Makinson d’Apice is very pleased to advise that Bill d’Apice has been awarded a Member of the Order of Australia (AM) in the Australia Day 2021 Honours List.

Bill was awarded the Member of the Order of Australia for his significant service to the law, to the legal profession, and to the Catholic Church of Australia.

That is a tremendous recognition for all that Bill has achieved for the legal profession and the Catholic Church over four decades.

Bill commented: “I must say that I was surprised to receive the award because there are so many others that are worthy recipients. Still, I am delighted to accept the award. The recognition is shared with the firm because much that I have been able to do in the legal profession (particularly in the Charities and Not-for-Profit space) and the Church has been made possible with the support of my Partners, our Charities and NFP team and our other staff in furtherance of our firm’s support for the Church, the profession and the broader Charities and NFP space.”

Joanne Grant and Belinda Marsh, Partners of the Charities & Not-for-Profits Practice Group, commented: “We would like to congratulate Bill on this very well-deserved award. Bill has tirelessly provided valuable advice, guidance and assistance to the Catholic Church, other religious organisations, charities and not-for-profit organisations for decades and this award recognises his efforts and work. We are proud and grateful to lead the Charities and NFP team as Partners, together with Bill as a Consultant to the team, to continue to provide first-class legal services to our valued clients and community for many more years to come.”

Click here to read the Governor-General’s announcement.

Makinson d’Apice is pleased to announce that Bill d’Apice has been recognised in Chambers and Partners’ Asia Pacific 2021 edition as a ranked lawyer in the area of Charities, for the fourth consecutive year.

With the assistance of other professionals within the firm’s Charities & Not-For-Profits team, Bill has been advising and representing hundreds of charities and not-for-profit organisations for decades. Congratulations Bill!

We are pleased to announce that the Leadership Team of the Makinson d’Apice Charities & Not-For-Profits Practice Group has expanded following the promotion of two experienced lawyers within the team on 1 July 2020.

Belinda Marsh has been promoted to the position of Partner which is recognition of her experience, depth of talent, significant contribution to our practice group and unwavering commitment to our clients over the last 9 years with our firm.

Jennifer Paterson has been promoted to Special Counsel to recognise her deep expertise and contribution to our practice group and clients as a pre-eminent lawyer in the Charities & Not-For-Profit sector.

Belinda and Jennifer will join Partner Joanne Grant and Consultant Bill d’Apice as the expanded leadership team within our practice group.

Joanne Grant said: “I am delighted with the promotion of Belinda as Partner and Jennifer as Special Counsel. Both promotions are very well deserved and in recognition of the hard work, commitment and expertise of Belinda and Jennifer. The promotions add to the leadership that Bill and I have been able to provide to the group as we continue to act as a one-stop shop for the legal needs of our charitable and not-for-profit clients. These escalations will give even greater depth to service the needs of our clients, with 8 lawyers in our team and over 75 additional lawyers and paralegals to call upon within our firm.”

 

 

 

 

 

Since the announcement of the National Redress Scheme for Institutional Child Sexual Abuse, many NSW non-government schools have been uneasy about whether they may inadvertently breach Section 83C of the Education Act if required to make a funding contribution (Funding Contribution) under the National Redress Scheme for Institutional Child Sexual Abuse Act (2018) (Cth).

From 11 October 2019, the Education Regulation 2017 (NSW) was amended to allow non-government schools to make redress payments without contravening Section 83C provided they can demonstrate that they did not use government financial assistance to make a Funding Contribution.

The new Regulation 10A provides as follows:

“10A School does not operate for profit because of funding contributions to National Redress Scheme for Institutional Child Sexual Abuse

  1. For the purposes of section 83C(3) of the Act, a non-government school is not taken to operate for profit because of a funding contribution made by or on behalf of the school to the National Redress Scheme for Institutional Child Sexual Abuse, if the school demonstrates, to the Minister’s satisfaction, that the funding contribution does not comprise any money provided by the Minister as financial assistance in respect of the school.
  2. For the purposes of this clause, a funding contribution means a funding contribution for a participating non-government institution under the National Redress Scheme for Institutional Child Sexual Abuse Act 2018 of the Commonwealth.”

As a result, a non-government school which is required to make a Funding Contribution will not be in breach of S83C so long as the funds used to make that Funding Contribution do not include any government funding. Non-government schools should be careful to keep clear records in respect of the source of funds used to make a Funding Contribution.

In recent years, many charities and other NFPs have found themselves in a position where they need to consider restructuring.

