Duties and Responsibilities
Directors and Management Committee Members
IntroductionThe duties and responsibilities of Directors and Management Committee members' arise from two main areas:
- Common Law; and
- Statute Law.
Examples of statute law are the Corporations Law, The Associations Incorporation Act, and Acts relating to taxation, revenue, employment and occupational safety and health.
Common law and statute law are applicable to Directors and Management Committee members irrespective of whether they are paid or unpaid (honorary).
Breaches by Directors and Management Committee members of their duties under the common law and statute law may result in personal liability to various parties, including the corporation concerned, for the loss sustained by those parties as a result of the breach.
Common Law DutiesCommon Law duties can be summarised as follows:
- To act honestly.
- To exercise reasonable care and skill.
- To be diligent.
- To fulfil fiduciary duties. These are legal and equitable duties that arise from the special position in which Directors and Management Committee members are placed, as elected representatives.
Examples of fiduciary duties are:
- To act in good faith and in the interests of the incorporated body as a whole.
- To exercise their powers for the purposes for which they were given.
- To refrain from restricting the future exercise of the powers of Directors and Management Commitee members.
- To avoid any conflicts of interest.
Breaches of common law duties expose Directors and Management Committee members to possible damages claims made by the incorporated entity and/or certain other parties, including members of the incorporated entity.
The Importance of the PositionBefore deciding to nominate for the position of Director or Management Committee member, an individual should carefully analyse the Club's constitution, and it's operating and financial position. A prospective candidate should also have a working knowledge of all laws impacting on the club's operations. Professional advice may be needed before making a decision to nominate.
It is also important that prospective Directors and Management Committee members realise that such positions require an active commitment to attend board meetings and to be familiar with agenda items before doing so.
It is the role of Directors and Management Committee members to establish financial, strategic and operating policies for the incorporated entity. This should not be confused with the role of the Secretary-Manager whose duty it is to implement the decisions of the Board in this respect.
Directors and Management Committee members should clearly understand the limits of their authority when representing the Club in contract negotiations, the procedure to be adopted in the conduct and recording of meetings and the signing of documents and annual financial accounts for lodgement.