How NFP Can Remove a Committee Member & Resolve a Dispute

Introduction

The committee of management is essential for guiding a NFP organisation, overseeing its affairs and ensuring it complies with legal requirements. When a dispute arises—a situation that may require formal charity dispute investigations—or a committee member’s conduct disrupts the organisation’s ability to achieve its mission, it becomes critical to address the issue effectively to protect the group’s objectives.

Removing a committee member is a serious step that requires careful consideration and a clear legal basis. This guide provides essential information on the options available to resolve a dispute, outlining the formal procedure to remove a member in accordance with your constitution and the Associations Incorporation Act 2009 (NSW).

Interactive Tool: Check If You Can Legally Remove a Committee Member

Protecting NFP Mission by Addressing Committee Disputes

The Link Between Good Governance & Charity’s Success

A well-functioning committee is the cornerstone of a successful NFP organisation. This committee of management is ultimately tasked with controlling and managing the business and affairs of the association.

When the committee operates effectively, it can successfully guide the organisation toward achieving its mission. To accomplish this, the committee’s responsibilities include:

• Overseeing financial matters.
• Ensuring the organisation adheres to its stated objectives.
• Maintaining compliance with all legal requirements.

How a Difficult Member Can Disrupt NFP’s Aims

An organisation’s ability to achieve its goals can be significantly disrupted when a committee member behaves inappropriately or acts in a way that is contrary to the association’s objectives. Consequently, a single difficult member can hinder the entire committee’s progress and create a dysfunctional environment.

These disruptive behaviours from a committee member can manifest in several ways, including:

• Dominating discussions: One person consistently talking over others or shouting to enforce their view can stifle debate and prevent other members from contributing to important decisions.
• Failing to contribute: A member who does not read meeting agendas, review minutes, or complete assigned tasks places an unfair burden on their colleagues and slows down the organisation’s work.
• Consistent absence: The primary role of a committee member is to attend meetings where key decisions are made, meaning a member who is frequently absent cannot fulfil their governance duties.
• Working against the committee: A member who refuses to support majority decisions, disrupts meetings, or speaks negatively about the board to outsiders undermines the committee’s unity and effectiveness.
• Using the position for personal gain: An “empire builder” who prioritises their own interests or those of their associates over the organisation’s mission can create serious conflicts of interest and damage the charity’s integrity.

Identifying the Legal Basis to Remove a Committee Member

Grounds for Disciplinary Action Under Your Constitution

An organisation’s constitution provides the legal basis for taking disciplinary action against a committee member. Such action is typically initiated when a member has breached the constitution or engaged in behaviour that is harmful to the association’s interests.

For instance, according to the model constitution, disciplinary action can be considered if a member has:

• Refused or neglected to comply with the provisions of the constitution.
• Acted in a manner that is prejudicial to the interests of the association.

Furthermore, if your organisation’s constitution includes a disciplinary procedure, it is essential that you follow it closely. Depending on the rules, the potential outcomes of such a procedure can include:

• A formal sanction or fine.
• The suspension or cancellation of the individual’s membership.

When a Committee Position Becomes Automatically Vacant

A committee member’s position can become vacant automatically under specific circumstances, often referred to as a ‘casual vacancy’.

Every incorporated association’s constitution must outline the grounds for a casual vacancy. If it does not, the provisions of the model constitution apply by default.

In these situations, a committee position is automatically vacated if the member:

• Ceases to be a member of the association.
• Is removed from the committee by a resolution passed at a general meeting.
• Passes away.
• Becomes bankrupt, which is defined as being an ‘insolvent under administration’ for the purposes of the Corporations Act2001 (Cth).
• Is defined as a ‘mentally incapacitated person’ under the Interpretation Act1987 (NSW).
• Is absent from three consecutive committee meetings without receiving consent from the committee.
• Is convicted of an offence involving fraud or dishonesty where the maximum penalty is imprisonment for at least three months.
• Is prohibited from being a director of a company under Part 2D.6 of the Corporations Act2001 (Cth).

Exploring Options to Resolve a Dispute Before Removal

Informal Resolution & Mediation

Removing a committee member is a significant action that can create division and potentially harm your organisation’s reputation. Before initiating a formal removal procedure, it is often better to explore less confrontational methods to resolve the dispute.

A practical first step is for an appropriate representative to speak directly with the committee member about the concerns. This conversation may be all that is needed to resolve the problem, particularly if it involves clarifying the member’s role, responsibilities, and the conduct expected of them.

If an informal discussion does not settle the issue, you should use your association’s dispute resolution procedure as outlined in your constitution. Should your constitution not contain such a procedure, the one detailed in the model constitution applies automatically. This process typically involves:

• Mediation: Under the model constitution, the dispute must first be referred to a Community Justice Centre, where a neutral mediator facilitates a discussion to help both parties reach an agreeable solution.
• Arbitration: If mediation fails to resolve the dispute within three months, the matter is then referred to arbitration.

Considering the Member’s Term of Office

Committee members are generally elected to serve for a specific term. According to the model constitution, committee members are elected at the Annual General Meeting (AGM) and their term lasts until the following AGM, at which point they may be eligible for re-election.

If a dispute with a committee member arises when their term is nearing its end, the most straightforward solution may be to wait for their term to expire. This approach can avoid a contentious removal process.

It might involve a discussion with the member where it is agreed that they will not seek re-election.