Common reasons we have seen for this are:

  • the charity or NFP may now be operating outside of the state or territory in which it was originally incorporated
  • the charity or NFP may have increased its activities and outgrown its original structure
  • the charity or NFP may have been originally set up incorrectly (for example, as a proprietary company rather than a public company limited by guarantee)
  • the structure of the charity or NFP may no longer be suitable in light of the objects and purpose of the charity or NFP
  • the charity or NFP may wish to merge its activities with another charity or NFP.

We would suggest that a charity or other NFP familiarise itself with the potential issues it faces in respect of a proposed restructure and the steps required before it commences this process rather than attempt to overcome hurdles after it has already started down the path to restructuring.

Some important factors that a charity or other NFP should consider are:

  • what steps will need to be taken on the restructure – for example, when will meetings of members need to be called to approve the proposed restructure
  • what resolutions will members be asked to pass
  • will the restructure result in the creation of a new entity
  • if so, how will property owned by the original entity be transferred to the new entity (and what steps will need to be taken to minimise any transfer duty (stamp duty) that may be payable on that transfer)
  • will regulators such as the ACNC recognise the change of structure or will the new entity need to re-register as a charity
  • will a new governing document need to be prepared
  • will the restructure result in a change to the objects and purpose of the charity or NFP.

Charities and other NFPs are also reminded that there is no one size fits all structure and that planning ahead means that they will be able to put in place a structure that works best for their individual needs.

For registered charities operating overseas or working with a third party overseas, there is a new set of standards that they must comply with in addition to the existing ACNC Governance Standards in this new financial year.

This set of new standards commonly referred to as “External Conduct Standards” are contained in the Australian Charities and Not-for-profits Commission Amendment
(2018 Measures No. 2) Regulations 2018 that were tabled in the Parliament late November 2018.

On 22 July 2019, the External Conduct Standards officially came into effect and became the new Division 50 of the Australian Charities and Not-for-profits Commission Regulation 2013 (ACNC Regulation).

What are the External Conducts Standards?

The External Conduct Standards are a set of standards that govern how a registered charity must manage its activities and resources outside Australia.

They are intended to support registered charities in fulfilling their objectives, by providing a minimum level of assurance that they meet public expectations in relation to their conduct when they undertake activities and send resources (including funds), or otherwise support activities, outside Australia.

It is well recognised that when operating outside Australia or working with a third party outside Australia, a registered charity may face risks that will vary according to its particular circumstances, such as its size, the sources of its funding, the nature of its activities (including the extent and importance of its activities outside Australia and resources given to parties outside Australia) and the needs of the public (including members, donors, employees, volunteers and benefit recipients of the registered entity).

Therefore, the External Conduct Standards do not mandate detailed procedures and requirements that registered charities must follow.

Instead, the External Conduct Standards are principles-based minimum standards and only require registered charities to take reasonable steps to ensure appropriate standards of behaviour, governance and oversight in relation to:

  • controlling their activities, funds, goods and other resources sent overseas
  • conducting an annual review of overseas activities and keeping necessary record;
  • taking anti-fraud and anti-corruption measures; and
  • taking measures aimed at protecting vulnerable individuals
Is your charity affected by the External Conduct Standards

Before you go through the trouble of assessing the implications of the External Conduct Standards that might have on your charity, we recommend that you first determine if the External Conduct Standards apply to your charity.

The External Conduct Standards apply to all registered charities that either:

  • operate outside Australia; or
  • work with a third party operating outside Australia,

regardless of the size, scale or significance of their work or operations outside Australia.

It is also worth noting that registered charities that are exempted from the ACNC Governance Standards for being Basic Religious Charities will also be subject to the External Conduct Standards if they operate outside Australia or work with a third party operating outside Australia.

What is “operating outside Australia”?

Pursuant to reg 50.4(1) of the ACNC Regulation,
“…a registered entity, or a third party, operates outside Australia if it operates outside Australia in whole or in part.”

The term ‘operate’ is not given a legal definition in the ACNC Regulation and is intended to have its ordinary meaning.   In context, the term ‘operate’ has the eleventh meaning given in the Macquarie Dictionary, namely “to bring about, effect, or produce, as by action or the exertion of force or influence”.   For a registered charity or a third party to operate outside Australia, it means taking actions to fulfill its objects, including but not limited to:

  • carrying out activities outside Australia; and
  • sending resources (including funds) to be used outside Australia.

