Not-for-profit director duties

The legal duties of a not-for-profit (NFP) director depends – in part – on the legal form of the organisation they help govern.

Generally speaking, NFPs are subject to both legislative and general law duties.

Companies limited by guarantee

The principal Act governing the duties of directors of companies limited by guarantee is the Corporations Act. Director duties under the Corporations Act include, but are not limited to:

• Exercise their powers and discharge their duties with the care and diligence that a reasonable person would have if they were a director of a company in the company’s circumstances and occupied the office held by, and had the same responsibilities as, the director.
• Exercise their powers and discharge their duties in good faith in the best interests of the company and for a proper purpose.
• Not to improperly use their position to gain an advantage for themselves or someone else, or to cause detriment to the company.
• Not to improperly use information obtained through your position to gain an advantage for themselves or someone else, or to cause detriment to the company.
• Disclose material personal interests in a wide range of circumstances.
• Prevent insolvent trading by the company.

Incorporated associations

By contrast, duties on directors of incorporated associations that operate within a particular state or territory, are imposed by the Associations Incorporation Act that relates to that particular state or territory.

Other statutes

In addition to these principal Acts, there are potentially hundreds of other Commonwealth, state and territory statutes that could impose liability on directors of NFPs, depending on the activities of the NFP. For example, state-based occupational health and safety legislation.