Ever-increasing responsibility for committees and directors is raising the bar on the legislative and legal expectation to act in good faith. However, to act in good faith for a not-for-profit club is often misunderstood or misinterpreted. The Australian Institute of Company Directors recently commissioned a review of the previous legal definition, following scrutiny on the term in the financial services Royal Commission.
This new legal interpretation has consequences for every club committee member, director, and senior staff member, as it redefines the interpretation of acting in good faith. The new definition broadens the term acting for example, it means to not only act in the interest of your members and the club’s objective, but it also means you need to take a greater view of all stakeholders.
Acting in good faith not only means doing the right thing by the members, in the new definition it also means doing the right thing for staff, the environment, and having a greater consideration on planning for the future of the organisation.
Unfortunately, many organisations fail due to short-term thinking, disregarding their responsibilities to staff (their key resource), as well as little to no care for their impact on the environment.
Maybe it’s time to review your strategic plan and corporate governance responsibilities to ensure you’re acting in good faith?
Why not give me a call to discuss how DWS can assist you to understand and implement this new definition of acting in good faith. You can contact me anytime on email email@example.com or mobile 0417 721 942.