In accordance with the guidelines published on the ACNC website, activities that may be considered operating outside Australia include:

  • sending money overseas
  • sending resources overseas
  • sending staff, volunteers, members or beneficiaries overseas
  • conducting activities or working overseas
  • buying goods and services from overseas suppliers (including online purchases) in some circumstances
  • working with individuals or organisations located overseas

This list is definitely not intended to be exhaustive.  We have observed the vast complexity and diversity in our charity clients’ activities. There are numerous borderline cases such as conducting activities purely online that are open to both people in and outside Australia.  We encourage you to contact us for detailed advice if you are unsure whether all or part of your charity’s activities are captured by the External Conduct Standards.

What is “working with a third party operating outside Australia”?

Pursuant to reg 4 of the ACNC Regulation,

“A third party, in relation to a registered entity, means an entity (other than a registered entity) that formally or informally collaborates with the registered entity for the purpose of advancing the registered entity’s purpose or purposes, and includes:
(a)    an entity with which the registered entity has some form of  membership, association or alliance; and
(b)    an entity that has an arrangement with the registered entity.”

An arrangement means any arrangement, agreement, understanding, promise or undertaking, whether express or implied, and whether or not enforceable (or intended to be enforceable) by legal proceedings.

A third party is required to collaborate with a registered charity for the purpose of advancing the charity’s purposes.  This means certain types of service provision to a registered charity will not be sufficient to make that entity a third party.  For example, if an entity provides information technology support to a registered charity, the entity is not collaborating with the charity to advance its charitable objects, and is therefore not a third party.

A registered charity working with a third party outside Australia must comply with the External Conduct Standards for its own activities overseas.  The extent of oversight and responsibilities the charity has over the activities of the third party is a question that will be addressed when we look further into the specific requirements of each individual External Conduct Standard in our upcoming article “Risk Based Approach – a reasonable starting point to comply with the External Conduct Standards”.

The only exemption is overseas activities that are directly related to the charity’s purposes in Australia, namely beneficiaries in Australia and these activities also need to be merely incidental to its operations in Australia.

Reg 50.4(2) of the ACNC Regulation sets out the only exemption from the External Conduct Standards:

“However, a registered entity does not operate outside Australia only because it carries out activities outside Australia (including providing funds to be used outside Australia) that are directly related to the pursuit of the registered entity’s purposes in Australia and merely incidental to its operations in Australia.”

To qualify for the incidental exemption, the activities outside Australia must be:

  • ‘directly related’ to the pursuit of a charity’s purposes in Australia, for example, beneficiaries located in Australia; and
  • not more than incidental when those activities are compared to the charity’s operations in Australia.

These requirements render the incidental exemption only applicable under very limited circumstances.  If you are unsure whether your charity’s overseas activities fall under this exemption, please contact us for detailed advice.

The ACNC regulates the External Conduct Standards in a similar way to their regulatory approach for the ACNC Governance Standards.  If your charity is already complying with the ACNC Governance Standards and also conducts or intends to conduct activities outside Australia or work with a third party outside Australia, the External Conduct Standards might mean additional compliance obligations for your charity as well because the External Conduct Standards specify some unique requirements to regulate overseas activities.

All registered charities operating outside Australia or working with a third party operating outside Australia should take time to understand the External Conduct Standards and how they affect their operation, and devise and implement an action plan to ensure they comply with the External Conduct Standards. This is likely to be a challenging and whole new experience for all registered charities, in particular, Basic Religious Charities that are used to being exempted from the ACNC Governance Standards.

To assist your charity to be External Conduct Standards ready, we will be publishing more articles on the External Conduct Standards and their compliance requirements shortly.

In the meanwhile, if you require further information or specific advice in relation to your charity’s activities and operation outside Australia, please do not hesitate to contact us.

Bill d’Apice, Partner | +61 2 9233 9013 | wdapice@makdap.com.au

Joanne Grant, Partner | +61 2 9233 9021 | jgrant@makdap.com.au

Zoe Wu, Lawyer | +61 2 9513 9529 | zwu@makdap.com.au

When an existing lease expires, a tenant may have the “option” to renew the lease. Essentially a tenant has the right to have a new lease granted to them on the same terms as the existing lease. However, the rent will be reviewed in accordance with the rent review terms of the existing lease.

So, what should a landlord be aware of when the initial term of a lease is coming to an end?

