Proposal Part 1

Incorporation of the Australian Lithuanian Community and updating its Constitution
A report by the Incorporation Working Group set up by the Federal Executive of the Australian Lithuanian Community
15 December 2016 

Part 1: Introduction, rationale and explanatory notes

 Part 2: Proposed Constitution

Part 3: Current Constitution in Lithuanian & English

 

Forward

1

 

Executive Summary

The Federal Executive of the Australian Lithuanian Community (ALC) has prepared this proposal to incorporate the ALC and bring its constitution up-to-date.

 

Incorporation

The reasons for incorporating the ALC stem from the short comings of not being incorporated. These include:

  1. it is difficult to get insurance to cover the members of the group if, for example, somebody is injured at an event organised by the group;
  2. all the members of the group are personally liable should someone be injured at an event organised by the group;
  3. any member who enters into a contract on behalf of the group with another party is personally liable under that contract; and
  4. it is very difficult and complicated for the group as a whole to own any property.

Being incorporated:

  1. limits the liability of members in general and of the office holders in particular;
  2. allows the organisation to obtain insurance cover readily;
  3. allows the organisation to own property in its own right.

After considering several options a company limited by guarantee and registered with the Australian Charities and Not-for-Profits Commission (ACNC) as a charity was considered to be the most suitable option.

 

Constitution

While this task started as putting together a proposal for the incorporation of the ALC, it quickly became apparent that the bigger task was to update the ALC’s constitution.

While an effort was made to replicate many of the practices and procedures in the current constitution it was not possible or thought desirable to replicate everything. The most significant change was brought about by the fact that most Lithuanian organisations in Australia are now incorporated. To accommodate this situation it was decided that an incorporated ALC should be an organisation of member organisations (a peak body) rather than an organisation of individual members.

Incorporation itself will mean that some things have to change. First, the constitution is drafted in English rather than Lithuanian, as, to be incorporated the ALC will have to provide its constitution in English. However, that does not mean that meetings and records cannot be in Lithuanian.

Secondly, in an incorporated organisation, the supreme decision making body

is the members of the organisation in general meeting.  In both our current and proposed constitutions the Federal Council has ex officio members as well representatives of the members. Accordingly, only the representatives of member organisations on Federal Council, not the ex officio members, will be able to vote on some issues. These issues include changing the new constitution and electing the Federal Executive.

Then there were other changes which were thought to be desirable. First, given that membership fees (solidarumo mokesčiai) paid to the ALC are a very small proportion of the ALC’s income, most of which comes as grants from the Australian Lithuanian Foundation, and most regional communities are strapped for cash, membership fees have been removed. However, they can be reintroduced if the need arises.

Secondly, the Court of Honour (Garbės Teismas) has been renamed the Advisory Council. Its duties are now to interpret the new constitution and mediate any disputes referred to it in relation to the operation and application of the constitution.

Thirdly, there was considerable discussion about how many delegates regional communities can send to the Federal Council. In the end it was decided to propose a modified version of what is in the current constitution.  That is, regional communities can send one delegate for each 25 of their members to a maximum of 5 delegates.

Finally, while the Federal Executive is still to rotate through Melbourne, Sydney and Adelaide, Federal Executive members:

  • do not all have to be from that location; and
  • may remain on the Federal Executive for more than one term.

 

Motion

That the unincorporated Australian Lithuanian Community:

  1. incorporate as a company limited by guarantee;
  2. adopt the constitution proposed in the document Incorporation of the Australian Lithuanian Community and updating its constitution dated 15 December 2016; and
  3. seek registration with the Australian Charities and Not-for-Profits Commission (ACNC) as a charity.

 

Incorporation

The fundamental question: why incorporate the Australian Lithuanian Community? 

This is the question Federal councillors and the community at large will want answered.

Some of the short comings of being a group of people with a common interest in working together are:

  1. it is nigh on impossible to get insurance to cover the members of the group if, for example, somebody is injured at an event organised by the group;
  1. all the members of the group, particularly the members of the Federal Council and the Federal executive, are personally liable should someone be injured at an event organised by the group;
  1. any member who enters into a contract with on behalf of the ALC with another party is personally liable under that contract. For example, a member may enter into a hiring agreement for basketball courts for a particular event with the owners of the basketball courts. At the end of the day that member is personally liable for all the obligations of the ALC under that contract; and
  • it is very difficult and complicated for the group as a whole to own any property.  This may not be a problem for a small items, for example a flag or other gift from a visitor from Lithuania. However, if the ALC wanted to acquire significant property, for example a Būstinė, either:
  • all of the members at the time would have to have their names on the title; or
  • a number of members would have to acquire the property on trust for all of the members.

Limiting members’ liability is an important reason for incorporation. The world has changed considerably since the ALC and its Council and Executive were formed. We now live in a much more litigious world where, if something goes wrong, people look to blame somebody else so that they can claim compensation.

