30 June 2018
Re: Proposal to change BMG legal structure from incorporated association to Company Limited by Guarantee
Bacchus Marsh Grammar (BMG) was registered as an incorporated association on 31 August 1987 under the now Associations Incorporation Reform Act 2012 (Vic). Given the scale and nature of the School’s activities, turnover and asset value, BMG has outgrown the structure of an incorporated association. In addition, BMG has received professional advice which recommended BMG transition from an incorporated association to a Company Limited by Guarantee.
Similar schools to BMG operate as a Company Limited by Guarantee. These include Ballarat Grammar, Westbourne Grammar and Kardinia College
The benefits of making the transition include:
- An easier, more streamlined reporting regime;
- Fewer intricacies and inconsistencies to navigate when operating interstate;
- A greater understanding of the corporate structure by the public;
- Clearer governing rules in relation to dispute resolution;
- Flexibility in signing legal documents;
- A clearer, more certain corporate structure to aid in transacting with third parties, particularly entities that operate outside of Australia; and
- Less personal risk for Members and increased accountability for the Board in terms of reporting, compliance and Directors’ duties as prescribed by law.
The attached table sets out the key features of the current registration and the proposed legal structure.
Given its current charity status, BMG would become a Charity CLG. In this case, its main regulator becomes the ACNC rather than ASIC. Different and less complex laws apply to CLGs that are charities than to other CLGs, because when a CLG becomes registered as a charity, most Corporations Act requirements ‘switch off’. For example, the ACNC governance standards prescribe a more flexible framework around holding meetings, directors’ duties, annual reporting and record keeping. The Corporations Act requirements for CLGs that are not charities are much more complex and prescriptive.
Importantly, when the conversion takes effect, there will be no changes to the School’s day to day operations, for example:
- It will continue to operate as a not-for-profit and a charity (under the advancing education subtype);
- The conversion does not create a new legal entity;
- Existing tax concessions will roll over;
- BMG’s ABN, contact details and staff will continue as usual;
- The School Council will transition to a board of Directors in the manner set out in BMG’s new constitution; and
- Any existing contracts that BMG has with third parties will continue with the Company Limited by Guarantee.
Notification of the change will be given to organisations the School has relationships with in the ordinary course of business (e.g. the ATO, WorkCover and other insurers, superannuation funds, banks, the Titles Office etc.)
This proposal will be on the agenda at the AGM on Wednesday, 24th October 2018 and a special resolution will be put to Members of BMG. If the Members vote in favour of the resolution, BMG will be changed from an incorporated association to a Company Limited by Guarantee.
For further questions, please also refer to this Q & A document.
We would be pleased to receive feedback via a phone call or email to email@example.com
Andrew A. Neal Moira Berry
Principal President – School Council