affairs are managed responsibly; and

(g)       not allow a charity to operate whilst insolvent.

 

Despite this, the following requirements of the Corporations Act still apply to directors of a company that are registered charities:

 

(a)       criminal offences relating to breaches of duties of good faith an acting for a proper purpose and misuse of position or information (under section 184 of the Corporations Act); and

(b)       the duty to prevent insolvent trading (under section 588G of the Corporations Act); this duty is also included under Governance Standard 5.

 

Relationship of ACNC and other regulators

 

Whilst the ACNC has assumed the regulatory role for Australian charities, the Australian Tax Office (ATO) remains responsible for deciding eligibility for tax concession as a charity and other Commonwealth exemptions and benefits.

 

The majority of reporting and notification obligations placed on companies registered with the ACNC now provide annual reporting requirements to the ACNC rather than to ASIC. Generally, a company should contact ASIC for matters relating to their corporate status, whilst they should contact the ACNC for matters relating to their charitable status.

 

It is important to note that if a company ceases being registered with the ACNC they must comply with obligations under the Corporations Act which are regulated by ASIC.

 

It is important for charities to understand and keep up to date with their obligations under both the ACNC governance standards and the Corporations Act. Failing to do so may result in potential civil or criminal charges.

 

Being a Good Advocate: More than Just being the Loudest

Friday, June 17, 2016

As a litigator, I advocate for my clients in the most traditional sense of the word – in the Courtroom. But if you think about it, isn’t advocacy part of everyday life? We are all required to advocate constantly – for our clients, for our family and friends and for ourselves. We may not consciously recognise that when we are required to become an advocate, particularly for ourselves, for example when we are interviewing for a promotion or for pay rise at work.


So what makes a good advocate? Do you have to be loud? Aggressive? Dramatic? Not necessarily. One of the first things I learned about advocacy is that effective advocates are not striving to achieve that “you can’t handle the truth” moment.

Here are some of our tips on how to be a good advocate:

1.        Listen before you talk

Before you launch into your brilliantly prepared speech, make sure you take a moment to listen to what it is the other person is saying. Do you understand what the issues are that you need to address? There is no point making a perfectly prepared speech which does not address the issues in dispute.  Accordingly, it is worth taking the time to listen at the beginning. Some strategies that might help you to actively listen include taking notes of the key points or even summarising them to the other person to ensure you are both on the same page.


2.        Be objective

There is a lot to be gained by stepping back and seeing a situation from a different perspective. This can be difficult to do when you are personally invested in a situation and this is often why people get lawyers involved in dealing with a dispute. Sometimes it helps to pretend a situation is happening to someone else rather than yourself or to recognise what prejudice or unconscious bias may be swaying your opinion. If you are able to view a situation objectively, you are better equipped to figure out how to best to persuade someone to agree with your view on the situation. This can also assist with being able to identify and address any weaknesses in your arguments.

 

3.        Be clear

Have structure to what you say and know what you want to say before you start talking. Fumbling around issues without addressing them head-on is not persuasive and you are not going to convince anyone of your point of view. Clearly identifying the issues and your response to each of the issues before you launch into your arguments will assist in ensuring there is a clear structure to what you say.

 

4.        Be concise

It is not effective to raise every possible argument in support of what it is you are trying to achieve. The best approach is to only raise your strongest arguments, which go directly to the crux of your case. It may assist to create a list or a mind-map of every argument you can think of and then pick the best ones to focus on.


5.        Be confident

If you don’t believe what you are saying, there is little chance that anyone else will. Speak with conviction and certainty. This is often easier said than done, but becomes easier with practice. Try practicing what you want to say to a trusted friend or mentor and ask them to challenge your views so that you can prepare for how to recover from a setback.