Incorporation is not an abrogation of responsibility, because, once incorporated the ALC can be insured. So any person injured as a result of an incorporated ALC’s activities will be able to claim compensation through the incorporated ALC’s insurance rather than from the pockets of the councillors, the Federal Executive members or, possibly, even general members.

For those that are interested here are 2 websites which talk about why a group should consider incorporation:

  • ‘Justice Connect Not-for-profit Law Legal advice, training and information for charities and not-for-profits’ (http://www.nfplaw.org.au/incorporationdecision) setting out the 3 main advantages of incorporation for non-profit community organisations.

Legal Liability

While the probability of being sued may be remote, in the unlikely event that it happens, the results could be catastrophic for the individuals concerned.

Most people volunteering for committee positions should feel more comfortable with the additional protection provided by incorporation and insurance.

It has been said that the ALC has a minimal risk of liability for injury because it only has a coordinating role in the Australian Lithuanian Community. This is not correct.

The current constitution created one organisation and to manage this organisation it created the Federal Council, the Federal Executive, regional communities and their committees etc. The important point is that there was only one organisation.

While most of the regional communities have since incorporated Adelaide, at least, has not and remains part of the ALC as defined in the original constitution. The Adelaide community organises functions and so is at risk of somebody being injured at one of those functions.  In that case all of the members of the ALC are potentially liable to contribute to the compensation for the injury.  In particular, because they can be easly identified,  the members of all of the governing committees from the Adelaide community’s committee to the delegates of the Federal Council.

Also, the ALC, through the Federal executive organises meetings of the Federal Council. Should somebody trip over a computer cord or a wastepaper basket during the Federal Council meeting, they may wish to seek compensation for their injury. Again all of the members of the ALC are potentially liable to contribute to that compensation.

It is not sufficient to say that the claim will be made against the incorporated organisation that owns the property in which the accident occurred, rather than the uninsured unincorporated association organising the function. Even if it were the case that the claim was brought against the insured, incorporated property owner, its insurers may decide to recover some or all of their expenses from the unincorporated, uninsured organisation which organised the event.

Acting honesty and with integrity and diligence may not be enough

 The starting premise must be that all those of our community who are involved with the management of the community act honestly and with integrity and diligence.

Those that don’t act with the required degree of probity will not be protected by incorporation or insurance. In fact, if their action is sufficiently dishonest then it may well bring criminal charges.

On the other hand, acting honestly and with the best intentions does not absolve a person from legal liability. One may be found to have been negligent even though they acted honestly and with the best intentions. This could happen because of an oversight, an accident or a finding that their best intentions were not good enough. And for these types of events there is insurance.

Ownership of property

The ALC does in fact have property in the form of the archival material in Adelaide. While this may not have any significant monetary value it does have significant cultural and historical value.

While the beneficial owners of this material should be the members of the current unincorporated ALC, it is not clear who the legal owner is. Is it the current head of the archive on trust for the general membership of the ALC? Could it be the community which is housing this material? Or somebody else?

The Australian Lithuanian community is familiar with incorporation

A search of the Australian Securities and Investment Commission’s (ASIC) website for associations and companies with ‘Lithuanian’ in their name shows that there are 21 incorporated associations and 5 companies currently registered.  No doubt there are other associations and companies with connections to Lithuanians without ‘Lithuanian’ as part of their name.

The following are some of the Australian Lithuanian organisations which are incorporated associations in their State or Territory:

  1. Australian Lithuanian Community – Sydney Incorporated.
  2. Australian Lithuanian Community in Melbourne Association Inc.
  3. Lithuanian Association of Western Australia Inc.
  4. Lithuanian Geelong Community Association Inc.
  5. The Canberra Lithuanian Community Association Inc.
  6. The Father Bačinkus Lithuanian Cultural Association Inc.
  7. Adelaide Lithuanian Society Incorporated

 

Of the five companies, 4 are public companies limited by guarantee and one (TALKA) is a public company limited by shares. The 4 companies limited by guarantee are:

  1. Australian Lithuanian Foundation
  2. Lithuanian Club Limited [Sydney]
  3. Lithuanian Community Publishing Society Limited.
  4. The Lithuanian Club in Melbourne.

Accordingly, the question of incorporation of itself should not be a concern to the community at large.

Options for incorporation

There are 2 options for incorporation: an incorporated association and a company.

An incorporated association. 

Most cultural, sporting and community clubs and groups incorporate as an incorporated association in their respective State or Territory. Incorporation and ongoing reporting as an incorporated association are relatively simple.

Incorporated associations are non-profit organisations.  That does not mean they cannot operate at a profit, it merely means they are not allowed to distribute profits or capital to their members.

Incorporated associations must have at least 5 members at all times.

Incorporated associations do not require a registered office (a physical address to which correspondence can be sent), but will require a public officer who lives in the state or territory of incorporation.

If an incorporated association goes broke the members do not have to pay anything.

However, an incorporated association is limited to dealing only within the State or Territory in which it is incorporated. For an incorporated association to operate throughout Australia it must also be registered with the ASIC as a Registered Australian Body. This registration process and the ongoing commitments are not onerous.

