Governance standard 4: Suitability of responsible persons
This standard requires charities to take reasonable steps to be satisfied that its responsible persons (its board or committee members, or trustees) are not disqualified from:
- managing a corporation under the Corporations Act 2001 (Cth) (the Corporations Act), or
- 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 persons 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 persons 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 persons.
Ways to meet this standard
Making sure responsible persons are not disqualified
Your charity will likely meet the first part of this standard if, for existing or potential responsible persons, it:
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.
Attention - Important information!In searching these registers, consider whether a responsible person has been known by a different name.
Read more about disqualification and download the ACNC’s suggested responsible person declaration [Word 16KB].
Removing unsuitable responsible persons
If any of your responsible persons are listed on one of these registers, refuses to sign a declaration or 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 governing documents and under any 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 and/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 your 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 as the ACNC Commissioner may give you permission to do so. Read our general tips on choosing a new board member.
Return to the governance standards.
Opportunity Melbourne is a second hand ‘op shop’ run by a community health service. A new chair is appointed 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. Opportunity Melbourne does not have any reason to believe that they are disqualified. Opportunity Melbourne meets the standard.
May’s Van is a small charity that provides meals to people experiencing homelessness. The charity is looking to appoint Pelegrin as a member of their board. Before appointing him, they 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 their board. Pelegrin refuses to sign the declaration. After asking Pelegrin why, the board finds out that Pelegrin was convicted of one of the offences mentioned in the declaration guidance, but that was about 15 years ago. May’s Van contacts the ACNC and is advised that this does not make Pelegrin unsuitable under the standard. This is because sufficient time has passed since the conviction for this offence which means he qualifies as a responsible person despite the conviction. There are different time periods set out for each offence, so contact the ACNC if you’re not sure. May’s Van prints a copy of ACNC’s responsible person guidance and checklist and gives it to Pelegrin. He learns about the time periods and signs the declaration. May’s Van meets the standard.
The Good Ship Enterprise is an incorporated association that 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.
- If the members decide to remove the member, the Good Ship meets the standard.
- If the members decide not to remove her, the committee should contact the ACNC to ask for advice.