Not-for-profit Law
Legal help for community organisations

The impact of whistleblower reforms on not-for-profit organisations

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From 1 July 2019, protection for whistleblowers (people who report organisational misconduct) under the Corporations Act 2001 (Cth) (Corporations Act) has been extended in a number of ways.

Who can be a whistleblower?

The definition of who can be a whistleblower is now wider. Whistleblower protection has been extended to include people that are current or former employees, volunteers, officers and contractors. The spouses and dependants of these people also now enjoy protection as whistleblowers. The protection still applies if a whistleblower stays anonymous. The scope of protection is also wider because whistleblower reports are no longer confined to corporate breaches of the law, but may include inappropriate or improper conduct.

The reforms introduce changes that impact not-for-profit incorporated organisations that are trading or financial corporations, public companies (including those registered as charities), large proprietary companies and corporate trustees of superannuation funds in different ways. You should find out whether these changes impact your organisation.

Impact on not-for-profit incorporated organisations that are trading or financial corporations 

The types of entities that must comply with whistleblower protection laws under the Corporations Act has been widened and not-for-profit incorporated organisations that are trading or financial corporations must now comply with these laws. These organisations may include incorporated associations, not-for-profit bodies corporate, incorporated organisations registered with ASIC as registered Australian bodies and incorporated organisations registered with the Australian Charities and Not-for-profits Commission (ACNC) as charities. Whether your organisation is a trading or financial organisation depends on whether your organisation’s trading or financial activities make up a significant proportion of their overall activities. Organisations that trade in goods or services, lend or borrow money, or provide financial services are likely to be trading or financial corporations.

Some not-for-profit incorporated organisations must have a whistleblower policy 

The reforms also require public companies (including those registered as charities with ACNC), large proprietary companies and corporate trustees of superannuation funds to have a whistleblower policy from 1 January 2020. Recognising that these reforms may put onerous obligations on not-for-profit companies, ASIC has asked people to make submissions about whether public companies that are small not-for-profits or charities should be exempt from the requirement to have a whistleblower policy. The deadline to send comments to ASIC is 18 September 2019.

While incorporated associations or other bodies corporate will not be required to have a whistleblower policy, we recommend having a strategy to manage whistleblower reports (particularly if the organisation is a trading or financial corporation). You may wish to get legal advice on your situation.

For more on whistleblowing, register for the Institute of Community Directors Australia’s free webinar on ‘Whistleblowing at your not-for-profit’

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