A Registered Australian Body must have a registered office (a physical address to which correspondence can be sent).

A company

The 2nd option is a company registered with ASIC.  These can operate Australia wide.

All companies must have a registered office.

Most people associate shares and the stock exchange with companies. Shares mean that each member owns at least one share in the company and can participate in the profits of the company.

Private companies (those who have Proprietary Limited or Pty Ltd as part of their name) can have up to 50 members.

Public companies limited by shares (those with just Limited or Ltd. as part of their names) can have an unlimited number of members.

With both of these types of companies, if the company goes broke the shareholders don’t have to pay any more, they just loose what they paid for their share/s.

Neither of these companies is suitable for our purposes.

Another type of company is a public company limited by guarantee.  Instead of shares, each member agrees to contribute a small amount (say $1 or $10) if the company goes broke.

Unless it is set up as non-for-profit charity, a public company limited by guarantee must have Limited or Ltd. as part of its name.  It is probable that an incorporated ALC would qualify as a charity for cultural purposes and be registered with the Australian Charities and Not-for-profits Commission (ACNC).

The cost and complexity of setting up a public company limited by guarantee is similar to that of an incorporated association.  With a ‘small’ not-for-profit public company limited by guarantee the ongoing obligations are not expensive or complex. And even less so, if registered as a charity with the ACNC.

For more detail please have a look at the document entitled ‘Incorporated association or company limited by Guarantee?’ http://www.nfplaw.org.au/sites/default/files/media/Incorporated_association_or_company_limited_by_guarantee_SA_0.pdf) published by the Not-for-profit Law Information Hub. This particular document is based on SA law, but if you would like to see others based on other state or territory laws go to: http://www.nfplaw.org.au/legalstructure and scroll down. There are minor variations in relation to incorporated associations as they are created by state and territory law, but none in relation to companies limited by guarantee as they are created by federal law.

Those who would like more reading could have a look at the Not-for-profit Law Information Hub (http://www.nfplaw.org.au/) or the ACNC (http://www.acnc.gov.au/) websites.

As an aside, a search of the records of the ACNC found the following charitable organisations with ‘Lithuanian’ as part of their name:

  1. Australian Lithuanian Foundation
  2. Lithuanian Caritas Incorporated
  3. Lithuanian Chaplaincy of the Catholic Archdiocese of Melbourne
  4. Lithuanian Women’s Association of South Australia Inc.
  5. Sydney Lithuanian Women’s Social Services Association as the operator of a PBI
  6. Sydney Lithuanian Women’s Social Services Association.

Cost of incorporation

Set up Costs

Assuming one of our number does the leg work, the cost of creating:

  • an incorporated association is about $200 depending on the state or territory one is incorporating in; and
  • a company limited by guarantee is about $400.

Ongoing costs and obligations

The additional reporting requirements and costs will not be great. The following is a brief summary of these requirements:

A company limited by guarantee and registered with ASIC only

Unless it is obliged to by its constitution, directed by its members or ASIC a small company limited by guarantee does not have to:

  • prepare a financial report or have it audited;
  • prepare a director’s report; or
  • notify members of annual reports.

 

A small company limited by guarantee is defined as one which:

  • is a company limited by guarantee for the whole of the financial year;
  • is not a deductible gift recipient at any time during the financial year; and most importantly
  • its revenue for the financial year is less than $250,000.

It will have to pay an annual review fee, currently $47 on ‘lodging’ its annual review. Currently, this process involves ASIC sending details of relevant information it has on file for the company, the company checking those details and if nothing has changed, merely paying the $47. If something relevant has changed then the company has to provide the updated information.

There will also be a requirement to advise ASIC when the officeholders change (i.e. when the Federal executive of the ALC changes); the registered office changes or there are changes to the constitution. Currently fees for these are:

  • no fee if the change of address is notified within 28 days of the change taking place;
  • no fee if the change to the constitution is notified within 14 days of the change taking place;
  • no fee if the change of officeholders is notified within 28 days of the change taking place.

All of these changes can be notified online.

A company limited by guarantee and registered with ASIC and the ACNC

Like the previous category, unless it is obliged to by its constitution, directed by its members or ASIC a small company limited by guarantee and registered with ASIC and the ACNC does not have to:

  • prepare a financial report or have it audited;
  • prepare a director’s report; or
  • notify members of annual reports.

.A small company limited by guarantee and registered with ASIC and the ACNC has to notify the ACNC of changes to its officeholders, address and constitution within 60 days of the changes taking place. Late lodgement may incur an administrative penalty.

A small company limited by guarantee and registered with ASIC and the ACNC has to lodge annual information statement containing or confirming information about its officeholders, address, constitution activities and some basic financial information. Again this can be done online.

An association incorporated in a State or Territory.

