Commissioner's Policy Statement: Allowing a disqualified person to be a Responsible Person

This Commissioner’s Policy Statement is issued under the authority of the Commissioner and should be read together with the ACNC Policy Framework, which sets out the scope, context and definitions common to our policies.

Policy statement

1. This Commissioner’s Policy Statement sets out the principles the ACNC will consider when deciding:
   1. whether to allow a person who is disqualified from managing corporations to be a Responsible Person for a charity, and
   2. whether to allow a person who in the preceding 12 months has been disqualified by the Commissioner to be a Responsible Person for a charity.
2. A person disqualified from managing a corporation or who the Commissioner has disqualified in the preceding 12 months can apply to the ACNC to become a charity’s Responsible Person.
3. The ACNC will carefully consider the circumstances of each application before the Commissioner makes a decision.

Legislative context

4. The Australian Charities and Not-for-profits Commission Regulations 2022 (Cth) (ACNC Regulations) sets out the minimum governance standards that charities must meet in order to maintain their registration with the ACNC.
5. Governance Standard 4 (suitability of responsible entities) requires charities to take reasonable steps to ensure that its Responsible People are:
   1. not disqualified from managing corporations (within the meaning of the Corporations Act 2001), and
   2. not disqualified by the ACNC at any time during the preceding 12 months, from being a Responsible Person.
6. Section 45.20(5) of the ACNC Regulation gives the Commissioner the discretion to allow a person who has been disqualified to be a Responsible Person for a charity.
7. There are three ways that a person can be disqualified from managing corporations under the Corporations Act 2001 (Cth):
   1. Automatic disqualification
   2. Disqualification by the Australian Securities and Investments Commission (ASIC)
   3. Disqualification by a court

Principles

• Principle 1: Compliance with charity rules, other legislation and court decisions
• Principle 2: Assessing the benefits to the charity
• Principle 3: Balancing the benefits to the charity and the need to maintain public trust and confidence in the sector
• Principle 4: Good decision-making

Principle 1: Compliance with charity rules, other legislation and court decisions

8. The ACNC will not exercise its discretion if doing so would breach the charity's rules, or cause the charity to breach its obligations under other legislation (such as a state's incorporated associations or fundraising legislation).
9. The ACNC also will not exercise its discretion if doing so would cause an outcome that is contrary to a court decision.

Principle 2: Assessing the benefits to the charity

10. The ACNC will consider the interests of the charity and the benefits that will flow to it if the disqualified person remains as, or seeks to becomes, a Responsible Person for the charity.
11. The ACNC will consider the circumstances of each charity and the individual’s disqualification. Considerations include, but are not limited to:
    1. the nature and organisational structure of the charity,
    2. any existing relationship that the disqualified person has with the charity (for example, if the disqualified person has been successfully involved with the charity as a Responsible Person for several years it may be important to the charity’s viability to maintain that relationship),
    3. the disqualified person's expertise (for example, the person has particular expertise that the charity needs and which is difficult to replace),
    4. the difficulty the charity has with attracting another Responsible Person of a similar calibre (for example, the charity is very small and does not have the resources to recruit another suitable Responsible Person, or the operations of the charity requires a person with a highly specialised set of skills),
    5. the nature of the person's disqualification and their specific position as a Responsible Person (for example, if the person is disqualified because they are an undischarged bankrupt, the ACNC may not consider it appropriate for that person to be involved in decision-making about a charity's finances),
    6. the character and conduct of the person since their disqualification,
    7. the degree of control which the disqualified person would be able to exercise over the charity’s affairs,
    8. the level of supervision that the disqualified person may be subject to,
    9. the involvement that the disqualified person is intended to have in the charity's management (for example, the person may only intend to be involved in a very specific aspect of the charity's management, such as co-ordinating its publicity),
    10. the remaining composition of the board, and whether it would prevent the person from acting autonomously, or dominating the board, and
    11. where the Commissioner has disqualified a Responsible Person in the preceding 12 months, the reasons why the Responsible Person was suspended or removed.

Principle 3: Balancing the benefits to the charity and the need to maintain public trust and confidence in the sector

12. The ACNC will balance the benefits to the charity with the need to maintain public trust and confidence in the sector, in order to decide whether it is appropriate for the disqualified person to be a Responsible Person of the charity.
13. This may involve an assessment of the following:
    1. whether there will be any risks to public confidence in the sector if the disqualified person is allowed to be a Responsible Person,
    2. whether there will be any risks to the charity's beneficiaries,
    3. whether there will be any risks to donors, creditors, or any other third party,
    4. the need to deter others from the conduct that led to the disqualification, and
    5. the length of time left before the disqualified person is no longer disqualified (for example, a bankrupt person will generally be discharged from the bankruptcy after three years and no longer be disqualified)

Principle 4: Good decision-making

14. The ACNC will apply the principles in Commissioner’s Policy Statement 2012/03 Decision-making when deciding on an application to allow a disqualified person to serve as a Responsible Person.

References

• CPS2012-01 ACNC Policy Framework
• Australian Charities and Not-for-profits Commission Regulations 2022 (Cth)
• Corporations Act 2001 (Cth)
• Commissioner’s Policy Statement 2012/03: Decision-making