Here is a handy checklist for landlords:

  1. Option Notice Period: It is important to ensure that you have entered into your calendar the correct dates the tenant is required to exercise their option to renew the lease. Usually, there will be a window (for example, a window of 3 to 6 months before the terminating date of the initial term) when the tenant can provide notice exercising their option to renew the lease. If the tenant misses this window, then the option period lapses and you may have cause to refuse the grant of a new lease.
  2. Validity of the Notice to Exercise the Option Term: The existing lease will usually mandate and set out the formal requirements for notice of the exercise of an option term by the tenant, such as the required method for service of the notice. As surprising as it may sound, a notice can be deemed invalid based on such a technicality, so it is important to seek legal advice in this regard, if you are unsure.
  3. Ask Yourself – are there any Subsisting Breaches Under the Lease? A breach of an essential term of the lease can include, amongst other things, the tenant’s failure to pay rent, maintain the condition or permitted use of the property. If the breach is still subsisting at the time the tenant serves their notice to exercise the option, they may no longer have a right to a new lease term. In such an instance, you will be required to notify the tenant in writing of the breach within 14 days after the giving of a notice or within 14 days after the breach occurred if the breach occurred after the giving of that notice, in accordance with the relevant legislation. This is something worth considering in the lead up to an option term and certainly something worth seeking legal advice on.
  4. Acknowledgement of Notice and New Rent: It is important that you provide written acknowledgement to the tenant if you agree to grant the further term. You will then need to determine the new rent payable at the commencement of the option term, in accordance with the rent review terms. If, however, you decide that you do not wish to grant the further term to the tenant, then we would strongly suggest you seek legal advice, to ensure that the grounds for refusal are in line with the terms of the lease and any relevant legislation. This could potentially save you from any legal action by the tenant.
  5. Preparation of the Option Lease: It is essential that you engage your solicitor to prepare the lease for the new term, to ensure that the option lease terms are properly documented. Unless otherwise agreed to between the parties, the terms will be essentially the same as the existing lease.

In summary, the process for option leases can be a delicate and quite complex task for landlords. Ensure you are aware of all your legal rights and obligations by seeking legal advice prior to delving into the option lease process.

In the latest issue of the F&P (Fundraising & Philanthropy) magazine, Joanne Grant, Partner at Makinson d’Apice takes a look at the legislative and compliance requirements that will impact the charity and not-for-profit sector in the next 12 months.

Click on the image to read the article.

Most Australian entities will now be aware that the Modern Slavery Act 2018 (Cth) (Commonwealth Act) commenced on 1 January 2019.

However, you may not be aware that the NSW government has recently passed its own Modern Slavery Act 2018 (NSW) (NSW Act), which will commence on 1 July 2019.

Obligations under the Commonwealth Act

Under the Commonwealth Act, entities based or operating in Australia which have AU$100 million or more in annual global revenue must report annually on their efforts to address modern slavery in their operations and supply chains. “Modern slavery” constitutes things such as human trafficking and child labour.

Entities covered by the Commonwealth Act are required to provide a “Modern Slavery Statement” every year. The Minister will publish these on a Modern Slavery Statements Register, which is available to the public online.

In preparing a Modern Slavery Statement, a covered entity is required to:

  • identify the risks of modern slavery practices in their own operations and those of their supply chains as well as the supply chains of any subsidiary entities they may have
  • describe what actions the covered entity (and any subsidiary entities it may have) has taken to assess and address those risks; and
  • assess the effectiveness of such actions. Whilst the Commonwealth and NSW Acts have many similarities, the NSW Act has a wider range than the Commonwealth Act. It applies to entities which:

What will change under the NSW Act

Whilst the Commonwealth and NSW Acts have many similarities, the NSW Act has a wider range than the Commonwealth Act. It applies to entities which:

  • are not government agencies;
  • have employees in New South Wales;
  • supply goods and services for profit or gain; and
  • have a total turnover in a financial year of $50 million or more.

The requirements for Modern Slavery Statements under the NSW Act will be set out in regulations which are yet to be passed. However, the information required under the NSW Act is likely to be very similar to that required under the Commonwealth Act.

One of the criticisms of the Commonwealth Act is that it currently does not contain any penalties for non-compliance.

However, under the NSW Act, if an entity fails to prepare a Modern Slavery Statement under the NSW Act, the maximum penalty is $1.1 million.

How should you prepare for the NSW Act?

To prepare for the commencement of the NSW Act, you should consider whether there is any risk of modern slavery arising from your (and your subsidiaries’) operations, as well as those of their business partners and suppliers.

We would suggest that all entities do this, even if they believe that they are likely to be below the threshold for either or both of the Commonwealth Act and the NSW Act.

Some examples of NSW entities whose operations may be at risk of modern slavery are:

  • schools who have their uniforms manufactured by third parties overseas
  • importers of sea food from Thailand or Burma

Entities should also consider reviewing their contracts with third parties as to whether those contracts include a provision relevant to modern slavery.

Please do not hesitate to contact us if you have any questions about the Commonwealth Act or the NSW Act.