Unless it is obliged to by its constitution, directed by its members or required by law (apart from the association’s incorporations legislation in the particular state or territory) small associated incorporations are not required to have their accounts audited. The following table sets out what is a small associated incorporation in various states and territories:

State or Territory Gross income* Assets* Members*
Victoria Less than $250,000
New South Wales Less than $250,000
Queensland Less than $20,000 Less than $20,000
South Australia Less than $500,000
Australian Capital Territory Less than $400,000 Less than $400,000 More than 1000 members
*In any particular financial year

Needless to say the incorporating authority in each state and territory will need to be informed of any changes to the address, officeholders and constitution of the incorporated association.

Also, incorporated associations have to lodge an annual report to their incorporating authority.

Many of these notifications do not attract a fee but where they do they are less than $100 each.

While this is not a comprehensive list of all the possible ways in which the ALC could be incorporated it fairly indicates that the annual obligations and costs of audit and reporting are not onerous. As pointed out earlier there are 5 Lithuanian organisations that are companies limited by guarantee, one of which is a registered charity on the ACNC register. There are also about 20 different Lithuanian incorporated associations on the ASIC register. These appear to manage these costs and obligations without much difficulty.

Recommendation

Registering under any of the various state or territory’s Associations Incorporation legislation presents various problems. First, such an entity cannot, without more operate in other States or Territories. Secondly, it will prompt a discussion from the various regional communities as to which state or territory it should be incorporated in.

For these and other reasons the preference is for a company limited by guarantee and registered with the Australian Charities and Not-for-Profits Commission (ACNC) as a charity. A company limited by guarantee can operate Australia wide and can have its registered office anywhere in Australia. Registration as a charity with the ACNC reduces the reporting requirements and does not require annual general meetings meaning the ALC can continue with biennial Federal Council meetings.

 

Constitution

Explanatory notes on the Draft Constitution

Introduction

  1. The following is a series of notes to:
    • explain what some of the clauses in the proposed constitution mean, and
    • why they were proposed in that particular way.

Hopefully these notes will make be the constitution easier to understand.

Preliminary

  1. We need a new constitution because most of the ‘member organisations’ of the unincorporated ALC have become incorporated and the current constitution no longer applies to these incorporated bodies.

For those who may not familiar with the detail of the current constitution the following starts with what was intended by the drafters of the original constitution and how we arrived at the position we are now faced with.

The drafters of the current constitution envisaged one organisation in which all individual Australian Lithuanian’s were members. To manage this organisation and its membership they provided for the Federal Council, the Federal Executive, regional communities and their committees, Auditors’ Commissions at federal and regional levels, Cultural and Educational Councils, the Court of Honour, the Australian Lithuanian Foundation, the Lithuanian Community Publishing Society and the Lithuanian Information Centre (the Archive).

They then provided a whole set of rules as to how all of these committees, councils, communities, commissions etc. should interact.

The important point is that there was only one organisation. The regional communities, the Australian Lithuanian Foundation and the Lithuanian Community Publishing Society etc. were not separate organisations. They were merely parts of the one ALC organisation.

In this single organisation individuals were members and regional executive committees collected the membership fees and maintained the membership registers.

Over time and for various reasons, parts of the original ALC organisation became incorporated. These parts include most of the regional communities, the Australian Lithuanian Foundation and the Lithuanian Community Publishing Society.  So now we have the situation where we have multiple organisations, the ALC and the remaining unincorporated regional communities being one of the these organisations and the incorporated regional communities, the Australian Lithuanian Foundation Ltd and be Lithuanian Community Publishing Society Ltd among the others.

The separately incorporated organisations do not fit within the current constitution. However, in practice, life has mostly gone on as before with everyone pretending that the incorporated organisations and, in particular regional communities, are part of the unincorporated ALC.

Further, the individual members of the incorporated regional communities are not automatically members of the ALC because the incorporated regional communities and the unincorporated ALC are separate organisations.

 In short, the current constitution does not adequately deal with the fact that most of the regional communities and other organisations are now incorporated.

  1. The template for this proposed constitution was taken from the Australian Charities and Not-for- Profits Commission’s (ACNC) website. For those that would like to have a look at the website here are the links:
  1. You will note that the style of the proposed constitution is completely different to the style of our current constitution. It goes into much, much more detail on almost every issue and tries to provide for most conceivable circumstances.

 

This is the current style of a constitution drafted by lawyers and it’s certain the ACNC had lawyers prepare the template. While this style be somewhat tedious to go through, it is well set out and reasonably easy to read.

  1. This constitution is for:
    • a company limited by guarantee,
    • set up as a charity, and
    • registered with the ACNC.

Two features of this type of company are:

  • it can operate throughout Australia; and
  • does not have to have annual general meetings meaning that we can continue having our biennial Federal Council sessions.
  1. Most are familiar with companies that have shares. To become a shareholder in that type of company one has to be issued or buy shares. On the other hand, a company limited by guarantee is one where, on becoming a member the member guarantees (promises) that, in the event the company is wound up because it cannot pay its debts, the member will contribute a set amount towards covering the shortfall. In this case the amount has randomly been set at $10. And that is the limit of the member’s liability.
  1. As the company will be registered under Australian law and the official language of Australia is English, the constitution is drafted in English. Further, all reporting to the authorities will have to be in English. This is no different to what all the other incorporated Lithuanian organisations in Australia have to do at the moment. However, this does not mean that we cannot hold our meetings, take minutes and make other records in Lithuanian.

