In the regulatory tool chest of the Australian Charities and Not-For-Profits Commission (ACNC) is the “enforceable undertaking” with a charity.

A charity facing investigation and perhaps eventual prosecution by the ACNC for a breach of the ACNC Act, regulations or conduct standards can forestall the costs of further investigation and maybe litigation by agreeing to an enforceable undertaking. The undertaking can specify actions that a registered charity has agreed to take or refrain from taking in order to comply with the provisions causing the investigation.

The sting in the tail is that if the ACNC Commissioner considers that a charity has breached any of the terms of an enforceable undertaking, the Commissioner may apply to the Court to enforce the enforceable undertaking. Failure to comply with an order of a Court may be a criminal offence.

It allows the ACNC to reform the policies and procedures of a defaulting charity without more drastic action, such as removal from the charity register, which would harm innocent beneficiaries.

A recent enforceable undertaking signed by the ACNC involving Hillsong College Ltd indicates what the ACNC expects about recording minutes of board and committee meetings, in-camera meetings and meetings of related parties.

Meetings of related parties

As occurred in the Hillsong situation, it is not uncommon that several registered charities make up the enterprise, and some have the same board members.

The undertaking notes that:

“19. The meetings of the Charity’s Board in which decisions are made will be held independently of meetings of related parties.”

This indicates that a separate meeting needs to be held where an organisation is “related”.[1] It would condemn the practice of a charity board discussing the business of another charity that they may control or be associated with in one meeting, even if separate minutes are later produced.

An example would be a school charity board making decisions about their separate charities, such as school building funds, library funds, scholarship funds or foundation at the school board meeting. Separate meetings for each would need to be held and minuted, even if all the same people were involved.

We presume this is to encourage each responsible person to recognise their duties to each charity they are appointed to. They must act honestly and fairly in the best interests of that particular charity and for its charitable purposes.  Further, any actual or perceived conflict of interest must be disclosed and managed.  Failing to turn one’s mind to these issues and being clouded by the interests of another charitable entity can lead to difficulties.

Record Keeping: Minutes

The ACNC legislation does not refer to minutes of a meeting specifically but generally refers in section 55-5 (2) of the Act to:

(2)     A registered entity must also keep written records that correctly record its operations, so as to enable any recognised assessment activity to be carried out in relation to the entity.

The term ‘assessment activity’ is defined in section 55-10 as an activity carried out by the Commissioner involving the assessment of the entity’s entitlement to registration, compliance with the Act, or an activity carried out by the Commissioner of Taxation involving the assessment of the entity’s compliance with any taxation law.

The legal requirement for minutes is more likely to be imposed by the statute creating the entity (if there is one), its founding document or rules, as there is no common law requirement for meeting minutes to be kept.

In this particular case, the organisation was a company limited by guarantee, and the Corporations Act 2001 (Cth) s 251A requires that a minute book be kept for various meetings as the record of “proceedings and resolutions”. That Act does not provide any further guidance as to the content of minutes.

The ACNC undertaking lists the following for the charity to implement in relation to its minutes.

Record-keeping

The Charity will ensure that minutes of any board or committee meeting include the following items:

  • the name of the committee or Board;
  • time, location, and date of the meeting,
  • attendance (including position and role) and apologies;
  • whether a quorum has been met;
  • conflict of interest declarations;
  • review and / or acceptance of previous minutes;
  • action items;
  • each agenda item and general business item including:
    • what was discussed and decided in enough detail to understand key discussion points that influenced decisions; and
    • recording reasons for transferring funds, assets or other resources to another entity, including related parties;
  • details of the next meeting; and
  • signature and date.

It is instructive to examine your organisation’s board and committee minutes and establish whether all of these issues are captured. If not, why not?

In Queensland, for incorporated associations, the Act in section 69A requires the secretary to keep minutes of all meetings, special, general and management. It does not further specify the nature of those minutes.  The Model Rules for incorporated associations require the secretary again to keep the minutes for each meeting, and clause 26 states:

“Minutes of management committee meetings

(1)     The secretary must ensure full and accurate minutes of all questions, matters, resolutions and other proceedings of each management committee meeting are entered in a minute book.

(2)     To ensure the accuracy of the minutes, the minutes of each management committee meeting must be signed by the chairperson of the meeting, or the chairperson of the next management committee meeting, verifying their accuracy.“

And the General Meeting in clause 41:

“Minutes of general meetings

(1)     The secretary must ensure full and accurate minutes of all questions, matters, resolutions and other proceedings of each general meeting are entered in a minute book.

(2)     To ensure the accuracy of the minutes—

(a)   the minutes of each general meeting must be signed by the chairperson of the meeting, or the chairperson of the next general meeting, verifying their accuracy; and

(b)   the minutes of each annual general meeting must be signed by the chairperson of the meeting, or the chairperson of the next meeting of the association that is a general meeting or annual general meeting, verifying their accuracy.“

In-camera Meetings

The ACNC also required the same to apply to in-camera meeting minutes: meetings where sensitive matters are discussed by only those authorised to attend. The subject matter often involves executive staff, their appointment or remuneration. The minutes of such meetings must be kept.

AI Meeting and Minute Apps

The advent of artificial intelligence (AI) has brought about any number of computer applications that can record, transcribe and make summaries of meetings, particularly if held using web meeting technologies such as Zoom, Teams, GoogleMeet and Webex. Some products claim they can even produce ‘minutes’ of a meeting.

There are several serious issues to consider before contemplating using such products in the preparation of minutes.

Some of the issues are:

  • Many products store the data outside the organisation and are permitted by the service terms to use the data in training their AI models, raising privacy risks for the information.
  • Even if you delete the recorded data after use, it may not be deleted by the service vendor.
  • ‘Shadow IT’ cyber security risk – Unsanctioned systems and/or bypassing organisations’ IT restrictions to experiment with such AI products introduce the risk of cyber breaches.
  • Regulators and other third parties may be able by force of law to force disclosure of transcripts in full.
  • The AI material produced may not be accurate and would need to be checked by a human.

What does this mean for me?

The terms of the ACNC enforceable undertaking prompt chairs and secretaries to check the suitability of their minutes and record keeping.

  • How do your minutes compare with the ACNC undertaking prescription?
  • Do the minutes comply with the legislative requirements set under your incorporating statute (e.g. Corporations Act), if any?
  • Do the minutes comply with your constitutional provisions?
  • Do your minutes contain sufficient information to be intelligible to an absent member to gain a correct impression of the nature of the proceedings, what was done, and the relevance and effect of resolutions passed?
  • Are your minutes stored safely in perpetuity?

We can assist in ensuring that your minutes and records are compliant if needed.

Details of the enforceable undertaking offered by Hillsong College Ltd (ABN 84 617 111 592) are available at:

https://www.acnc.gov.au/charity/charities/fe1ee793-3aaf-e811-a963-000d3ad24077/history

[1] In assessing whether 2 organisations are related it must be noted that the ACNC has two definitions; one for small charities and the other for medium and large charities. For a small charity, a related party is a person or organisation that is connected to the charity and has significant influence over the charity. For medium and large charities, a related party is defined in AASB 124 Related Party Disclosures.