The following Article is from Bruce Gotterson’s regular article in Club Life
Members rights to financial records
If you ask people in the Club Industry whether a member can access and look at the financial records of the Club you will get as many saying yes as saying no. So what is the answer?
The answer is no but subject to the Corporations Act, the Registered Clubs Act and what a club’s constitution may say.
Usually Club Constitutions are silent on the issue but sometimes you see a provision which says that a member can access the financial records but only with the consent of the Board of Directors.
Under section 290 of the Corporations Act a director of a company has a right of access to the “financial records” of the company at all reasonable times.
Under section 247A of the Corporations Act a member can apply to the Court to access the books of the company. The books include financial records. The court may only make the order if it is satisfied that the applicant is acting in good faith and for a proper purpose.
However under section 316A of the Corporations Act members are able to request in writing to receive a copy of the annual Directors Report, the Auditors Report and the Financial Report. Previously clubs had to post or email these reports to members but now the member must apply in writing. The Club must send the full financial report not a concise report. The reports must be sent 4 months of the end of the financial year or within 21 days before the Annual General Meeting whichever is the earlier. So if for example a club had its financial year ending on 30 June and held its AGM on 30 October then the Club must send the reports to members who request copies no later than 7 October which is 21 days before the AGM. However if the AGM was held on 30 November then the Club must send the reports no later than 31 October which is 4 months after the end of the financial year.
Can members access and review any other financial records of the Club?
Clause 17(a) of the Registered Clubs Regulations provides:
“17. A registered club must:
(a) prepare, on a quarterly basis, financial statements that incorporate:
(i) the club’s profit and loss accounts and trading accounts for the quarter, and
(ii) a balance sheet as at the end of the quarter.”
Additionally, clauses 17(c) to (e) inclusive of the Registered Clubs Regulations provide:
“17. A registered club must:
(c) make the financial statements available to the members of the club within 48 hours of the statements being adopted by the governing body, and
(d) indicate, by displaying a notice in the form approved by the Director-General on the club’s premises and on the club’s website (if any), how the members of the club can access the financial statements, and
(e) provide a copy of the financial statements to any member of the club or the Director-General on the request (in writing) of the member or the Director-General”
Previously a club had to place on the Clubs Notice board a copy of quarterly Income and Expenditure statements for the preceding quarter. However under the new requirements the Club only needs to display a notice on the notice board and on its web site (if it has a web site) advising members how they can access the financial statements. The financial statements themselves do not need to go up on the Notice Board.
For advice on issuing Members’ requests, financial statements and AGMs please contact Bruce Gotterson on b.gotterson@pigott.com.au.
This article is intended to provide general information in summary form on a legal topic, current at the time of publication. The contents do not constitute legal advice and should not be relied on as such. Formal legal advice should be sought in specific circumstances.