Object, purposes and powers

 

  1. Clause 6.1 states that the object of the ALC is to pursue some broad purposes. Several things arise here. First, the critical word is ’pursue’. This means the object of the ALC is to work towards achieving these purposes. It does not require the ALC to actually achieve all of them. In fact, they are so broad that actually achieving them is impossible.

Secondly, while the stated purposes reflect what the ALC currently does it also leaves room for it to do other things if the need arises. For example, clause 6.1 (b) allows the ALC to organise cultural, social and sporting activities.  It is possible, that with our diminishing membership, organising the Australian Lithuanian Days may become too much for any one regional community and so may fall on the ALC to garner resources nationally to organise it.

  1. The order in which these purposes are listed in clause 6.1 has been chosen, in part, to assist in obtaining registration as a charity by the ACNC.
  1. While clause 6.1 states the broad purposes, in clause 6.2 we can provide examples of specific things which these broad purposes include. By stating these are specific things it makes it clear that these things are important and are specifically included.
  1. While the purposes set out what the ALC is striving to achieve, the powers set out what it may do in achieving those purposes. Clause 7 states that an incorporated ALC would have the powers of an individual and a company limited by guarantee.

An individual and a company limited by guarantee have the powers, among other things, to:

  • have a bank account,
  • own and rent property,
  • enter into contracts,
  • take out insurance,
  • apply for and accept grants.
  1. Clause 7.2 states that an incorporated ALC cannot interfere in the administration and running of member organisations.
  1. As a charity the ALC would have to be a not for profit organisation. This does not mean that it cannot make a profit on its activities, it merely means that it cannot distribute income or assets to its members except in limited circumstances set out in clauses 8.2 and 76.

For example, a not-for-profit organisation may hold a function and earn more from the function than it cost to run the function. That is, it may make a profit on organising and running the function. However, as a not for profit organisation it cannot share that profit with its members.  The profit must remain in the organisation to help finance other activities it organises in pursuing its purposes.

  1. Clause 9 states that the constitution can only be amended by the 75% of the member organisations passing a special resolution to change the constitution.

Members and membership

  1. In the Incorporation Working Group there was some discussion as to whether the members of the ALC should be individuals or organisations. If individuals, there are difficulties created by the fact that most regional communities are now incorporated. These difficulties include the fact that individual members of the incorporated regional communities are not automatically members of the ALC. There are possibly 2 ways to overcome this. First, each individual would have to separately apply for membership of the ALC as well as their regional community. Secondly, the incorporated regional communities could amend their membership application and renewal forms so that when individuals sign up for membership or renewal of membership they are also signing up for membership of the ALC. In both of these cases it would require the ALC to keep a separate register of individual members.
  1. Given that most of our regional communities and many other Lithuanian organisations are incorporated it is proposed that and incorporated ALC should be an organisation of organisations, a peak body. That is:
    • an association of smaller groups with similar interests as its members, and
    • established to act on behalf of all members in promoting the interests of its members.

However, in doing this we should strive to replicate the intent of the current constitution as far as membership goes. That is, limit ourselves to dealing specifically with the regional communities, the Australian Lithuanian Foundation, the Lithuanian Publishing Society Ltd and the Australian Lithuanian Sports Federation (ALFAS) and providing a mechanism for other organisations to join the ALC.

These existing ‘members’ fall into 2 groups, the regional communities on the one hand and the special or single interest organisations on the other.

The process of incorporating the ALC will involve some (preferably, all) of these current ‘member’ organisations signing up as ‘initial members’ of the incorporated ALC. If only some sign up as ’initial members’ then there needs to be a mechanism to allow the others to join later.

  1. Clause 10 was drafted with all of this in mind. Clause 10.1 allow regional community organisations:
    • with any number of members, however small or large, and
    • whether incorporated or unincorporated to be member organisations of an incorporated ALC.

This allows for organisations like the Seniūnijos in the current constitution to be member organisations of an incorporated ALC.

Clause 10.2 allow other organisations to be member organisations as Special Interest Members. These organisations include the Australian Lithuanian Foundation, the Lithuanian Publishing Society Ltd and ALFAS.

  1. Clause 10.3 indicates that as a national peak body the membership of an incorporated ALC should be limited to organisations that:
    • at a regional level represent a significant group of individuals, or
    • at a national level represent a group of other organisations.

Local groups, such as local sporting groups, should seek to participate in the ALC through the regional community organisations, the regional sporting organisations or ALFAS.

  1. Clauses 11 to 15 deal with how organisations can become members of an incorporated ALC.

The Federal Council

  1. Clause 18.1 replicates the composition of the Federal Council in the current constitution.

Note that:

  • paragraphs (a) to (f) refer to ex officio members of Federal Council,
  • paragraph (g) to the President of each member organisation whether that be a Regional Community Member Organisation or a Special Purpose Member Organisation, and
  • paragraph (h) refers to the delegates elected by each Regional Community Member.

