Governance Standard 4 requires charities to take reasonable steps to be satisfied that their Responsible People (its board or committee members, or trustees) are not disqualified:
- from managing a corporation under the Corporations Act 2001 (Cth) (the Corporations Act), or
- from being a Responsible Person by the ACNC Commissioner within the previous 12 months.
If a charity is not satisfied, it must not appoint this person. If the person is already appointed, the charity must take reasonable steps to remove them as a Responsible Person.
The requirement to ensure that Responsible People are not disqualified from managing corporations applies even if your charity is not a company.
Purpose of this standard
The members of a charity’s governing body should ensure that it is well governed, responsibly managed and meeting its obligations under the law.
Together, these people share responsibility for a charity’s work. It is important that a charity’s Responsible People are suitable for the responsibility they hold to a charity and to the people it works with.
This standard makes sure that registered charities are not controlled by people who may pose a risk to the charity’s financial position or the pursuit of its charitable work.
For charities to operate effectively, it is important that their members, the people they serve, and the public have confidence in the suitability of their Responsible People.
Ways to meet this standard
Ensure Responsible People are not disqualified
Your charity will likely meet the first part of this standard if, for existing or potential Responsible People, it:
- understands how a person becomes disqualified
- does a search of the ASIC Disqualified Persons Register for each person
- does a search of the ACNC Register of Disqualified Persons for each person (the ACNC has not disqualified anyone at this time), and
- requires each of its Responsible People to sign a declaration confirming that they are not disqualified and that they understand what it means to be disqualified.
If your charity takes these above steps, it will likely meet this part of the standard. However, if it suspects that a Responsible Person is disqualified, it must take further steps to be satisfied that the person is not disqualified.
In searching these registers, consider whether a Responsible Person has ever been known by a different name.
Removing unsuitable Responsible People
If any of your charity's Responsible People are listed on one of these registers or refuses to sign a declaration, or if your charity believes that they are disqualified, your charity must take reasonable steps to remove them.
You should begin by asking the person to resign. If they refuse, follow the process in your charity's governing document and any processes set under legislation that applies to your charity to remove them as a Responsible Person.
You may need to call a meeting of the board or committee or a general meeting of the members to remove them by a vote.
If your charity cannot remove the person (for example, if the members of a company limited by guarantee refuse to remove a director), please write to the ACNC and explain the situation. You may also consider whether it is necessary to involve another regulator – for example, the one that your charity was incorporated by.
If there are good reasons to keep the person, please contact us because the ACNC Commissioner may give your charity permission to do so.
If you need to appoint a new Responsible Person, see our tips on choosing a new board member.
A secondhand op shop run by a community health service appoints a new chair to its committee and wants to make sure that her committee members are all suitable people to be on the governing body of the service.
She asks the shop’s manager to search for each of their names on ASIC Disqualified Persons Register and the ACNC's Register of Disqualified Persons, and asks the members to sign a declaration that they are not disqualified.
These searches show that none of the committee members are disqualified from managing a corporation or are disqualified by the ACNC. The charity does not have any reason to believe that they are disqualified.
Tick icon The charity meets Governance Standard 4.
A small charity that provides meals to people experiencing homelessness is looking to appoint a new board member.
Before appointing him, the board members check the ASIC Disqualified Persons Register and the ACNC’s list of disqualified persons. They find that he isn’t listed on either list, and also ask him to sign a declaration saying that he is eligible to be a member of the board.
The prospective board member refuses to sign the declaration. After asking him why, the board finds out that he was convicted of one of the offences mentioned in the declaration guidance, but that was about 15 years ago.
The charity contacts the ACNC and is advised that this does not make the prospective board member unsuitable under the standard because sufficient time has passed since the conviction for this offence. This means he qualifies as a Responsible Person despite the conviction.
And because there are different time periods set out for each offence, the charity takes time when it contacts the ACNC to clarify.
The charity prints a copy of ACNC’s Responsible Person guidance and checklist and gives it to the prospective board member. He reads more about the time periods and signs the declaration.
Tick icon The charity meets Governance Standard 4.
A charity structured as an incorporated association provides business training and work for disadvantaged people. It has conducted the checks of the ASIC and ACNC Registers and has declarations from its committee members that none of them are disqualified.
However, they find out that one of their committee members has become bankrupt. She has not been discharged for that bankruptcy and is disqualified from being a Responsible Person.
The committee ask her to resign but she refuses. Under its rules, she can only be removed by a general meeting of the members. The committee calls the general meeting.
Tick icon If the members decide to remove the member, the charity meets Governance Standard 4.
Cross icon If the members decide not to remove her, the committee should contact the ACNC to ask for advice.