6.        Come up with various solutions

It is important to be able to recognise when you are failing to persuade someone. It might be worth changing tactics and raising new arguments. It may also be worth considering what creative solutions you can come up with to a problem. Is there another way to reach your end goal? This may involve asking for an incremental pay rise if you are not able to secure the increase you want straight away or considering what solutions to a problem might benefit the other person as well as yourself. There are often many possible outcomes to a problem which will satisfy your interests and it is important not to get stuck on only fighting for what you perceive to be the most favourable outcome.


7.        Don’t be afraid to walk away

There may come a time where discussions become circular and you feel like you are not advancing your position. In these situations, it may be necessary to walk away, either temporary or permanently. In some circumstances, some breathing room can allow everyone to reassess the situation and come back with a fresh outlook. Being prepared to walk away permanently may also result in the person you are advocating to reconsidering their position and being prepared to make some more concessions in order to keep you around.

 

 

The Future of Privacy after Dallas Buyer Club

Tuesday, June 07, 2016

Thought you can use the internet anonymously?

 

A recent Australian case has shown that the right to privacy does not necessarily prevent someone finding out your identity in order to make a claim against you.

 

If an individual or entity has a right to relief against a prospective respondent but cannot adequately identify that prospective respondent, they may seek an order for discovery to identify the respondent under rule 7.22 of the Federal Court Rules 2011 (Cth) (the Rules).

 

To exercise this rule the court must be satisfied that:

 

1.              the prospective applicant may have a right to seek relief against a prospective respondent;

2.             the prospective applicant is unable to ascertain the description of the prospective respondent; and

3.             another person knows the prospective respondent’s description or has control of a document that may help ascertain the prospective respondent’s description.

 

Generally, this would be an uncontroversial exercise of court power allowing a prospective applicant access to information that will give them an opportunity to seek the relief to which they are entitled. However, this power under the Rules became a hot topic when the US Corporation, Dallas Buyers Club LLC (DBC), asked the court to order six Australian Internet Service Providers (ISPs) to provide information about their customers that would allow DBC to pursue action against ‘pirates’ who they claim breached copyright laws by unilaterally sharing the movie “Dallas Buyers Club”. Dallas Buyers Club LLC v iiNet Limited [2015] FCA 317.

 

The ISPs attempted to reject DBC’s request to access their client records and presented a number of arguments including that:

 

1.              the prospective respondents did not breach the Copyright Act 1968 (Cth) and therefore DBC did not have a right to relief;

2.             providing the information held by the ISPs may not identify the actual person who had downloaded the film and would therefore not help ascertain the prospective respondent’s description;

3.             if the information was provided to DBC, they might engage in ‘speculative invoicing’ – where a prospective applicant sends a letter of demand to a prospective respondent with the threat of pursuing legal action if the prospective respondent does not pay a specified sum; and

4.             the Telecommunications Act 1997 (Cth) contains privacy provisions preventing the ISPs from releasing the information requested by DBC.

 

The Federal Court rejected these arguments, although did make an order to prevent speculative invoicing, and ruled that the ISPs must provide the names and residential addresses of each of their customers who had been identified as a prospective respondent due to downloading “Dallas Buyers Club”.

 

The effect this ruling has on privacy in Australia, and the circumstances when privacy provisions may be overruled, remains to be seen. Amendments to the Copyright Act 1968 (Cth) in June 2015 mean that applications can be made to the Federal Court for an injunction to prevent accessing websites which infringe copyright.

 

With technology becoming the more prominent means of watching movies and TV shows, it will be interesting to see how the legislation keeps up with current practices.

Do you feel that you have been unfairly left out of a Will?

Friday, June 03, 2016

A person may leave their assets to whoever they wish.  However, the law recognises that there are those who may have relied upon the deceased for support, who are sometimes left out of the Will.  If you feel this is you or someone you know, please continue to read. 

What is a family provision claim?

A family provision claim refers to an application for an order for provision to be made out of the estate for a person’s maintenance, education or advancement in life.  In the ACT, claims are governed by the Family Provision Act 1969. 