These distinctions will become important later.

  1. Clause 19 deals with delegates to the Federal Council.
  1. Clause 19.1 states that Special Interest Members are to be represented at Federal Council by the President or his or her nominee under clause 18.1(g). They are not to have any delegates. This reflects what is in the current constitution.
  1. Clauses 19.2 to 19.8 deal with delegates of Regional Community Member Organisations. This is possibly the most discussed issue in this proposed constitution. The options discussed included each Regional Community Member Organisation having;
    • a fixed number of delegates, and
    • a number of delegates in proportion to its membership.

Further, the fixed number of delegates could be the same for each member organisation or different for different member organisations.

The discussion also raised the issue of whether actual financial membership of a Regional Community Member Organisation reflects the number of people actively involved in that community or the number of people of Lithuanian heritage or association living in that region.

Further, if, as is proposed, the ALC can admit new Regional Community Member Organisations then there needs to be a formula for calculating how many delegates that new member may have.

As amended in 2012, the current constitution states that:

  • each regional community may have at least one delegate for every 20 of its members, and
  • Seniūnijos are to be represented by their president only.
  1. Clause 19.3 of the proposed constitution reflects this current position except that:
    • each Regional Community Member Organisation may have at least one delegate for every 25 (not 20) of its members, and
    • the maximum number of delegates each Regional Community Member can send is 5.
  1. Clause 19.5 provides that the Federal Executive may verify the number of members each Regional Community Member Organisation has by inspecting the Regional Community Member Organisation’s membership records.
  1. Clause 21 replicates the current constitution in relation to the presidium of the Federal Council.

Distinction between the Federal Council and members in general meeting

26. Under the Corporations Act the supreme decision making body of all incorporations, however incorporated, is the members of the incorporation in general meeting. We are all familiar with annual general meeting of incorporations whether they be companies listed on the stock exchange or local sporting groups. At these annual general meetings the management of the incorporation reports to the members and only the members vote to accept (or not) the reports and on other prescribed or important issues. On other occasions, when important issues need to be decided (for example, whether or not to change the constitution of the incorporation) special general meetings are held. Again, at these meetings, only the members vote on the issues. The management, the auditor, the lawyer, in fact, everybody who is not a member or a member’s representative, does not get a vote.

  1. This means that the Federal Council as constituted under the proposed constitution and the ‘members in general meeting’ under the Corporations Act are not one and the same. That is, there may be decisions which can only be made by the members in general meeting. If so, the following members of Federal Council would not be able to vote on those decisions, unless they were also Member Organisation Representatives:
    • members of Federal Executive,
    • the President of the Advisory Council or his or her nominee,
    • the President of the Audit Committee or his or her nominee,
    • the head of the association’s archive or his or her nominee
    • the association’s representative on the Commission of the Lithuanian Republic Parliament and Lithuanian World Community,
    • the delegates to the World Lithuanian Community Parliament.
  1. The main aspects of the proposed constitution affected by this are:
    • clause 27 dealing with the quorum at Federal Council sessions, and
    • clause 34 dealing with how many votes a councillor has at Federal Council sessions.
  1. If the incorporated ALC is registered as a charity under the Australian Charities and Not-for-Profit Commission Act this distinction may not apply. However if the incorporated ALC is not registered or ceases to be registered as a charity under the Australian Charities and Not-for-Profit Commission Act then this distinction will have to be taken into consideration when determining whether or not a quorum exists at Federal Council and who can vote at the Federal Council.
  1. Clauses 27 and 34 have been drafted with this in mind.

Federal Council sessions

31. Clauses 23 to 31 deal with different aspects of the Federal Council sessions, most of which are straight from the ACNC’s template and do not require any comment. However 2 aspects do require comment.

  1. First, under Corporations Act, incorporations are required to hold annual general meetings at which the management of the incorporation can report to the members and the members can vote to accept (or not) the reports and to vote on other prescribed or important issues. However, under our current constitution we meet biennially. While this difference between our current practice and the requirements of Corporations Act may cause some consternation there are 2 ways to accommodate it.

One way is that while the incorporated ALC is registered as a charity with the ACNC it does not need to hold annual general meetings provided it otherwise communicates regularly and effectively with its members. The current proposal is to have the incorporated ALC registered with the ACNC and so we should be able to continue on as before.

If this is not possible, clause 29 of the proposed constitution provides that a Federal Council session may be held at 2 or more venues using any technology that gives the councillors as a whole a reasonable opportunity to participate including to hear and be heard. Therefore, in the years when there are no Australian Lithuanian Days a Federal Council session could be held using technology such as Skype. If the session limited itself to the minimum technical reporting requirements of an annual general meeting it should over and done with within half an hour or an hour at the most.

  1. Secondly, the quorum at Federal Council sessions. The current constitution provides that:

A quorum [at Federal Council] shall comprise an absolute majority of the delegates (a half plus one).  If a quorum cannot be formed the meeting shall take place 30 minutes after the appointed time, provided that 1/4 of all the Federal Council delegates are present.

