An organisation is a ‘registered charity’ if it is registered with the Australian Charities and Not-for-Profits Commissions (ACNC). If your organisation is a company limited by guarantee, you may be wondering who your regulator is and who you are required to report to.
The ACNC along with the Australian Securities & Investments Commission (ASIC) and the Australian Taxation Office (ATO) all serve regulatory functions relating to charities. This article will shed light on the differences between obligations of new charities to ASIC and ACNC, including reporting duties.
Company Limited by Guarantee
The first step in becoming a Company Limited by Guarantee is to register your company with ASIC. Once registered as a company, it can then elect to apply for registration as a charity with the ACNC. One of the effects of a company limited by guarantee that registers as charity is that various provisions in the Corporations Act no longer apply – rather the ACNC’s governance standards prescribe a more flexible framework around holding meetings, directors’ duties, annual reporting, and record keeping. In particular, your charity would no longer be required to do the following:
- Lodge changes to its constitution with ASIC. Instead, this information must be provided to the ACNC.
- Send a copy of its constitution upon request by members. The ACNC online register has made these documents readily available.
- Notify ASIC of a change to its address details. Instead, this information is to be provided to the ACNC.
- Notify ASIC of the appointment, resignation or retirement of directors, secretaries and alternate directors or submit personal details of directors and secretaries. Instead, this information is to be provided to ACNC.
- Review their details. The charity will not be sent an annual statement for review.
- Pay an annual review fee. However, if the last annual review date falls before registration with ACNC, the charity must pay the annual review fee to ASIC.
It is important to note that if your company limited by guarantee is not a registered charity, or has lost its charitable registration, it will be regulated by ASIC and be expected to comply with the full suite of obligations under the Corporations Act.
Incorporated Association
If a charity is registered as an incorporated association in New South Wales, it is only required to comply with the ACNC regime – ASIC has no part to play in its registration or regulation thereafter. They will generally not be obligated to lodge an annual statement with Fair Trading, nor pay an annual fee. They will only be required to lodge an Annual Information Statement to the ACNC.
If your association is incorporated in another State or Territory, feel free to reach out and we can let you know your reporting obligations.
Registered Australian Body
If a charity is registered as a registered Australian body, it is regulated by both ASIC and ACNC. Registered Australian bodies are incorporated associations registered under a State Act and registered with ASIC if it carries on business outside the state or territory in which it is registered. ACNC must not be notified of a change in your charity’s name or address for service. They will then liaise with ASIC to update their register. However, ASIC must be directly notified if your charity stops carrying business outside of your state of incorporate (which may lead to ASIC deregistering your organisation) or changes to its opening hours (if you have lodged a notice with ASIC about your opening hours previously).
All registered charities have ongoing obligations to the ACNC. They must ensure that they:
- Meet ACNC governance standards.
- Keep correct records documenting in detail net wealth, performance, and operations.
- Submit an Annual Information Statement every year if you are a small sized charity.
- Submit an Annual Financial Report every year if you are a medium or large sized charity.
- Maintain their eligibility to be registered by remaining not-for-profit, pursuing their charitable purpose, and otherwise complying with the ACNC act.
- Notify the ACNC of changes, including to charity details, and of any breach of the ACNC Act, including governance standards.