Time limits on making a claim

In the ACT, the time for bringing a claim is within 6 months from the date probate or administration is granted by the Supreme Court.  The Court has a discretion to extend time, where sufficient cause for making a late application can be demonstrated, except after the estate has been lawfully and fully distributed to beneficiaries.

Who can make a claim?

The legislation sets out the classes of persons who are entitled to make application to the Court for the provision out of the estate of a deceased person.  The Court has no discretion to permit an application from a person who is not an eligible person, even in exceptional circumstances.

Eligible persons in ACT

In the ACT, the categories of persons who may be entitled to make a claim are:

1.    A partner of the deceased;

2.    A person (other than a partner of the deceased person) who was in a domestic relationship with the deceased person for 2 more years continuously at a time;

3.    A child of the deceased person;

4.    A stepchild of the deceased person;

5.    A grandchild of the deceased person; and

6.    A parent of the deceased person.

There are some conditions in respect to a stepchild, grandchild or parent that need to be considered and satisfied before making a claim. 

Consideration that the Court makes

The Court when determining whether to order provision for the applicant may consider the following:

1.    Any family or other relationship between the deceased person, including the nature and the duration of the relationship;

2.    The nature and extent of the deceased persons’s estate and any liabilities of the estate;

3.    The nature and the obligations or responsibilities owed by the deceased person to the person making the claim (applicant);

4.    The financial resources (including earning capacity) and financial needs, both present and future) of the applicant;

5.    If the applicant is cohabiting with another person – their financial circumstances;

6.    The age of the applicant when the application is being considered;

7.    Any physical, intellectual or mental disability of the applicant;

8.    Any contribution (whether financial or otherwise) by the applicant to the acquisition, conversation and improvement of the estate of the deceased person;

9.    Any provision made for the applicant made by the deceased person, either during the deceased person’s lifetime or made from the deceased’s person’s estate;

10.  Any evidence of the testamentary intentions of the deceased person;

11.  The character and conduct of the applicant before and after the date of the death of the deceased person;

12.  Any other the matter the court considers relevant, including matters in existence at the time of the deceased person’s death or at the time the application is being considered by the Court.

Costs

In the ACT, the Judge has discretion regarding legal costs in family provision cases.

If you are successful as the applicant and you receive an order for provision, normally the estate will pay your ordinary costs.  However, if you receive no order for provision, the Court may order that you pay the defendant’s legal costs.

If you feel that you have been treated unfairly or left out of a will, please do not hesitate to contact Kym Kennedy, Special Counsel to discuss the possibility of a family provision claim.

I have an issue: do I need to investigate?

Wednesday, May 25, 2016

An employer has a legal obligation to provide a safe working environment under a number of legislative provisions such as the Work Health and Safety Act 2011. Investigations are one option available to establish the facts, identify issues, and look at potential outcomes to resolve a situation.

When should you investigate?

A workplace investigation should be conducted when you:

  • receive a specific complaint of misconduct;
  • are aware of ‘problems’ in an area;
  • don’t know what happened; or
  • need to establish evidence in order to make a decision. 

There is also often an obligation under an applicable Enterprise Agreement or internal policy to conduct an investigation.

Formal or Informal?

An informal investigation may occur when the complaint relates to minor misconduct that would, if substantiated, lead to performance management or a warning.

A more formal investigation should be conducted when it an allegation of serious misconduct, a breach of legislation or company policy, or if the potential disciplinary action may be serious, such as dismissal.

If the allegation is of deliberate misconduct and the actions were intentional, summary dismissal may be considered, however care should be taken to ensure any claim for unfair dismissal is not successful.

Key Steps for a Workplace Investigation

When a complaint is received, you should:

  • verify the initial complaint
  • appoint an independent investigator
  • determine the allegations
  • conduct evidence gathering
  • prepare a report.