In short, it provides for 2 quorums. The preferred quorum being an absolute majority of the delegates but if that cannot be formed within 30 minutes after the appointed starting time 25% of the delegates is enough to form a quorum. Presumably, if the 2nd quorum can’t be formed the meeting is cancelled.

Clause 27 of the proposed constitution replicates and extends this situation. It was thought that as:

  • delegates and other councillors will have travelled from far and wide to attend the biennial Federal Council session; and
  • the biennial Federal Council session cannot be adjourned to the next year without being in breach of the proposed constitution and probably the Corporations and the ACNC Acts

it is preferable to have the meeting go ahead with a reduced quorum rather than have it  cancelled.

Councillors’ resolutions and statements

  1. Clauses 31 and 32 state Federal councillors may propose resolutions and have those proposals and supporting statements distributed to members. Again this comes directly from the ACNC template and does not reflect anything in the current constitution.
  1. Clause 33 of the proposed constitution is a different version of clause 16 in the current constitution which provides Federal Council may determine issues by correspondence without the need for convening an extra ordinary session. It seems to indicate that such a ballot by correspondence only requires a simple majority to succeed.

Clause 33 of the proposed constitution goes into a little more detail and, includes electronic communication as correspondence. However, it requires an absolute majority for a resolution to succeed.

  1. Note that a ballot by correspondence or, as it is called in the proposed constitution, a circular resolution, cannot be used to replace an annual general meeting.

Voting at the Federal Council sessions

37. As mentioned in paragraphs 26 and 27 above, the Federal Council as constituted under the proposed constitution and the ‘members in general meeting’ under the Corporations Act are not one and the same.

  1. This gives rise to the greatest change from the current position. Under the current constitution all members of Federal Council get a vote. Under the proposed constitution only the representatives of member organisations get a vote where the law requires that an issue must be decided by the members in general meeting. This means that, in those circumstances, none of the following councillors can vote on Federal Council, unless they are also a representative of a member organisation:
    • members of Federal Executive,
    • the President of the disputes resolution committee or his or her nominee,
    • the President of the Audit Committee or his or her nominee,
    • the head of the association’s archive or his or her nominee
    • the association’s representative on the Commission of the Lithuanian Republic Parliament and Lithuanian World Community,
    • the delegates to the World Lithuanian Community Parliament.

Clause 34 of the proposed constitution sets out this position.

39. Clause 38 represents the current position that proxy voting is not permitted.

Elections

  1. Clause 39 has been taken from the current constitution and adapted slightly to fit.

Federal Executive

  1. Clauses 40 through to 59 of the proposed constitution deal with the Federal Executive and its operations. Most of this is taken from the ACNC template and adapted to our current practice. As you will see, it goes into considerable detail on all sorts of issues. You will find most of these clauses or, something very similar, in relation to directors and their meetings in most modern company constitutions.

 42. Two main issues arise. First the location and composition of the Federal Executive. With our communities dwindling it will become more difficult to have a Federal Executive made up of members all located in the same city.

 Under the current constitution the Federal executive rotates through Melbourne Adelaide and Sydney. Clause 41 replicates this situation.

It is important that all regional communities have an opportunity to participate in the Federal executive. If it were located in one place there is the possibility that other regions could feel that they were being left out.

While the Federal Executive should be hosted in different locations, it should not have to limit its membership to people in that location.

Further, with the advances of communication technology, it is less important that all members of the Federal Executive be co-located.

 43. Secondly, having a completely new Federal Executive every 2 years makes strategic planning nigh on impossible. Again, because our communities are dwindling, we are entering a period of significant change and longer term strategic planning is needed to adapt to these changing circumstances.

 The most significant change proposed in this part of the proposed constitution relates to the terms of Federal Executive members.

 Instead of all Federal Executive members having to retire at each biennial Federal Council session the proposed constitution only requires half of them to resign, with the remainder staying on until the next Federal Council session.

Allowing some Federal Executive members to stay on to the next Federal Executive will provide some continuity and allow some longer term strategic planning to be done and implemented.

Please note, this does not stop all Federal Executive members resigning at a biennial Federal Council session and allowing a completely new Federal Executive to be elected.

This change to the terms of office of Federal Executive members it is in clause 44 of the proposed constitution. You will also see that clause 44 does not allow a Federal Executive member to remain on the Federal Executive indefinitely. It states that Federal Executive Members must retire at least once in every 4 years.

  1. Another change is that the section in the current constitution dealing with cultural and educational matters has been moved to clause 47.2 which states that the Federal Executive may form Cultural and Educational subcommittees to foster, coordinate and support cultural and educational activities.

 Reporting to the Federal Council

45. While a corporation registered with the Australian charities and not for profits commission does not have to have annual general meetings, it must report to its stakeholders regularly. Hence, the requirement in clause 50 that the Federal Executive provides a written report to the councillors every year.

