How's your Constitution?

Organisations generally have similar problems.

Everyone in a Organisation will agree at some point they need a Committee to Review the Constitution. If its bigger than the average club then I firmly believe what they REALLY need is a lot more than just a Constitutional Review Committee. What's more often needed is a full time Governance Committee that when needed, takes submissions from any part of the Organisation and reports directly to what is the Board of Management, the Company Directors.

This means we'd have a mechanism that deals with compliance issue if & when they happen can mitigate & reduce risk and legal exposure to both the Organisation & indiviuduals and officers of the whole organisation.

A constitution or Articles of Association are living documents which need to be in a state of constant or regular review. A constitution is a reflection of what an organsation is and how it does what its supposed to.

Corporate Governance distilled down is nothing more than the systems & processes you have in place to ensure your organisation or company does what it's supposed to do, in the required manner its supposed to do it.

Remember its still possible, even with the new Incorporations Act (in WA) to have a Act compliant & Department approved Constitution and still have serious breaches of Corporate Governance.

In previous times the Incoporations Acts of all states were really only the legislative framework to allow a Not For Profit legal entity to exist. Where there were gaps in the respective state based Acts, the over arching Act was the federal Corporations Act. Its also here that rights roles & repsonsibilities of Company Directors (Management Committee members) were set out and applied to anyone in charge of a For Profit or Not For Profit legal entity. This is still the case but the new WA Act now covers more than it ever did before.

Still we need to know having a good constitution is only part of the remedy for most State Based Not-For-Profit organisations. The Corporate Governance levels need to be addressed and maintained continually. This cannot be done with JUST a constitution review once every 8 or 10 years. Organisations need a governance committee that sees to the maintenance of their Constitution in an ongoing basis and not wait until 6 or 10 years of out of date matters need a massive & critical re-write. A Governance Committee must also over see our operations to make recommendations to reduce our individual and/or combined risks & legal exposure.

Good news is if your group's constitution isn't compliant with the new current Act fear not. You have until July 1st 2019 to get complaint with the Department.

But what will you do to ensure good Corporate Governance in a governance model that suits your organisation?

Also note, having a complaint constitution doesn't mean your management committee is immune from breaching their fiduciary duty or failing in its rights, roles & responsibilities. An ongoing reporting committee of vigilance is essential.

If you have the numbers (and most certainly if you have a number of committees and working groups) get proper charters for each so everyone knows their knitting, safe from legal angst. Remember the Not-For-Profit that's complaint can be sued for what it has, but people in positions of management or decision making can still be personally liable. Get covered, get compliant and get on with the more important things like the aims of your association.

https://www.commerce.wa.gov.au/consumer-protection/associations-new-law