There are a variety of types of evidence, ranging from statements, documentary evidence and electronic evidence. Although strict rules of evidence are not mandatory in an investigation, the ability to rely on the report will be stronger the more closely they are followed.

Where to from here?

Workplace investigations are an important tool that can be relied upon to defend a decision if they are conducted properly, by ensuring procedural fairness is provided, there is no conflict of interest, and information is kept confidential. Consequently, you should seek advice to ensure your investigation, and any outcome, is handled properly.

If you require more information on how to complete a workplace investigation, please contact us.

 

A guide to the leases Act for landlords

Thursday, May 19, 2016

Are you the landlord of retail or commercial premises in Canberra? If so, it is likely that the Leases (Commercial and Retail) Act 2001 (ACT) (the Leases Act) will apply.

As a landlord under a Leases Act lease, there are some of the things you should be aware of.

·      Inconsistency –You are unable to contract out of your obligations under the Leases Act – in the event of any inconsistency between the lease and the Leases Act, the Leases Act prevails and the lease clause is void.

·      Disclosure Statement – You are required to provide a prospective tenant with a disclosure statement for the proposed lease at least 14 days before the lease is entered into. A disclosure statement outlines all of the important details of the lease, for example the term of the lease, if any option terms are available and outgoings payable by the tenant, and should reflect all terms agreed upon between the landlord and the tenant. If a disclosure statement is not provided, a tenant has the right under the Leases Act to terminate the lease within the first three (3) months of the term.

·      Bonds and bank guarantees – you are entitled to require a bond or a bank guarantee for security of the tenant’s obligations under the lease.  Under the Leases Act a bond cannot be for an amount more than 3 months’ rent for the premises.  You are required to hold a bond in trust in an interest bearing account and you may only make certain deductions from the bond that are permitted under the Leases Act.  For this reason it is often preferable as a landlord to request a bank guarantee rather than a bond.

·      Rent review – under the Leases Act, rent cannot change more than once in each 12 month period after the commencement of the lease. A clause in a lease that allows for a rent review to occur more than once in a year will be void. You are not permitted to include a clause in the lease that prevents the amount of rent payable from decreasing on market review. If a clause to this effect (commonly referred to as a ratchet clause) is included in the lease, it will be deemed void under the Leases Act.

·      Outgoings – you are required to provide the tenant with a written estimate of the outgoings a tenant is required to contribute to under the lease 1 month before each accounting period during the term of the lease and make a written expenditure statement available to the tenant within 1 month after the end of the accounting period. The estimates must align with the description of the listed outgoings in the disclosure statement provided to the tenant before they entered into the lease.  For this reason it is critical to ensure that your disclosure statement includes a complete list of the outgoings you intend to recover from the tenant.

·      Harsh and oppressive conduct – you are prohibited under the Leases Act from engaging in conduct that is harsh and oppressive. An example of harsh and oppressive conduct includes, but is not limited to, discrimination against a tenant for being a member of an association that represents and protects the interests of tenants or preventing a tenant from joining such an association.

·      Lease costs – the landlord and the tenant are responsible for their own respective costs in relation to the preparation of a lease.  You are, however, entitled to require the tenant to pay for the landlord’s costs for certain things such as considering or preparing documentation for an assignment of or subletting under the lease.

 

 Contact our office for more information on your rights or obligations as a landlord.

A GUIDE TO THE LEASES ACT FOR TENANTS

Monday, May 16, 2016

Are you the tenant of retail or commercial premises in Canberra? If so, it is likely that the Leases (Commercial and Retail) Act 2001 (ACT) (the Leases Act) will apply.

As a tenant under a Leases Act lease, there are some of the things you should be aware of.

·      Inconsistency – if the landlord includes a clause in a lease that is inconsistent with the Leases Act, this clause will be considered void.

