Non-Profit Fact Sheets

What is a Disqualified Person?

If your Australian charity or not-for-profit is unsure whether an individual serving on its board or committee (or applying to serve) is a Disqualified Person, the first step is to understand the definition of a ‘Responsible Person’. The next is to review whether the rules set out by regulators have been followed. Under the Corporations Act 2001 (Cth), Australia has strict governance standards that ensure charities make reasonable efforts to check whether the people they select as board members, committee members, and trustees are not disqualified from managing a corporation or from being selected as a Responsible Person.

What is a Public Ancillary Fund (PubAF)?

A Public ancillary fund (PubAF) is an entity that receives and distributes money or property to charitable organisations. PubAFs are run by a company that agrees to assume the role of a trustee. They are typically led by a group of individuals who are recognised in their community as having important responsibilities or positions such as school principal, member of parliament, or doctor. In 2020, Australia had 3,192 ancillary funds on record valued at a total of $10.

What are Related Party Transactions?

Related party transactions are a normal part of the business if your organisation works closely with other entities or individuals and enters into agreements. The Australian government’s regulations for related party transactions likely apply to you. Related party relationships are a normal part of doing business. However, when a person in a leadership position has ties to two entities the organisation conducts business or collaborates with, these relationships can affect the way each entity will manage money, make decisions, or create policies.

What Is Auspicing?

Auspicing is a fairly common practice for unregistered or unincorporated non-profits in Australian such as informal groups or new organisations that may not have legal standing on their own. This type of agreement may be a good fit if a group of individuals or a local club want to run a project or host an event such as a festival or exhibition, a community pilot, a local study group or youth club, or a national sporting competition.

What is a Proprietary Limited Company (Pty Ltd)?

One of the most frequent legal structures Australian businesses choose is the proprietary limited company or Pty Ltd. Similar to other company forms such as a company limited by shares or an unlimited company, Pty Ltd entities operating in Australia are regulated by the Corporations Act 2001 and have legal obligations associated with the Australian Securities and Investments Commission and the Australian Taxation Office. These rules have a direct impact on organisational governance and profit distribution.

Illiquidity Vs Insolvency

A non-profit organisation’s financial health is vital to achieving its mission. As stewards of the organisation, board members must understand two key financial concepts - illiquidity and insolvency. On the surface, they may seem similar. But illiquidity and insolvency stem from different causes and have different implications. This article will explain what illiquidity and insolvency mean, their key differences, and provide real-world examples to illustrate how non-profit boards should interpret and respond to signs of financial distress.

Difference between a Company Limited by Shares and Company Limited by Guarantee

What are the key differences between a company limited by shares and a company limited by guarantee? Is one better than the other? Under Australian law, there are two main types of company structures: proprietary companies and public companies. A closer look reveals that these businesses usually operate either as companies limited by shares (CLS) or companies limited by guarantee (CLG). The difference between the CLG vs CLS structure is primarily in the ways each approaches liability, voting and dividend rights, and share distribution.

What is a Company Limited by Shares (CLS)?

A company limited by shares (CLS) is one of the most common structures used to conduct business in Australia. As a company founder, the legal structure you choose determines the activities your organisation can legally carry out. Forming a CLS is a good option for organisations planning to conduct commercial activities and can help protect group owners from personal liability. The Corporations Act 2001 (Cth) defines a company limited by shares as “a company formed on the principle of having the liability of its members limited to the amount (if any) unpaid on the shares respectively held by them.

What is a Body Corporate in Australia?

A body corporate, or owner’s corporation, is one of several incorporated legal entities in Australia that use a group structure as a management model. In Australia, a general body corporate represents a group of independent owners who run the company as a corporation to develop, manage, and maintain jointly owned land. Bodies corporate hold the same powers and manage their affairs in a similar way to other incorporated entities, but are regulated by the state in which they are located.

What is a Public Benevolent Institution (PBI) in Australia?

A public benevolent institution (PBI) is one of several subtypes of charities able to register with the Australian taxation Office and apply for tax concessions. The purpose of a PBI is to ‘relieve poverty or distress’ in a community by providing services to people in need. Like other charities, PBIs have both legal obligations and benefits. One such benefit is that they are eligible to receive the deductible gift recipient status.