The Formal Legal Procedure to Remove a Committee Member

Following the Removal Procedure in Your Charity’s Constitution

To formally remove a committee member, your organisation must first consult its constitution.

This document serves as the primary legal guide for the process and must be followed closely, as it should outline the specific procedure for removing a member from the committee of management.

If your constitution is silent on this issue, the provisions detailed in the model constitution—as set out in the Associations Incorporation Regulation 2022 (NSW)—will automatically apply. Under these default rules:

• It is not compulsory for an incorporated association in NSW to have its own specific rules for the removal of a committee member.
• A member can instead be removed from the committee by a resolution passed at a general meeting.

Calling a General Meeting & Passing a Valid Spill Motion

If your association uses the model constitution, a general meeting of all members is required to vote on a resolution to remove a committee member. This gathering can be either an AGM or a special general meeting convened specifically for this purpose.

The committee of management has the power to call a special general meeting whenever it deems necessary.

Furthermore, the committee is legally obligated to convene a special general meeting if a request is made by 5% or more of the association’s members. This mechanism empowers the membership by allowing them to:

• Initiate a “spill motion” to remove a committee member.
• Take action if they believe the removal is in the organisation’s best interest.

Upholding the Rights of the Member in the Dispute

Ensuring the removal process is fair and proper is a critical legal requirement.

This principle, known as procedural fairness or natural justice, serves two main purposes during a dispute:

• It protects the fundamental rights of the committee member facing removal.
• It helps shield the organisation from potential legal challenges.

Consequently, the member must be given a reasonable opportunity to present their side of the story before a vote is taken.

If your organisation follows the model constitution, the member subject to the removal resolution has specific rights, which include:

• Preparing a written statement to explain their position.
• Requesting that the secretary or president distribute this statement to all members of the association before the meeting.
• Requiring the statement to be read aloud at the meeting if it was not circulated beforehand.

In addition to these rights, the general meeting itself must adhere to all procedural requirements outlined in your constitution, such as providing proper notice to all members and ensuring a quorum is present for the vote to be valid.

Emergency Governance Stabilisation After a Removal

Meeting Your Legal & Administrative Duties

After members vote to remove a committee member, the organisation must promptly fulfil several legal and administrative duties to ensure compliance. These steps are outlined in the Associations Incorporation Act 2009 (NSW) and are critical for maintaining good governance, a key aspect of NFP governance and ACNC compliance.

The organisation is required to take specific actions following the removal:

• Within 14 days, the association must ensure the removed committee member returns all documents belonging to the organisation that are in their possession. These must be returned to the public officer.
• Within one month, the association’s register of committee members must be updated. This update needs to record the exact date on which the member officially vacated their office.

If the removed member held a specific officer position, such as president, vice-president, secretary, or treasurer, the date they ceased holding that role must also be recorded in the register.

Filling the Vacancy to Ensure Committee Viability

Once a committee member is removed, your association may need to take immediate steps to fill the position to remain legally compliant. Under Section 28 of the Associations Incorporation Act 2009 (NSW), your organisation must maintain a committee with at least three members, and at least three of these members must ordinarily reside in Australia.

The removal of a member creates what is known as a ‘casual vacancy’. Your organisation’s constitution should outline the procedure for filling such a vacancy.

If your association uses the model constitution, clause 17 provides the following framework:

• It allows the remaining committee members to appoint another member of the association to fill the empty position.
• This newly appointed member will then serve on the committee until the next AGM.

When Dispute Requires Court or Regulator Intervention

Understanding the Limited Role of NSW Fair Trading

NSW Fair Trading serves as the regulator for incorporated associations in the state, but its capacity to intervene in internal disputes is specific and limited. The agency can only become involved if there is evidence of a breach of the Associations Incorporation Act 2009 (NSW) or the Associations Incorporation Regulation 2022 (NSW).

Generally, NSW Fair Trading cannot intervene in internal administrative matters or governance disputes that do not involve a clear violation of the legislation. Its powers are typically reserved for issues that pose a serious risk to public trust and confidence.

Examples of breaches that the regulator can investigate include:

• A failure to conduct an AGM within the required timeframe.
• Not maintaining proper financial records.
• Dishonest use of position or information by a committee member.
• Failure to fill a vacant public officer position.

Meeting the Thresholds for Supreme Court Intervention

Taking a dispute to court should only be considered a last resort for a NFP organisation. Legal action is a stressful, time-consuming, and expensive process that may not resolve the underlying conflict within the committee or membership.

Court intervention is typically reserved for serious situations, particularly where an association has:

• Failed to follow the procedures outlined in its own constitution.
• Denied a member natural justice.

The courts have historically been reluctant to interfere in the internal affairs of community organisations, so a strong legal basis is required before proceeding. Before contemplating legal action against a committee member, it is essential to seek professional legal advice to understand the potential costs and outcomes.

Conclusion

Removing a committee member is a significant step for any NFP, but it can be essential for protecting the organisation’s mission from internal disputes. To ensure the action is legally sound, your association must strictly follow the removal procedure outlined in its constitution and uphold the member’s right to procedural fairness.

If your committee needs guidance on this complex legal procedure, seek professional advice to protect your organisation’s interests. Contact LawBridge’s experienced not-for-profit lawyers for trusted legal support to resolve your dispute effectively and maintain good governance.

Frequently Asked Questions