·      Disclosure Statement – Landlords are required to provide a prospective tenant with a disclosure statement for the proposed lease at least 14 days before the lease is entered into. A disclosure statement outlines all of the important details of the lease, for example the term of the lease, if any option terms are available and outgoings payable by you as the tenant, and should reflect all terms agreed upon between the landlord and the tenant. If a disclosure statement is not provided, a tenant has the right under the Leases Act to terminate the lease within the first three (3) months of the term.

·      Bonds and bank guarantees – in almost every case, a landlord will require the tenant to provide a bond amount. Under the Leases Act a bond cannot be for an amount more than 3 months’ rent for the premises. Your bond amount must be held in trust by the landlord in an interest bearing account and the landlord can only make certain deductions from the bond that are allowed under the Leases Act. You should also note that if it is your preference to provide a bank guarantee, instead of a bond amount, the landlord cannot unreasonably refuse to accept a bank guarantee in satisfaction of a bond.

·      Rent review – under the Leases Act, rent cannot change more than once in each 12 month period after the commencement of the lease. A clause in a lease that allows for a rent review to occur more than once in a year will be void. A landlord is also not able to include a clause in the lease that prevents the amount of rent payable from decreasing on market review.

·      Outgoings – a landlord is required to provide the tenant with a written estimate of the outgoings a tenant is required to contribute to under the lease 1 month before each accounting period during the term of the lease and make a written expenditure statement available to the tenant within 1 month after the end of the accounting period. The estimates must align with the description of the listed outgoings in the disclosure statement provided to the tenant before they entered into the lease. The landlord has other reporting requirements under the Leases Act in respect of all outgoings, including in relation to the landlord’s spending on outgoings.

·      Harsh and oppressive conduct – landlords are prohibited under the Leases Act from engaging in conduct that is harsh and oppressive. An example of harsh and oppressive conduct includes, but is not limited to, discrimination against a tenant for being a member of an association that represents and protects the interests of tenants or preventing a tenant from joining such an association.

·      Lease costs – the landlord and the tenant are responsible for their own respective costs in relation to the preparation of a lease. Tenants should be aware that the landlord may require the tenant to pay for the landlord’s costs for certain things such as considering or preparing documentation for an assignment of or subletting under the lease.

 

Contact our office for more information on your rights or obligations as a tenant.

Don’t risk losing 10% of your sale price on settlement: Understanding withholding tax obligations

Friday, May 06, 2016

If you are thinking about selling or purchasing property in the near future, you should be aware that for certain transactions there are additional obligations of the vendor and purchaser who are selling and buying some types of property. As of 1 July 2016, if a foreign resident disposes of certain taxable Australian Property a 10% withholding tax may apply. This tax will require the purchaser to withhold 10% of the purchase price and pay that amount to the Australian Taxation Office (ATO).

 

What assets will be affected?

 

The withholding tax will only apply on transactions entered into on or after 1 July 2016. The most predominant impact the withholding tax will have is on the sale of land, buildings, residential and commercial property within Australia with a market value of $2 million or more. There are obligations on both the vendor and purchaser of property above this value to take certain steps to prior to completion of the sale.

 

Other assets impacted include lease premiums paid for the grant of a lease over real property in Australia, mining, quarrying or prospecting rights, interests in Australian entities whose major assets consist of the above property or interests, and options or rights to acquire the above property or interests.

 

Exclusions include if the transactions are ones listed on an approved stock exchange, such as the Australian Stock Exchange (ASX), or if the foreign resident vendor is under external administration or has declared bankruptcy.

 

What do I have to do?

Vendor

 

If you are an Australian resident vendor of Australian real property with a market value of $2 million or above, as of 1 July 2016 you will be required to apply for a clearance certificate through the ATO and provide this to the purchaser before settlement to ensure that no funds are withheld from the sales proceeds on settlement. A clearance certificate confirms that the withholding tax is not to be applied to the transaction and can be accessed through the ATO website or by calling 132 866 within Australia or +61 2 6216 1111 outside Australia. The clearance certificate is valid for a 12 month period and must be valid on completion of the sale.