 

Audit committee and external auditors

46. Clause 62 is, by and large, taken from the current constitution and requires the audit committee to audit the financial books and records of the ALC at least every 2 years before the biennial Federal Council session.

This is important in the light of clause 63 of the proposed constitution which states that the incorporated ALC does not need an external auditor unless required by law or contract or otherwise deemed necessary by the Federal executive.  This situation may arise if the ALC becomes a large organisation when the Corporations Act and the ACNC Act may require external auditors. Or, if the ALC applies for a grant, it may be a condition of the grant that its financial records are audited by an external auditor.

  1. A small company limited by guarantee registered under the Corporations Act is not required to have outside auditors. Nor is a small incorporated charity under the ACNC Act. To this extent the position remains the same as it is under the current constitution.

However it is always prudent to have somebody independent look over the financial books and records prepared by management. Hence the requirement for the audit committee to audit the financial books and records at least once every 2 years.

 Advisory Council

 48. Clause 64 creates an Advisory Council to replace the Court of Honour in the current constitution. The advisory Council’s role is to interpret the constitution and to help mediate any disputes referred to it. Note, that the disputes are limited to disagreements under the constitution between members and other people in the incorporated ALC. It does not involve mediating any and all disputes between people of Lithuanian heritage or association in Australia.

 Constitutional interpretation and dispute resolution

  1. Three types of dispute resolution are commonly used to resolve disputes. These are the courts, arbitration and mediation. The courts are organs of set up by National and State constitutions and financed by governments. Arbitration and mediation, on the other hand, are most often private arrangements and are often included in contracts to resolve any dispute that may arise. Arbitrations can be binding on the parties involved, or not, depending on how they are set up. In mediation, a mediator tries to have the parties resolve the dispute without making any decisions as to who may be right or wrong. Mediation is the simplest and cheapest way of attempting to resolve a dispute.

Clause 65 in the proposed constitution imports a mediation clause from the ACNC’s template constitution. Note that it is limited to resolving disputes related to the membership or operation of the ALC. It does not purport to allow mediation of disputes between members on completely unrelated issues.

Australian Lithuanian Foundation and Lithuanian Community Publishing Society

  1. Clauses 67 and 68 have been added so as to retain the current status of the Australian Lithuanian Foundation and the Lithuanian Community Publishing Society within the incorporated ALC

Archive

53. Clause 66, by and large, repeats what is in the current constitution about the archive.

Membership fees

54. Of the $3 the ALC receives for each individual member of a regional community it keeps $2 and sends $1 to the World Lithuanian Community.

Given that the membership fees are:

  • a very small proportion of the ALC’s income, most of which comes as grants from the Australian Lithuanian Foundation, and
  • most regional communities are strapped for cash it was decided to do away with membership fees.

This does not mean that an incorporated ALC cannot raise membership fees in the future. Clause 69 states that as at the making of the constitution there are no membership fees. However, it does allow the Federal Council to set membership fees in the future.

55. This means the Federal Executive has to come up with a dollar amount to send to the World Lithuanian Community for each individual member of a regional community that satisfies the requirements of the World Lithuanian Community’s constitution.

By-laws

56. Clause 70 of the proposed constitution allows the Federal Executive to make by-laws to give effect to the constitution. Needless to say these by-laws must conform to the constitution. That is, they cannot be for purposes other than those set out in clause 6.

By-laws could include things like:

  • details of how the registers of members and councillors are to be kept and whether they can be electronic or need to be paper-based,
  • a detailed procedure of how the Federal Executive will deal with applications for membership,
  • details of how subcommittees are to operate;
  • details about different aspects of the operation of the Archive (hopefully in consultation with the archivist).

Notice

  1. Clauses 71 to 74 deal with our notice can be given to and by the ALC by various people.

Financial year

  1. Clause 75 states that the ALC’s financial year should be from one October to 30 September. This was chosen so that the end of the financial year was about 3 months before the biennial Federal Council sessions. This period of 3 months:
    • allows time for the ALC’s financial records to be audited before the biennial Federal Council session, and
    • only requires the incoming Federal Executive to get their heads around 3 months of transactions from the previous Federal Executive.

Indemnity, insurance and access

  1. Clause 76 of the proposed constitution states that the ALC will reimburse a Federal Executive member for any loss or liability that he or she suffers as an officer of the ALC. An example of a loss that a Federal Executive member is being successfully sued for accidental defamation in the course of his or her duties on the Federal Executive.

Given the meagre assets of the ALC, this clause is unlikely to give Federal Executive members any great comfort.

  1. Clause 77 allows the Federal Executive to insure the ALC and Federal Executive members against any liability of this type.
  1. Clause 78 states that past and present Federal Executive members may access the records of the ALC.

Winding up

  1. Clauses 79 and 80 deal with what will happen to any surplus assets in the event that the ALC is wound up. These are standard clauses for not-for-profit charities and are essential if the ALC is to be considered a not-for-profit charity.

Definitions and interpretation

  1. Clauses 81 to 82 deal with definitions and interpretation and are by and large self-explanatory.