New Templates
The ACNC recently released the following new constitution templates for companies limited by guarantee seeking to obtain/retain charity registration with the ACNC:
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Companies that do not have and are not applying for deductible gift recipient (DGR) endorsement;
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Companies that have, or are applying for, DGR endorsement as a whole and are required to maintain a gift fund;
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Companies that have, or are applying for, DGR endorsement for the operation of a fund, authority, or institution;
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Companies that have, or are applying for, registration as the ‘Health Promotion Charity’ subtype of charity; or
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Companies that have, or are applying for, registration as the ‘Public Benevolent Institution’ subtype of charity.
You can find these templates here.
Benefit to the Sector
These new templates will provide those looking to establish a charity on a minimal budget with a good starting place. In particular, the templates helpfully highlight:
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the connection between certain clauses and the ACNC Governance Standards; and
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where further professional advice may be required.
Notable Limitations
Although a useful tool, the new ACNC templates are necessarily basic and may not be appropriate in all cases. For example:
1. Limited access to state-based exemptions
The templates may not enable access to all state-based tax exemptions. For example, the templates provisions do not meet the requirements in Queensland for registration as a ‘charitable institution’. This registration is the gateway to state-based tax exemptions in Queensland (e.g. transfer duty, land tax, payroll tax etc). Care should therefore be taken to ensure appropriate interaction with other regulator requirements.
2. No consideration of corporate groups
The templates do not contemplate the company existing within a corporate group. If the company is to exist within a corporate (e.g. be a subsidiary company of another entity), the relationship of this company to the other entities within the group often requires careful consideration and may need to be reflected in the company constitution. For example, it may be appropriate to reserve certain powers ordinarily exercised by the board of the company to its sole corporate member on account of its role within the group as a whole. It may also be appropriate to have more robust director removal rights in the context of a corporate group.
3. No consideration of sole-member companies
The templates assume multiple members. Although the templates are not necessarily problematic for sole member companies, a company constitution can usually be considerably streamlined if it has a sole member which may make ongoing governance simpler in practice.
4. Only one membership class
The templates only contemplate a single membership class. If your charity has / will have multiple classes (e.g. this is common in peak body organisations), further bespoke drafting is necessary to establish those classes and detail what differentiates those classes.
5. No consideration of faith-based requirements
The templates do not contemplate a statement of faith for the company or the relevance of any such beliefs. This is often a critical element for any faith-based companies, as it may have implications for the ability of that company to require its members and directors to abide by that statement of faith. This is often critical for it to retain its missional character over time. The inclusion of or lack of a statement of faith can also have implications for the company’s ability to rely on anti-discrimination law exemptions.
6. Generic membership conditions
The templates do not prescribe much in the way of membership conditions. The members of a company control its governing rules and appoint its directors. Members also have certain rights in respect of the company, including the ability to make member oppression claims. Accordingly, a company’s members are its ultimate controllers. It is therefore critical from the outset to consider and prescribe anything which may be fundamental to someone’s ongoing right to membership (e.g. continued membership with an associated entity or compliance with a statement of faith).
7. Generic director conditions
The templates do not prescribe any director eligibility requirements over and above the baseline requirements at law. You should consider if there are any other requirements that may be important to you organisation (such as compliance with a statement of faith) or are required by a key regulator (such as a requirement to have a specific skill mix) and ensure that is reflected in your constitution.
How we can help
A charity’s constitution is foundational to everything that it does. It is therefore essential that a charity’s constitution is tailored to its needs to maximise its ability to effectively pursue its charitable purposes. We can help you tailor your company’s constitution to help ensure that its charitable works can be built on a firm foundation.
The team at Vocare Law are specialist Not-for-Profit solicitors. Please don’t hesitate to contact our office on 1300-VOC-LAW / 1300-862-529 or email: enquiry@vocarelaw.com.au if you need assistance with drafting or redrafting your charity’s company constitution.
This article was written by Paul Neville
**The information contained herein does not, and is not intended to, constitute legal advice and is for general informational purposes only.
