Regulating Volunteer Directors’ Duties in Companies Registered with the Australian Charities and Not-for-profits Commission

Abstract

Australian directors, whether volunteering or serving a commercial or charitable company, have similar legal responsibilities and exposure to personal liability for unintentional mistakes. In 1991, the Supreme Court of Victoria awarded $97 million, equivalent to almost $200 million today, against a volunteer director of a not-for- profit charitable company. More recently, the Federal Court imposed a $90,000 penalty on a former Tennis Australia director, Harold Mitchell. Should volunteer charity directors and their fee-earning corporate counterparts be subject to the same legal duties, obligations and liability exposure? This article considers the potential impact of the 2018 Australian Charities and Not-for-profits Commission (‘ACNC’) Legislation Review Recommendation 11, that the statutory directors’ duties in the Corporations Act 2001 (Cth) be turned ‘back on’ for directors of ACNC registered charitable companies, with specific reference to individual directors, charities, and the regulation of the charity sector. It cautions against regulatory changes that impose unrealistic compliance obligations and complexity that could do significant long-term damage to the sector.