 

If, as a vendor, you are not entitled to a clearance certificate, but believe the withholding tax is inappropriate, you may apply for a variation application requesting a lower tax rate to be applied to your transaction. A variation application can be accessed in the same manner as a clearance certificate.

 

Purchaser

 

If you are a purchaser entering into a transaction including Australian real property on or after 1 July 2016 you must withhold 10% of the purchase price and pay this to the ATO unless the vendor provides a clearance certificate. Failure to withhold the relevant amount can result in a fine equal to the amount that was required to be withheld. If you are required to withhold an amount, you must complete an online Purchaser Payment Notification form, providing the details of the transaction (including vendor and assets you are purchasing) to the ATO. Doing this will generate a payment reference number and a barcode. The Purchaser Payment Notification can be accessed in the same manner as a clearance certificate. Payment methods are also available through the ATO website.

 

The Tax and Superannuation Laws Amendment (2015 Measures No. 6) Act 2016 can be accessed at the following link: https://www.legislation.gov.au/Details/C2016A00010.

Companies must get changed in public

Wednesday, April 27, 2016

The Australian Securities and Investments Commission (ASIC) is the regulator for corporate entities in Australia. ASIC administers the Corporations Act 2001 (Cth).

 

ASIC needs to know if your company changes a whole range of basic company information – and in most cases, you have just 28 days to let ASIC know. If you fail to tell ASIC you can be hit with late fees; $75 for up to one month late and $312 for over one month late.

 

We often see clients hit with late fees with many companies not realising that, for example, even a change of address of a director requires notification to ASIC.

 

A list of other changes which ASIC should be notified of include:

 

·                Name of office holders or members

·                Change to company addresses

·                New directors/ secretary

·                Removal of a director/ secretary

·                Proprietary company members

·                Ultimate holding company

·                Cancellation of shares

·                Issue of shares

·                Share structure

 

A Form 484 is used to notify ASIC of these changes and you can lodge this form online using your corporate key. For more information, go to: http://www.asic.gov.au/for-business/changes-to-your-company/

 

If you require any assistance please contact us.

Uh oh.... lose your work iPad?

Wednesday, April 20, 2016

We’ve seen media reports, heard stories and maybe it’s even happened to someone in your office – an employee loses the work tablet or phone. Other than a huge inconvenience it can also have implications for your organisation’s compliance with the Privacy Act.

 

Australian Privacy Principle 11.1 requires an organisation that holds personal information to take reasonable steps to protect information from:

 

(a)      misuse, interference and loss; and

(b)      unauthorised access, modification or disclosure.

 

Unfortunately with the rise of technology, so too has there been a rise of privacy breaches, which can happen in numerous ways including by:

 

(a)      lost devices;

(b)     staff emailing information that should not otherwise have been emailed to the recipient; and

(c)      hacking.

 

If this happens to your organisation, you should take the following steps to immediately respond:

 

1.         Take the breach seriously.

2.         Contain the breach: stop the breach, for example, by shutting down the system or changing computer privileges.

3.         Assess the breach: what personal information, or sensitive information, did the breach involve? What possible harms could come from the breach? Who is affected by the breach? What is the context of the breach?

4.         Notification: who needs to be notified immediately? Do affected individuals need to be notified immediately? Is an internal investigation required? Do the police need to be notified? Does your insurer need to be notified? Consider notifying the Office of the Australian Information Commissioner.

5.         Do not destroy evidence: evidence may be used to identify the cause or culprit and to help analyse corrective or future preventative action.

6.         Maintain records: detail steps taken, decisions made and outcomes.

7.         Conduct an audit: assess your organisation’s processes and systems to identify and resolve weaknesses which may expose the organisation to further breaches.

 

Following these steps can help you avoid or mitigate the loss such breaches can cause. It can also go a long way in protecting your organisation from adverse findings and penalties by the Office of the Australian Information Commissioner.

                   

               
       

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